Cryptocurrency is one of the most talked-about topics today, making it an emerging area for scammers to exploit victims.
According to new data from the Federal Trade Commission (FTC), reports for cryptocurrency fraud are at an all-time high in the past year.
The FTC is a federal agency that protects consumers against fraudulent and deceptive activities by bad actors. In doing so, the FTC collects data, conducts investigations, and sues companies that violate consumer protection laws.
According to the new data that was recently published, the FTC found “nearly 7,000 people reporting losses of more than $80 million” from cryptocurrency scams since October 2020. This represents an increase of more than twelve-times the previous period figures.
Why is this Happening?
There are a number of factors that are leading people to cryptocurrency scams in the marketplace. As we discussed in our most recent article from the Elon Musk SNL Appearance, we see that there is a great deal of excitement in this space. The FTC says that there is a “Wild West vibe to the crypto culture,” as well as “an element of mystery.” This is certainly true as people look to cash-in on the recent trend.
However, a new and exciting area of technology doesn’t come without uncertainty and risk. Many people that jump into the crypto world have little to no knowledge or experience of the underlying technology. Instead, people are jumping in only with the idea that cryptocurrency is “the future” and will be much more valuable in due time. Thus, if a scammer comes along and makes unrealistic but enticing promises of making quick money, many people understandably fall for the trick.
How Can I Protect Myself?
There are a number of ways to protect yourself from becoming a victim of cryptocurrency scams. Here are three major ways to protect yourself:
- Exercise extreme caution. Be cautious about sending money to strangers, especially if it involves cryptocurrency. Often times, scammers request that their victims send Bitcoin or other forms of cryptocurrency in exchange for their goods, services, etc. The benefit for scammers to use cryptocurrency is that their true identities remain anonymous, making it nearly impossible for anyone to find them or recoup the money that was sent to them.
- Watch for giveaways. Scammers commonly use giveaways to entice unsuspecting victims. For instance, scammers will offer victims 10 Bitcoin if their victims simply send 1 Bitcoin. Many people fall for this scam with the hope that they will receive much more than they send. However, this is certainly a scam on its face. Watch out for anyone requesting a small amount of crypto in exchange for a large amount of the same crypto.
- Know who you’re dealing with at all times. The internet is filled with a number of bad actors that seem legitimate at first glance. Many scammers are skilled salesmen that are able to display a disingenuous side of them for the sake of victimizing people. Although they may look legitimate, do not blindly trust them simply because they have a large social media following or a website that looks legitimate.
For more information on protecting yourself against cryptocurrency and/or investment scams, visit our blog and the FTC consumer website.