More than 46,000 people reported to the FTC that they lost over $1 billion in scams involving cryptocurrency from January 2021 through March 2022. Only a small percentage of people report scams, so the actual numbers are likely much higher.
The reports indicate that cryptocurrency is becoming the payment of choice for many scammers. Losses in 2021 were almost 60 times the losses reported in 2018. Crooks like cryptocurrency because:
- There’s no bank or other entity to flag suspicious transactions before they happen.
- Cryptocurrency transfers can’t be reversed. Once the money is transferred, it’s gone.
- Most people still don’t understand how cryptocurrency works, making them vulnerable to a slick pitch.
Over half of the reported losses involved bogus investment opportunities. Scammers promised big returns for investing in cryptocurrency and in some cases had websites and apps that claimed to track the growth of the investor’s portfolio. Some allowed investors to make a small “test” withdrawal. But like Bernie Madoff’s Ponzi scheme, the impressive returns ended up being fake. When people tried to cash out, they were required to send more cryptocurrency to pay fees and still didn’t get their money back.
The next most common scheme involving cryptocurrency were romance scams in which a new love interest convinced the victim to invest in cryptocurrency or send the crook cryptocurrency for some reason. They were followed by business and government impersonation scams in…
