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Over $1 Billion Lost to Cryptocurrency Scams in Last 15 Months

FTC says median loss for crypto victims 60 and older was more than $8,000

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U.S. consumers reported losing more than $1 billion to fraud involving cryptocurrencies from the start of 2021 through March 31, 2022, according to new data from the Federal Trade Commission (FTC).

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The cumulative losses from more than 46,000 complaints filed with the watchdog agency account for nearly $1 of every $4 lost to fraud over those 15 months, putting crypto atop the list of scam artists’ favorite ways to get paid.

The skyrocketing costs of crypto fraud, with annual losses increasing more than 20 times over in the last three years, suggest criminals are cashing in on virtual money’s growing mainstream prominence, the FTC says, with Bitcoin ATMs cropping up at supermarkets and commercials for crypto trading platforms taking center stage in Super Bowl advertising.

Reported Losses to Cryptocurrency Fraud

Cryptocurrency fraud losses 2018-Q1 of 2022. From $12M up to $680M in 2021, and $329M in the first quarter of 2022

Consumer losses from crypto-linked investment fraud, romance scams and other cons jumped from $33 million in 2019 to $680 million last year, with another $329 million tallied in the first quarter of 2022, the FTC reports. The median loss in crypto scams is $2,600, compared to $1,000 across all fraud types.

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While people ages 20 to 49 were three times as likely as older adults to report losing crypto to a con artist, the amounts lost rise steeply with age, according to the FTC — from a median of $1,600 for someone in their 20s to more than $8,000 for victims age 60 and older.

Social media and crypto are a particularly “combustible combination,” the agency says, with nearly half of people who lost money in a crypto con reporting that it started with an ad, post or message on a social network, most commonly Instagram or Facebook.

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Investment fraud dominates

Cryptocurrencies such as Bitcoin, Ether, Tether and many more are mediums of exchange that exist as digital code. Crypto can be used to purchase goods and services, but it has gained the most attention as an investment vehicle, publicly traded on online exchanges.

Unlike traditional money, cryptocurrencies are not backed or regulated by governments, and they are subject to rapid swings in value.

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The lion’s share of recent losses — $575 million since January 2021 — derive from scams promising huge returns on crypto investments.

“The stories people share about these scams describe a perfect storm: false promises of easy money paired with people’s limited crypto understanding and experience,” the FTC says. “Those crypto ‘investments’ go straight to a scammer’s wallet. People report that investment websites and apps let them track the growth of their crypto, but it’s all fake.”

Crypto has also become entwined with romance and impostor scams, according to the FTC. Criminals cultivating romantic relationships online induce their targets to begin dabbling in digital currencies. Victims reported losing $185 million in cryptocurrency over the 15 months tracked by the FTC, amounting to a third of all losses in romance scams.

Another $133 million was lost to crooks demanding crypto payments in the guise of well-known companies or government agencies. For example, you might receive a text about an unauthorized Amazon purchase or Microsoft security issue putting your financial accounts at risk. In another twist, scammers posing as border patrol agents claim your accounts have been linked to a drug trafficking probe. They’ll offer to help you “protect” your cash by following their instructions to convert it to crypto, which goes into their digital wallets.

Red flags for crypto fraud

The FTC alert spotlights three key signs of a cryptocurrency con:

  • “Guaranteed” returns. Be skeptical of people who promise big windfalls. There’s no such thing as a surefire crypto investment.
  • Demands for crypto payments. Legitimate businesses and government bodies will not require you to fork over crypto to sort out a problem. Anyone who does is a scammer.
  • Mixing love and crypto. Be wary if a new romantic interest starts pushing you to invest in crypto or asks you for money in that form.

Andy Markowitz is a contributing writer and editor for AARP, covering Social Security and fraud. He is a former editor of The Prague Post and Baltimore City Paper.

 

AARP’s Fraud Watch Network can help you spot and avoid scams. Sign up for free Watchdog Alerts, review our scam-tracking map, or call our toll-free fraud helpline at 877-908-3360 if you or a loved one suspect you’ve been a victim.

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