Hacker man using laptop and computer with green binary chart and cryptocurrency candle price chart on display screen.

Crypto scams: Americans have lost $1 billion since 2021 – what to look out for and what to do

Zephyr18 / Getty Images / iStockphoto

There may be no more certain evidence that the currency has reached the financial mainstream than when it is used to deceive people into getting huge piles of money. This is what is happening with cryptocurrency, according to a new report from the Federal Trade Commission.

SNAP BENEFITS: Can you use your EBT/Food Stamp card to buy hot food?
SNAP 2022: Will My State Offer Additional Money in EBT Food Stamps in June?

The report, which was released on June 3, found that since the beginning of 2021, more than 46,000 people have reported losing more than $1 billion in cryptocurrency due to scams. In terms of the percentage of dollars lost to scams, cryptocurrency is superior to any other payment method. Reported losses in 2021 were nearly 60 times the amount just three years earlier.

CRYPTO DISPLAY: Buy Bitcoin and Cryptocurrency Instantly! Sign up for Gemini Crypto Exchange and start investing with less than $100 today.

The average loss reported by an individual was $2,600 per person. People said they used to pay scammers on the highest tier of cryptocurrencies, namely Bitcoin (70%), Tether (10%), and Ether (9%).

The problem only got worse this year. In 2021, a total of $680 million in crypto fraud was reported to the Federal Trade Commission. During the first quarter of 2022 alone, nearly half of that amount was reported – $329 million.

The FTC pointed out several features that make crypto attractive to scammers. The biggest one is that no bank or other central authority has been set up to report suspicious currency transactions and stop fraud before it happens. Another problem is that once a crypto transaction is made, it cannot be undone.

Check out: 6 Alternative Investments to Consider for Diversification

Social media is a particularly ripe hunting ground for scammers. Nearly half of the people who reported losing cryptocurrency to a scam since 2021 said it started with an ad, post or message on a social media platform. Most scams take the form of investment scams, with romance scams coming in second, followed by business and government scams.

There has been some move by federal bank regulators — including the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency — to create a roadmap that would put in place greater regulation of cryptocurrencies. But for now, it’s still the Wild West of finance.

In the meantime, what can you do to help prevent crypto scams? The FTC offers the following advice:

  • Be wary of cryptocurrency investment offers that guarantee big profits and returns. As the FTC notes, no cryptocurrency investment (or any investment) is ever guaranteed to make money, let alone the big money.
  • Avoid transactions that require you to buy cryptocurrencies. This is almost always a hoax.
  • Don’t confuse dating advice with investing. If you meet someone and they offer to show you how to invest in cryptocurrency, or they ask you to send crypto, you can be sure that it is a scam.

To learn more about cryptocurrency scams, visit ftc.gov/cryptocurrency and ftc.gov/scams. You can also report fraud to the FTC at ReportFraud.ftc.gov.

More from GOBankingRates

About the author

Vance Kariaga is a London-based writer, editor and journalist who has previously held positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work has also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and North Carolina Business Magazine. He holds a BA in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting has won awards from the North Carolina Press Association, Green Eyeshade Awards and AlterNet. In addition to journalism, he worked in banking, accounting and restaurant management. Vance’s short story, “St. Christopher,” a North Carolina-born who also writes novels, was ranked second in the 2019 Writer’s Digest Short Story Competition. Two of his short stories have appeared in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His first novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.

Leave a Comment

Your email address will not be published.