Cryptocurrency investment scams are on the rise, with people reporting they have lost over $80 million due to fraudulent claims surrounding fake Elon Musk claims and celebrity impersonators, the Federal Trade Commission (FTC) reported on Monday (May 17).
“Promises of guaranteed huge returns or claims that your cryptocurrency will be multiplied are always scams,” the commission said in its Monday report.
Since October 2020, almost 7,000 people have reported some type of fraud in connection with cryptocurrency. The median loss was reported to be $1,900, which is roughly 12 times more than reports from the same period last year and almost 1,000 percent more in total losses.
Cryptocurrency investment scams are varied but often take on the appearance of offering people insider tips and secrets that take people to fake investment sites.
Another common scam offers a deposit bonus from celebrities. Investors have reported losing $2 million to Elon Musk impersonators alone since October, the FTC said in the release. Fraudsters used fake giveaways by Tesla’s Musk to take advantage of the escalation of interest in crypto investing.
People aged 20 to 49 were more than five times more likely to get scammed than older investors. Investors in their 20s and 30s lost more than half of their crypto investments due to scams.
“Some say there’s a Wild West vibe to the crypto culture, and an element of mystery too. Cryptocurrency enthusiasts congregate online to chat about their shared passion. And with bitcoin’s value soaring in recent months, new investors may be eager to get in on the action,” the FTC said.
Crypto is largely unknown territory for investors, making them vulnerable to friendly faces offering tips that could be part of a ruse to gather investors. Some scams are even based on referral chains that are supported through the recruitment of new members, per the release.
JPMorgan’s Jamie Dimon told the Investment Company Institute (ICI) that he thinks cryptocurrency needs a managerial framework. He said in a speech to the group that regulators rushed to accept crypto without fully understanding it and failed to enact a framework.