Cryptocurrency trading continues to become increasingly popular year after year. As the cryptocurrency market grows, so do the opportunities for bad actors within the industry to carry out scams and fraud.
The Rising Threat of Cryptocurrency Scams
For years, experts claimed that cryptocurrency would be more secure than traditional finance, but that hasn’t actually proven to be true. In fact, the very reason that cryptocurrency scams take place, is the same reason traditional internet scams take place. That reason happens to be human error.
Between 2018 and 2021, the number of reported scams has multiplied 60 times over; with 46,000 cryptocurrency holders losing a total of $1 billion. This data comes directly from USA’s Federal Trade Commission (FTC)
What The Data Tells Us
According to the FTC, social media has become a breeding ground for cryptocurrency scams. The FTC claims that almost 50% of all cryptocurrency scams last year originated from social media. Instagram seems to be worst offender in this regard; with 32% of social media cryptocurrency scams coming from the platform. Facebook cryptocurrency scams follow close behind, with 26%, and Whatsapp makes up just 9%.
In terms of the most common cryptocurrencies stolen, Bitcoin was the primary target with 70%. Tether and Ether made up 10% and 9% respectively.
Common Types of Cryptocurrency Scams
According to the FTC, the most common of all social media cryptocurrency scams in 2021 was investment fraud, with $575 million dollars being stolen from victims of such scams. Perhaps the most nefarious were romance scams. In this case, a scammer would build a romantic relationship with someone on social media, luring them into a false sense of security. They would then make up some fake sob story to convince the victim to send them cryptocurrency. The victim would never see the scammer or their money again.
Before You Invest
Cryptocurrency investing can be a very lucrative endeavor, but it’s important to educate yourself of all the potential dangers involved. Make sure you understand exactly what you’re getting into, and that you have the tools necessary to keep your money and your privacy secure.