Since the start of 2021, more than 46,000 people have reported losing over $1 billion in crypto to scams – that’s about one out of every four dollars reported lost. Crypto has several features that make it attractive to scammers, says US Federal Trade Commission report
Since the start of 2021, more than 46,000 people have reported losing over $1 billion in crypto to scams – that’s about one out of every four dollars reported lost, more than any other payment method, according to a Federal Trade Commission report by the US government.
The report said that most of the people scammed held Bitcoin (70 per cent), Tether (10 per cent) and Ethereum (9 per cent).
According to the report, crypto has several features that make it attractive to scammers. “There’s no bank or other centralised authority to flag suspicious transactions and attempt to stop fraud before it happens. Crypto transfers can’t be reversed – once the money’s gone, there’s no getting it back. And most people are still unfamiliar with how crypto works. These considerations are not unique to crypto transactions, but they all play into the hands of scammers,” the report said.
In addition, reports also pointed out the role of social media and advertisement in crypto scams. “Nearly half the people who reported losing crypto to a scam since 2021 said it started with an ad, post, or message on a social media platform,” the report added.
The top platforms identified in these reports were Instagram (32 per cent), Facebook (26 per cent), WhatsApp (9 per cent), and Telegram (7 per cent). “Since 2021, $575 million of all crypto fraud losses reported to the FTC were about bogus investment opportunities, far more than any other fraud type,” the report said.
The report further pointed out that people in the 20-49 years age group were thrice as likely to lose cryptocurrency to a scammer as compared to their older generation.
“People in their 30s are the hardest hit – 35 per cent of their reported fraud losses since 2021 were in cryptocurrency. But median individual reported losses have tended to increase with age, topping out at $11,708 for people in their 70s,” the report added.
Incidentally, crypto scams have also increased manifold. Last week, criminals reportedly used Tesla CEO Elon Musk’s face and voice to create a deepfake video in order to dupe crypto investors.
Interestingly, the craze for cryptocurrencies was at a fever pitch in November 2021, with Bitcoin hitting a record high of $69,000.