Cryptocurrency investment scams are currently on the rise, according to a new report from the Federal Trade Commission (FTC).
The report, published on Thursday, states that since last year, more than 40,000 Americans have reported losing “over $1 billion in crypto to scams,” with a majority of scammers using Bitcoin, the world’s most popular cryptocurrency, followed by Tether and Ether. According to the report, the number of reported cryptocurrency losses last year “were nearly sixty times what they were in 2018.”
The report comes as several different cryptocurrencies continue to gain popularity, despite many digital coins seeing a drop in price in the last several months.
“Of the reported crypto fraud losses that began on social media, most are investment scams,” the report said. “Indeed, since 2021, $575 million of all crypto fraud losses reported to the FTC were about bogus investment opportunities, far more than any other fraud type. 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 report stated that these investment scammers will tell individuals that they can obtain quick and large returns on investments; however, “those crypto ‘investments’ go straight to a scammer’s wallet.”
According to the report, cryptocurrency has several features that attract scammers. One of the key reasons crypto is “attractive” to scammers is because the digital currencies do not operate under a central bank or authority that has the power to flag a suspicious event or transaction.
“And most people are still unfamiliar with how crypto works. These considerations are not unique to crypto transactions, but they all play into the hands of scammers,” the report said.
Trailing cryptocurrency investment scams in severity are romance scams, as more than $180 million of crypto was reported lost since last year. “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 study added that adults from age 20 to 49 were three times more likely to report losing cryptocurrency to a scammer than other age groups. However, the median amount of money lost in these different scams increases with age, “topping out at $11,708 for people in their 70s.”
This is not the first time the FTC has warned of scamming incidents on social media applications. In February, the FTC issued a Consumer Protection Data Spotlight Post, which stated that “social media was far more profitable to scammers in 2021 than any other method of reaching people.”
Newsweek reached out to the FTC for comment.