According to the US Federal Trade Commission, social media and cryptocurrency are a “combustible combination for scams,” with social media platforms accounting for over half of all crypto-related scams in 2021.
The research, which was released on Friday, indicated that scammers stole up to $1 billion in cryptocurrency this year, a more than five-fold increase from 2020 and over sixty-fold increase from 2018.
The amount of cryptocurrency lost as of March 31 was already reaching half of the projection for 2021, indicating that progress isn’t slowing.
Crypto scams are more than ever
The top platforms utilized for crypto frauds, according to the FTC, were Instagram (32%), Facebook (26%), WhatsApp (9%), and Telegram (7%). Interestingly, despite being clogged with spam and scam bots pushing fraudulent coin giveaways, Twitter, the social media medium commonly used by the crypto-community, was not listed.
Investment Related Fraud was the most common type of crypto scam, accounting for $575 million of the total $1 billion in fraud reports to the FTC’s Consumer Sentinel Network.
According to the FTC, frequent investment scams involve a so-called “investment manager” contacting a client and promising to grow their money if the consumer purchases cryptocurrencies and deposits it into an online account.
Impersonating a celebrity who can multiply any cryptocurrency sent to them or promising free cash or cryptocurrency are two other tactics. Scams involving investment in false art, gems, and rare coins, phony investment seminars and advice, and other miscellaneous financial scams are also included in this category, according to the FTC.
Romance Scams, with $185 million in losses, were the next highest crypto-fraud-related losses, in which a love interest tries to persuade someone into investing in a crypto scam.
People in their 20s–49s were the most likely to lose crypto to a fraudster, with those in their 30s being the heaviest hit, accounting for 35% of total reported fraud losses.
The amount of cryptocurrency lost increases with age, with the median individual recorded cryptocurrency losses for those in their 70s reaching $11,708, compared to just $1,000 for those in their 18s and 19s.