The crypto market may be volatile, but it is still attractive to young people with “higher risk appetites”, said Chris Adam of SharpRank.
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More than 46,000 people say they have lost over $ 1 billion in crypto fraud since the start of 2021[ads1], according to a report released by the Federal Trade Commission on Friday.
The losses last year were almost 60 times what they were in 2018, with a median individual loss of $ 2600.
The FTC notes that the best cryptocurrencies people said they used to pay fraudsters were bitcoin (70%), tether (10%) and ether (9%).
A key feature of cryptocurrencies such as bitcoin is that payment transfers are final and cannot be reversed. This is not always a good thing. Reversals – a type of tool designed to protect consumers – allow consumers to reverse a transaction if they claim to have been fraudulently charged for a product or service they did not receive.
Almost half of the people who reported losing crypto due to a scam since 2021, said it started with some kind of message on a social media platform. The top platforms mentioned in these complaints were Instagram (32%), Facebook (26%), WhatsApp (9%) and Telegram (7%).
False investment opportunities were by far the most common type of fraud. In 2021, $ 575 million reported losses of crypto fraud to the FTC related to investment opportunities. People reported that investment sites and apps would let them track the growth of their krypton, but the apps were fake and when they tried to get their money out, they could not.
“There is no bank or other centralized authority to flag suspicious transactions and try to stop fraud before it happens,” the FTC warns in its report. “These considerations are not unique to cryptocurrencies, but they all play into the hands of fraudsters.”
Romance scams are the second most common source of cryptocurrency fraud, followed by corporate and government fraud, which the FTC said can often start with fake messages claiming to be from technology companies such as Amazon or Microsoft.
Younger consumers were more likely to be caught cheating. The FTC reports that people between the ages of 20 and 49 were more than three times as likely as older age groups to report losing crypto to a scammer.
To avoid being scammed, the FTC says, people should understand that investing in cryptocurrencies has never guaranteed a return, avoid business plans that require a cryptocurrency purchase, and watch out for romantic come-ons accompanied by a cryptocurrency call.
The news comes after some tumultuous weeks in the crypto markets. A failed US dollar-denominated stablecoin helped pull down the entire cryptocurrency class, erasing half a trillion dollars from the sector’s market value and weakening investor confidence in the process. Many institutional and private investors were wiped out, and for the most part there is no backlog from the FDIC, or any other consumer insurance coverage.
Billionaire bitcoins Cameron and Tyler Winklevoss recently announced layoffs at the Gemini cryptocurrency exchange, citing the fact that the industry is in a “contraction phase” known as “cryptocurrency winter”, which has been “further exacerbated by the current macroeconomic and geopolitical turmoil.”