Americans have lost more than $1 billion to cryptocurrency scams since the start of last year, as criminals exploit rising popular interest in scoring quick digital riches, according to a new analysis by the Federal Trade Commission.
And those numbers likely represent a small fraction of the total losses, since most of the crimes go unreported, according to Emma Fletcher, the FTC senior data researcher who wrote the report.
Investment scams promising swift and easy paydays account for the bulk of the crypto fraud, totaling $575 million in losses. Fraudsters frequently lure victims on social media, then show their investments making fake gains. In some cases, the FTC found, investors successfully complete “test” withdrawals, convincing them the arrangement is sound and encouraging them to plow in more money that they are then unable to recover.
“Given that investment scams are really driving this, it’s very important for people to understand that any promises of huge returns, or that your investments can be quickly multiplied, are obviously a scam,” Fletcher said. “No return on a crypto investment is guaranteed.”
So-called romance scams — in which thieves posing as potential love interests ensnare people on dating apps or social networks, then persuade them to invest in fraudulent crypto schemes — cost victims $185 million, according to the report. A single such scam last year probably took in more than 5,000 victims and made off with more than $66 million, a Washington Post investigation found.
People between 20 and 49 were more than three times as likely as older cohorts to be taken in by crypto grift, the FTC found. And crypto scams made up 35 percent of the fraud suffered by people in their 30s.
Crypto’s lack of federal oversight has helped make it a magnet for criminals. “There’s no bank or other centralized authority to flag suspicious transactions and attempt to stop fraud before it happens,” the FTC’s report said. Plus, “crypto transfers can’t be reversed — once the money’s gone, there’s no getting it back.”
Fletcher said potential crypto investors, in addition to being wary of promises of big returns or enticements from dating app matches, should steer clear of pitches on social media. “Even when it’s somebody who may very well be their friend, the account could have been hacked,” she said.
