(Kitco News) Investing in crypto is risky enough, but scams in the space are also rising, with the Federal Trade Commission (FTC) reporting that since 2021 more than 46,000 people have lost over $1 billion in crypto scams. This is more than any other payment method.
"That's about one out of every four dollars reported lost," the FTC said in the report published on Friday. "The median individual reported loss? A whopping $2,600."
The most popular cryptocurrencies used in scams were Bitcoin, representing 70%, stablecoin Tether at 10%, and Ethereum at 9%.
According to the FTC, losses reported in 2021 were almost sixty times more than those registered in 2018.
"There's no bank or other centralized 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," the report noted.
Making things worse is the lack of knowledge around how cryptocurrencies work, the FTC added.
Social media plays a crucial role 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 FTC pointed out.
The top social media platforms used in crypto scams were Instagram, Facebook, WhatsApp, and Telegram.
The most popular crypto scam is about "bogus" investment opportunities. Since 2021, $575 million has been lost in such scams.
"The stories people share about these scams describe a perfect storm: false promises of easy money paired with people's limited crypto understanding and experience," the FTC said. "People report that investment websites and apps let them track the growth of their crypto, but it's all fake. Some people report making a small 'test' withdrawal – just enough to convince them it's safe to go all in. When they really try to cash out, they're told to send more crypto for (fake) fees, and they don't get any of their money back."
Another widely-used way to steal money is "romance scams," responsible for $185 million lost since 2021.
"These keyboard Casanovas reportedly dazzle people with their supposed wealth and sophistication. Before long, they casually offer tips on getting started with crypto investing and help with making investments," the report said. "The median individual reported crypto loss to romance scammers is an astounding $10,000."
There are also business and government impersonation scams, which are responsible for $133 million in crypto losses since 2021.
"These scams can start with a text about a supposedly unauthorized Amazon purchase, or an alarming online pop-up made to look like a security alert from Microsoft. From there, people are reportedly told the fraud is extensive and their money is at risk," the report described.
People in their 30s were hit the most by these crypto fraudsters over the last year and a half.
