More than 46,000 people have lost over a billion dollars to crypto scams since the start of 2021, the Federal Trade Commission stated in a report released on Friday. This is about a fourth of total revenue lost to scams but also the largest using any payment methods.
2021 was rather a good year for cryptocurrencies. By November, various altcoins had together garnered a $3 trillion market share, more than what the likes of Apple, Microsoft, or Tesla individually commanded. The lure of the rising Bitcoin was also milked by scammers who pocketed more than a billion dollars in the year alone.
Social media fuels the scams
According to the FTC report, social media platforms played a huge role in increasing the reach of these scams, and nearly half of the reported scams began either as an ad, a post, or a message on social media.
With a 32 percent share, Instagram topped the list of social media platforms that helped propagate these scams, with the parent company Meta's other social media app, Facebook, coming a close second at 26 percent. Meta's Whatsapp completed the podium finish with a nine percent share, and Telegram was responsible for about four percent of crypto scams.
Investment, Romance, Crypto
Most people are allured to the scams by offering over the moon returns with their crypto holdings. As much as $575 million of investor money was lost in crypto investment scams, which saw the scammer disappear after promising quick and easy returns on cryptocurrencies.
The swindling in these scams is quite sophisticated, with "investment apps and websites" also letting investors track the growth of their crypto holdings. Others also let investors make small withdrawals to demonstrate the legitimacy of the platform, but the scam is unearthed when the investor wants to cash out, FTC said on its website.
Although not as popular as investment scams, romance scams take the number two position as the most common method of swindling crypto holders. Nearly one in three dollars lost in crypto scams was lost to a romance scam in 2021, with an estimated $185 million of money lost.
While newfound love on the internet has asked people for cryptocurrency in the past, there are also those that involve crypto-investment tips. Needless to say, altcoins put in after heeding these requests head to a scammer's wallet, never to be seen again. Median frauds in this area are an astounding $10,000, the highest among any of the methods deployed.
Organization and government impersonations rank third on FTC's list where the gullible are asked to convert their assets to crypto to avoid them from being frozen. The new holdings are to be stacked away for safety purposes but are never seen again by the real owners. FTC reports that $133 million were lost this way in 2021.
Scammers exploit people's unfamiliarity with cryptocurrencies and how they work to fill their own coffers. With no central authority to flag suspicious transactions or stop fraud from occurring or system to reverse a fraudulent transaction, scammers have free rein, FTC said in its report.