Crypto-related scams are growing as crypto moves towards becoming mainstream. With crypto transfers irreversible and regulations being at best vague, the vulnerability of scammers may be higher than ever.

In 2021, crypto-related frauds were reported to have cost nearly 60 times as much. More than 46,000 victims reported losses totalling $1 billion. According to the Federal Trade Commission (FTC), the U.S.

Social Media’s Role in Fraud

FTC claims that the main source of cryptocurrency-related scams is social media. Nearly half of the consumers that reported cryptocurrency-related fraud in 2021 claimed that it started with an ad, post, or message they had seen on social media.

FTC reports show that Instagram (32%) and Facebook (NASDAQ) (26%) are the most popular platforms for scams involving crypto. WhatsApp (9%) and Telegram (7%) also make up the majority of these top platforms. The most popular cryptocurrencies that were used to defraud were Ether (9%) and (10%).

The FTC identified that investors aged 20–49 were more than three times as likely as older age groups to lose cryptocurrency to scammers. The majority of fraud that was reported by individuals in their 30s related to cryptocurrency. As a result, the amount of crypto losses increases with age. 18-year-olds report an average loss of $1,000 while older people lose up to $11,708.

Here are some of the most popular scam schemes

The FTC received fraud reports and was able identify repeated scams related to cryptocurrency. Investment Related Fraud was the most prevalent type of cryptocurrency scam, accounting for $575 million out of $1 billion.

“The stories people share about these scams describe a perfect storm: false promises of easy money paired with people’s limited crypto understanding and experience. Scammers claiming to be investment scammers promise quick and easy returns on their investments. But those crypto “investments” go straight to a scammer’s wallet,” underlined the FTC.

This scheme convinces investors to invest via a fake website or app. These apps typically mislead clients by allowing them to “track” the growth of their crypto. Then, when a client tries to cash out their investment, they’re informed that they must first send more crypto to cover bogus fees, at which point they receive no returns.

Romance-related scams were another popular method used, which resulted in $185 million worth of cryptocurrency losses reported in 2021. In these scams, fraudsters use a fake identity to building a “relationship” with the victim, often romantically through a dating app, before convincing them to invest in crypto, either via a duplicated false version of a legitimate website, or by transferring funds directly into a scammer’s wallet address. A median victim reported crypto losses exceeding $10,000 due to these romance schemes.

“These keyboard Casanovas reportedly dazzle people with their supposed wealth and sophistication. Soon, the keyboard Casanovas offer help and tips for crypto investing. People who take them up on the offer report that what they got was a tutorial on sending crypto to a scammer,” wrote the FTC.

The losses came in large part from scams perpetrated by government officials and businesses. $133 Million worth of crypto has been stolen since 2021. Scammers present themselves as official bank representatives, claiming that the victim’s fiat money is at risk due to an investigation by law enforcement. They then offer to secure the user’s money by putting it into crypto, and are thus tricked into sending money to a scammer’s wallet address.

“These scammers tell people the only way to protect their money is to put it in crypto: people report that these “agents” direct them to take out cash and feed it into a crypto ATM. The “agent” then sends a QR code and says to hold it up to the ATM camera. But that QR code is embedded with the scammer’s wallet address. Once the machine scans it, their cash is gone,” the FTC explained.

FTC listed also scams that involve investment in fake art, rare coins and gems, as well as bogus advice and investment seminars.

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