Reports show scammers are taking advantage of the crypto craze

From Super Bowl commercials to Bitcoin ATMs, cryptocurrency seems to be everywhere lately. Although it has not yet become a mainstream payment method, reports from the FTC show that it is an alarmingly common method for scammers to obtain people’s money. Since the start of 2021, over 46,000 people have reported losing over $1 billion in crypto to scams[1] – it is about one in four dollars declared lost,[2] more … than any Other payment method. The median individual declared a loss? A whopping $2,600. The top cryptocurrencies people reported using to pay scammers were Bitcoin (70%), Tether (10%) and Ether (9%).[3]

Crypto has several features that attract scammers, which may help explain why reported losses in 2021 were almost sixty times what they were in 2018. There is no bank or other centralized authority to flag suspicious transactions and try to stop fraud before it happens. Crypto transfers cannot be undone – once the money is gone there is no way to get it back. And most people still don’t know how crypto works. These considerations are not unique to crypto transactions, but they all play into the hands of scammers.

Reports indicate that social media and crypto are a combustible combination for fraud. Nearly half of people who said they lost crypto to a scam since 2021 said it started with an advertisement, post or message on a social media platform.[4]

During this period, nearly four in ten dollars reported lost to social media fraud were lost in crypto, far more than any other form of payment.[5] The main platforms identified in these reports were Instagram (32%), Facebook (26%), WhatsApp (9%) and Telegram (7%).[6]

Of the reported crypto fraud losses that began on social media, most are investment scams.[7] Indeed, since 2021, $575 million of all crypto fraud losses reported to the FTC were from bogus investment opportunities, far more than any other type of fraud. The stories people share about these scams paint a perfect storm: bogus promises of easy money coupled with people’s limited understanding and experience of crypto. Investment scammers claim that they can get huge returns for investors quickly and easily. But these crypto “investments” go straight into a scammer’s wallet. People report that investment websites and apps allow them to track their crypto’s growth, but it’s all fake. Some people claim to have made a small “test” pullout – just enough to convince them that it is safe to go all-in. When they really try to withdraw money, they are told to send After crypto for (fake) fees, and they get none of their money back.

Romance scams are far behind investment scams, with $185 million in cryptocurrency losses reported since 2021, or nearly one in three dollars reported lost to a romance scam during that time.[8] And many also have an investment twist. These keyboard Casanovas would dazzle people with their supposed richness and sophistication. Before long, they are casually offering advice on how to start investing in crypto and helping with making investments. People who accept the offer report that what they really got was a tutorial on sending crypto to a scammer. The median individual reported loss of crypto to romance scammers is $10,000.

Business and government impersonation scams come next with $133 million in crypto losses reported since 2021. These scams can start with a text about a supposedly unauthorized Amazon purchase, or a pop-up in alarming line designed to look like a security alert from Microsoft. From there, people would be told that the fraud is big and their money is at risk. Scammers may even put the “bank” online to back up the story. (Pro tip: It’s not the bank.) In another twist, scammers posing as Border Patrol agents allegedly told people their accounts would be frozen as part of a trafficking investigation. drug. These scammers tell people that the only way to protect their money is to put it in crypto: people report that these “agents” instruct them to withdraw money and introduce it into a crypto ATM. The “agent” then sends a QR code and says to hold it up to the ATM camera. But this QR code is embedded in the scammer’s wallet address. Once the machine scanned it, their money was gone.

People aged 20 to 49 were more than thrice as likely as older age groups to have reported losing cryptocurrency to a scammer.[9] Reports indicate that people in their 30s are the hardest hit – 35% of their reported fraud losses since 2021 were in cryptocurrency.[10] But reported median individual losses tend to increase with age, reaching $11,708 for people in their 60s.[11]

Here are some things you should know to avoid a crypto scam:

  • Only scammers will guarantee profits or big returns. No cryptocurrency investment is ever guaranteed to make money, let alone a lot of money.
  • No one legit will ask you to buy cryptocurrency. Not to fix a problem, not to protect your money. It’s a scam.
  • Never Mix Online Dating and Investment Advice. If a new love wants to show you how to invest in crypto, or asks you to send him crypto, it’s a scam.

To learn more about cryptocurrency scams – and how to spot and avoid scams in general – visit ftc.gov/cryptocurrency and ftc.gov/scams. Report scams to the FTC at ReportFraud.ftc.gov.


[1]These numbers and figures throughout this Spotlight, unless otherwise noted, are based on fraud reports made directly to the FTC in the Consumer Sentinel Network database from January 1, 2021 through March 31, 2022 which listed the cryptocurrency as payment method. Reports provided by Sentinel data contributors are excluded due to inconsistencies between contributors in entering payment information. Since the vast majority of fraud goes unreported, these numbers reflect only a small fraction of public harm. See Anderson, KB, Who do victims of mass consumer fraud complain to? to 1 (May 2021), available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3852323 (the study showed that only 4.8% of people who were victims of mass consumer fraud complained to a Better Business office or government entity).

[2] From January 1, 2021 to March 31, 2022, cryptocurrency was identified as the method of payment for 24% of dollar losses reported in FTC fraud reports.

[3]These figures exclude reports that do not specify the type of cryptocurrency.

[4] From January 1, 2021 to March 31, 2022, 49% of FTC fraud reports listing cryptocurrency as a method of payment specified that the scam started on social media, compared to 37% in 2020, 18% in 2019 and 11% in 2018.

[5] From January 1, 2021 to March 31, 2022, $1.1 billion was reported to the FTC as lost due to social media fraud. Of this number, 39% were reported as paid by cryptocurrency, followed by bank transfer or payment (20%) and wire transfer (9%). 8% did not indicate a method of payment.

[6] These numbers exclude reports that did not specify a social media platform.

[7] From January 1, 2021 to March 31, 2022, people reported to the FTC that $417 million in cryptocurrency was lost due to social media fraud. $273 million of those losses were due to fraud classified as investment-related, followed by romance scams ($69 million) and business imposters ($35 million).

[8] From January 1, 2021 to March 31, 2022, cryptocurrency was identified as the method of payment for 29% of reported dollar losses from romance scams.

[9] From January 1, 2021 to March 31, 2022, people aged 20 to 49 submitted fraud loss reports to the FTC listing social media as a method of contact at a rate 3.4 times higher than people 50 years and over. About 91% of fraud reports listing cryptocurrency as a payment method during this time period included age information. This age comparison is normalized to the number of casualty reports per million population by age over that time period. Population figures were obtained from the United States Census Bureau’s annual estimates of the resident population for selected age groups by sex for the United States (June 2020).

[10] From January 1, 2021 to March 31, 2022, the percentage of total reported fraud losses that were lost in cryptocurrency by age were as follows: 12% (18-19), 23% (20-29), 35 % (30-39), 33% (40-49), 28% (50-59), 19% (60-69), 10% (70-79) and 2% (80 and over). These numbers exclude reports that did not state age.

[11] From January 1, 2021 to March 31, 2022, the median individual reporting cryptocurrency losses due to fraud by age was: $1,000 (18-19), $1,600 (20-29), 2 $500 (30-39), $3,200 (40-49), $5,000 (50-59), $8,500 (60-69), $11,708 (70-79) and $8,100 (80 and more).

Aurora J. William