US FTC blames social media for crypto scams
Reports from the US Federal Trade Commission say that half of the crypto-related scams have their origin in a social media ad, post, or message
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US Federal Trade Commission’s (FTC) latest report on Consumer Protection Data Spotlight states that nearly half of the crypto-related scams reported in 2021 started with an ad, post, or message on social media. The report called crypto and social media “a combustible combination for fraud”.
The report was published on June 3, and the latest findings show that scammers stole more than $1 billion worth of crypto assets between January 2021 and March 2022. More than 46,000 people reported these scams. The Data Spotlight report further revealed that the reported losses in crypto scams were 60x more than those in 2018, with one out of every four dollars invested in crypto being lost to fraud in 2021.
Crypto investors have been vulnerable to scams lately due to the lack of knowledge about how crypto works and the irreversible nature of peer-to-peer transactions. Social media has become a handy tool for scammers who can lure people into fraud schemes which promise high gains or returns within a short period. Of the people who reported the scams, 32 percent specified that the scam occurred on Instagram, 26 percent specified Facebook, 9 percent said WhatsApp, and 7 percent received communication via Telegram.
The report stated that from January 2021 to March 2022, $575 million were lost to bogus crypto investment schemes. Scammers promise big returns and claim to track the growth of the trader’s crypto investment, but the promise of impressive-sounding returns turns out to be fake. Other kinds of prevalent crypto scams are romance scams and imposter scams.
The age group worst affected by these scams is the 20-49 age group, which is three times more likely to fall prey to such scams than the older age group, as per the report. 30+ year-olds have been the hardest hit, reporting 35 percent of their losses in crypto since 2021. The highest reported individual losses belong to people in their 70s, with the worst instance of an individual crypto scam loss reported as high as $11,708.
The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash
