The crypto crash isn’t the only way the decentralized currency can lose its holders a lot of real money.
The FTC says 46,000 people reported losing more than $1 billion worth of crypto in scams between January 2021 and March 2022, noting that this number is only the people who reported their losses to the FTC.
Even though that $1 billion figure might not be reflective of the true amount of money lost, it does indicate just how much crypto scams have increased: Reported losses were nearly 60 times higher in 2021 than they were in 2018.
Crypto already has a not-great reputation as a playground for illegal purchases, hacker ransoms, and money laundering.
More than half of that $1 billion came from investment-related scams: people promising they can invest victims’ money into crypto for big returns.
The second-highest losses came from romance scams, which seem to be related to investment scams. Typically, someone gains the victim’s trust through a relationship, then gets them to give their money to an investment scam or to the “keyboard Casanova,” as the FTC colorfully refers to them.
Increasingly, they’re told to make those payments in crypto, thanks to the widespread availability of crypto ATMs that make it quick and easy for victims to make those payments and difficult for investigators to trace them.
Younger people were three times more likely to be scammed this way than other age groups, but the average amount of money lost to scams increased with age.
Another reflection of the times and the medium: Almost half of people who reported being scammed said it originated on social media — mostly Instagram and Facebook.
While many crypto enthusiasts point to the benefits of currency that isn’t controlled by banks and governments, that lack of control makes it easy for bad actors to take advantage.
The FTC recommends staying away from investments that promise big returns, anything that requires payment in crypto, and not to mix online dating with investment advice.