About half of consumers who reported a cryptocurrency-related scam in 2021 said it started with a social media ad, post, or message.
According to the US Federal Trade Commission, social media and cryptocurrency are a “combustible mix for fraud,” with social media platforms responsible for more than half of all crypto-related scams in 2021. According to the study, scammers stole up to $1 billion in cryptocurrencies this year; a more than five-fold increase from 2020 and a more than sixty-fold increase from 2018. As of March 31, the quantity of bitcoin lost has already reached half of the projected amount for 2021; demonstrating that growth isn’t slowing down. According to the FTC, the most popular platforms for crypto fraud were Instagram (32%), Facebook (26%), WhatsApp (9%), and Telegram (2%).
Investment, Fraud, and Social Media
Interestingly, Twitter, the popular social networking platform for the crypto community, was not a part of it even though it is full of spam and scam bots promoting bogus currency giveaways. The most common type of crypto scam is investment fraud; it accounted for $575 million of the total $1 billion in fraud reports to the FTC’s Consumer Sentinel Network. “These con artists regularly mislead potential investors into believing that investing in their cryptocurrency schemes would result in massive returns, yet many have reported losing all of the money they’ve ‘invested.'”
According to the FTC, a so-called “investment manager” contacts a client and promises to grow their money if the consumer acquires cryptocurrency and puts it into an online account. Another strategy is to impersonate a celebrity who can multiply any bitcoin handed to them or to promise free cash or cryptocurrencies. According to the FTC, this category includes investment scams, including counterfeit art, jewels, rare coins, bogus investing seminars and advice, and other miscellaneous financial frauds.
Romance Scams were the second-highest crypto-fraud-related losses, with $185 million in losses; in which a love interest tries to entice someone into investing in a crypto hoax. With a total of $133 million, impersonation in the workplace and government scams came in third, with fraudsters claiming that their money is in peril due to fraud or a government investigation.