According to a report released by the US Federal Trade Commission, more than 46,000 people have lost over a billion dollars in crypto to scammers since 2021 began. The report published on Friday said that “Although it’s yet to become a mainstream payment method, reports to the FTC show it’s an alarmingly common method for scammers to get peoples’ money. Since the start of 2021, more than 46,000 people have reported losing over $1 billion in crypto to scams – that’s about one out of every four dollars reported lost, more than any other payment method.”
According to the report, the median individual loss stood at $2,600. Losses recorded in 2021 were almost 60 times what was recorded in 2018. People lost their money to scammers via Bitcoin, Tether, and Ether. The losses constitute 70 percent, 10 percent, and 9 percent for Bitcoin, Tether, and Ether respectively.
The major reason why these scams continue to happen is that there is no central system and also no medium in place to adequately detect and flag down suspicious accounts or activities. Besides, unlike the traditional system, there is no feature that allows a reversal of cryptocurrency once a customer or user claims that they have been scammed or fraudulently scammed. Cryptocurrency transactions are, therefore, irreversible. “There’s no bank or other centralized authority to flag suspicious transactions and attempt to stop fraud before it happens,” the FTC warns in its report.
According to this report, scammers often promote enticing offers using social media. Almost half of the people scammed started with a message they saw or received on social media and the platforms that the Federal Trade Commission reported in its report include Instagram, Facebook, WhatsApp, and Telegram.
In 2021, about $575 million of crypto fraud losses that were reported to the commission were related to investment opportunities which the Federal Trade Commission says was the most common type of scam. People complained of investment websites that allowed them to track the growth of their investment but refused to allow withdrawal.
The FTC made it known in its report that younger, more tech-savvy people were more prone to these scams adding that people between the ages of 20 and 49 were more likely to be scammed.
The FTC in its reports urged people to look out for themselves by avoiding businesses that require cryptocurrency. The commission said that cryptocurrency investments do not have guaranteed returns and that people need to understand what they’re getting themselves into before they venture into any type of investment.