Since January 1, 2021, more than 46,000 people have fallen victim to crypto scams in the United States, according to a report by the Federal Trade Commission (FTC). Fake investment opportunities are popular with scammers.
With the craze for cryptocurrencies, scams in the sector are becoming more and more numerous and they are proving to be particularly lucrative for the cybercriminals who implement them. Since January 1, 2021, more than 46,000 people have lost more than $1 billion in the United States through crypto scams, according to a report by the Federal Trade Commission (FTC), the US competition and consumer protection agency. The main cryptocurrencies used by victims to pay scammers are bitcoin (70%), tether (10%) and ether (9%).
The US agency says nearly half of victims said the scams started with a social media ad, post or message. Since the start of 2021, nearly $4 out of every 10 dollars reported lost to social media fraud have been cryptocurrency losses, far more than any other form of payment, the report said. Meta’s applications, namely Instagram (32%), Facebook (26%) and WhatsApp (9%), as well as Telegram (7%) are among the social networks preferred by scammers to steal money from victims.
On social networks, but not only, most scams are based on false investment opportunities. As of 2021, these account for $575 million of all crypto-scam losses reported to the FTC. Behind investment scams, romance scams account for $185 million of the billion lost, while schemes to impersonate companies and governments account for $133 million in losses. Last year, the American agency had revealed in particular that imitators of Elon Musk had succeeded in duping certain Internet users to raise millions of dollars.
Lack of knowledge of how cryptocurrencies work in favor of scammers
According to the FTC, several characteristics of cryptocurrencies explain their success with scammers. “There is no bank or other centralized authority to flag suspicious transactions and attempt to stop fraud before it happens. Cryptocurrency transfers cannot be reversed. Once the money is gone, there’s no way to get it back. And most people still don’t know how cryptocurrencies work. These considerations aren’t unique to crypto transactions, but they all play into the hands of scammers.”writes the organization in its report.
Last year, cryptocurrency crime reached an all-time high, with $14 billion received by illicit wallet addresses in the past year, according to Chainalysis’ “2022 Crypto Crime Report.” This represents a 79% increase from the $7.8 billion received in 2020. These illicit wallets were largely fueled by scams, which increased by 82% in 2021 to $7.8 billion in stolen cryptocurrencies in the world. Of this sum, more than 2.8 billion dollars were stolen with the method of “rug pull”, an English term which translates into French as “draw of carpets”. In the cryptocurrency industry, it means a scam where the founders of a project abandon it and run away with the funds brought in by investors.