The US Federal Trade Commission (FTC) states that over $80 million has been lost to cryptocurrency investment scams, according to roughly 7,000 reports received since October 2020. This is a ten-fold increase compared to the previous 12 months. The most vulnerable group to this type of scam were consumers aged 20 to 49 who were five times more likely to lose money, with more than half of all investment scam losses they reported (roughly $35 million) being linked to cryptocurrency. “The numbers are especially striking for people in their 20s and 30s: this group reported losing far more money on investment scams than on any other type of fraud, and more than half of their reported investment scam losses were in cryptocurrency,” the FTC said in their statement. Cryptocurrency investment scams take many forms, with the FTC highlighting scammers using fake investment sites, get rich quick scams, impersonating a government authority or business, and even impersonating celebrities with giveaway scams. Elon Musk is likely the best example of a celebrity being used as cover to trick people into sending their cryptocurrency to scammers’ wallets.
The FTC has released a shortlist of recommendations to avoid being scammed:
• Research before you invest. Search online for the company and cryptocurrency name, plus “review,” “scam,” or “complaint.”
• Be wary of guarantees and big promises. Scammers often promise you will make money quickly, or that you’ll get big payouts or guaranteed returns. They might offer you free money paid in cash or cryptocurrency — but, even if there is a celebrity endorsement, don’t buy it. You will make money if you’re lucky enough to sell your crypto for more than you paid. Don’t trust people who say they know a better way.
• Anyone who says you must pay by cryptocurrency, wire transfer, or gift card is a scammer. If you pay, there’s usually no way to get your money back.