Scams are a big problem in the crypto industry. While their fraction has dropped drastically, the numbers have shot up. The Federal Trade Commission in the US reported that Investors had lost over $1 billion to crypto scams since 2021. There were more than 46,000 people involved in these scams, which shows how big of a problem it is.
Crypto scams since 2021
As more investors enter the market due to hype and expectations of huge profits, the easier it gets for scammers to get their way. These scams are so simple that if you learn about them, it will seem impossible how investors can get trapped in them. But it still happens because the crypto market still has significantly less awareness. The FTC in the US reported that since 2021 there have been more than $1 billion in frauds.
Even in this, there is a pattern we can see. In 2021, the losses were around $680 million, but in the first 3 months of 2022, the fraud has already amounted to $329 million. This shows that as the bear market kicks in, the rate of crypto frauds has almost doubled. There were more than 46000 investors involved in these scams, and the median loss for investors was $2,600.
FTC reports also show that scammers prefer Bitcoin over everything as 70% of these frauds involved BTC, Tether was around 10%, and Ethereum at 9%. This could either be because of Bitcoin’s prominence or the idea that almost all investors hold some Bitcoin.
How did these scams happen?
Most investors that lost money and reported on fraudulent activities said that it started with an ad, message on social media, or a post. Scammers used Instagram and Facebook the most, with 32% and 26% of scams originating on them. Whatsapp and Telegram were on the lower end with 9% and 7%, respectively.
Another new type of fraud that has recently gained prominence is the romance scam. They accounted for nearly $185 million of the total amount and stood at number two. FTC also reported $93 million in business imposter scams and $40 million in government imposter scams. The main target group of these scammers was 20-49, but people in their 30s were affected more.
What are your thoughts as FTC reports that investors lost over $1 billion to crypto scams? And do you think that regulation will be able to bring down these numbers? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.