Even though crypto has been in existence since 2009, the major traction came in 2018, when new crypto users started eying it as an alternative to traditional finances. But, this has its own drawback.
As a result, people became interested in crypto where they could make good returns; however, only a few understood the market and booked profits.
In this case, various platforms were used to promote cryptocurrency and get more users to their projects, but this is where customers were scammed.
Users were new to crypto, so they were unable to analyze and understand the projects they invested in. On social media platforms, there were many advertisements promising 10x to 1000x returns in a few days. As a result, new users invested, with no knowledge of crypto, and, in return, were scammed.
Since 2021, crypto users have lost $1 billion worth of investments. According to a report released by the FTC on 3 June 2022, over 46,000 people have lost over $1 billion as a result of cryptocurrency scams.
Adding further, the report said that a user on average has lost $2600 in 2021 till March 2022. For every dollar invested, one dollar was lost in a scam.
Among the cryptos in which users have been scammed, Bitcoin (BTC) has a share of 70%, followed by Tether (USDT), a stablecoin, and Ethereum (ETH) and 1% includes other cryptocurrencies.
In the FTC report, it was explained that because cryptocurrency is still in its infancy, no centralized authority or bank can flag suspicious transactions, thereby preventing fraud before it occurs. Crypto has become a very attractive place for scammers due to the lack of awareness among users.
As soon as the users send the money, there is no way for them to get it back. It is this feature that scammers exploit.
Since 2018, crypto scams have increased by nearly 60 times. The report found that 50% of users had found out about the crypto projects via online advertisements, a message on social media, or a post on the platform.
Platforms where users saw the post, and advertisements are Instagram which accounts for 32%, followed by Facebook with 26%, WhatsApp with 9%, and Telegram with 7%.
What are investment scams?
The scammers post fake investment opportunities and ask users to deposit crypto in return for double or more crypto within a few days.
Since 2021, over $575 million have been lost using this method and it is the most popular one, as many users do not cross-check the information the scammers provide.
Once the investment is made by users, all the investment goes to scammers’ wallets. In addition, scammers are so clever that they also give users the ability to track their investments, but they only do it to scam the user. Some users may even be allowed to withdraw some crypto, but if they want to withdraw all, more crypto will be required. As the users were able to withdraw funds, they fell into the trap and never got their full account back.
What are romance scams?
Millions of people log on to dating apps and social networking sites to meet potential partners and end up sending money, as scammers approach in such a way that users cannot resist sending cryptocurrency.
This is the second most used method to scam crypto users, where users have lost $185 million since 2021. On average, a user has lost more than $10,000 in this type of scam.
What are Business and government impersonation scams
Under this, a person impersonates a business/bank representative and drops you a message that user’s account is at risk and the user will be told to follow a process and send crypto to the QR code to secure the bank account.
In the case of government officials, the scammer tells the users that their account has been frozen as it was part of drug trafficking investigations, and the user needs to send crypto to reverse the order and when the users send the crypto, all the assets are gone within seconds without the user knowing that, he/she only transferred the crypto to scammers wallet.
The report also said that people in the age group of 20 – 49 years are likely to lose three times the currency than the older age group. People in their 30s are the hardest hit, with 35% more susceptible to these scams.
However, the average loss to users in this older age group is around $11,708, which is the highest among all age groups, the FTC report added.
The report lists three major points that any crypto user must always note, which include:
- 1. That no cryptocurrency investment will ever guarantee profits;
- 2. Never mix online dating with any investment advice, if someone is asking for crypto online, it is nothing but a scam;
- 3. No bank or organization will ask you to buy crypto and send it to solve any problem.
As traction towards various crypto projects grows, cryptocurrency has begun to spread. In reality, crypto is just like traditional finance and share markets, which are subject to market risks. Although there are exceptional cases where people have earned many folds, it can happen in any field or industry.
Think clear, be Klever…