The U.S. Federal Trade Commission revealed that about half of the fraudsters who managed to steal digital assets used social networks such as Instagram, Facebook, WhatsApp and Telegram.
Analysts at the U.S. Federal Trade Commission (FTC) released data on cryptocurrency fraud. The new report indicates that 49% of scam victims were attacked via social media from January 1, 2021 to March 31, 2022.
In comparison, according to the FTC’s past research, social media involvement in crypto fraud has increased significantly. So the same rate was at 37% in 2020, 18% in 2019, and 11% in 2018.
The FTC’s study found that scammers managed to steal more than $1 billion in cryptocurrency in 2021, and about 46,000 people reported their digital assets stolen. However, FTC analysts say that the reality is that this figure could be much higher. Last year’s study found that only 4.8% of people report loss of digital investments to government agencies due to online fraud.
The average crypto loss rate was $2,600 per person, and Bitcoin (BTC) was the most popular cryptocurrency sought after by 70% of scammers. They also prefer to receive payments in Tether (10%) and Ethereum (9%).
FTC analysts state that social networks and cryptocurrency are “a combustible combination for fraud.” So between January 1, 2021 and March 31, 2022, scammers stole $1.1 billion through social media, and 39% of the money stolen was in cryptocurrency. Nearly half of the victims claim the attack began with an ad, post or social media message. The leading platforms for crypto scams were Instagram (32%), Facebook (26%), WhatsApp (9%) and Telegram (7%).
The most common schemes for stealing cryptocurrencies through social media:
- Investment-related fraud. Scammers managed to steal $575 million by offering investors to invest assets in their cryptocurrency projects, promising quick and high returns. Some fraudulent projects even provided initial profitability and cashing out first profits to new investors to encourage them to invest more. Investment scammers were resourceful and created special investment tracking platforms for users, but the information on them did not match reality.
- Romance scams. This type of scam involves the victim’s love interest in the scammer, who manipulates feelings to push the victim to invest in fraudulent projects. Thanks to romance schemes, scammers managed to steal $185 million in cryptocurrency in 2021. The main manipulation techniques of this type were built around a certain charismatic personality, whose supposed wealth and status attracted wealthy investors. Social networks helped scammers create an imaginary image.
- Business imposters. These scammers target consumers by claiming that their money is at risk and the only way to protect their cash is to convert it into cryptocurrency. Crypto losses due to these types of scams reached $133 million in 2021. Often these types of messages began with text about a supposedly unauthorized purchase on Amazon or a pop-up that visually resembled a security warning from Microsoft. Fraudsters used fake bank employees and fake government agents to convince their victims to hand over their digital assets.
The FTC’s study also found that people between the ages of 20 and 49 are more willing to report cryptocurrency fraud to government agencies, while people over 50 are three times less likely to do so. The report also found that 35% of crypto thefts in 2021 occurred among people aged 30-35, but the amount of assets stolen was higher among the older generation. The average crypto loss rate for people over 70 in 2021 was more than $11,000.
FTC analysts recommend adhering to simple investment rules to keep digital assets safe. It’s worth keeping in mind that:
- only scammers can offer quick and high profits because the cryptocurrency market is too volatile to guarantee profits, especially in the short term;
- no government agency has the authority to legally require or recommend the purchase of cryptocurrencies;
- online dating and investing should not be confused;
- you should not believe everything posted on social media.
CoinsPaid Media offers you a detailed look into the most popular fraud schemes with crypto-assets and what you should take into account to avoid becoming a victim of fraud. Also, you can find information about financial risks and pyramid schemes principles in the Academy materials.
