June 6, 2022
By Murtuza Merchant
Social media and cryptocurrencies are a combustible combination for fraud, with nearly half the people who reported losing crypto to a scam since 2021 saying it started with an advertisement, post, or message on a social media platform, according to a report by the US Federal Trade Commission (FTC).
The FTC in its report states that since the start of 2021, more than 46,000 people have reported losing over $1 billion in crypto to scams – that’s about one out of every four dollars reported lost.
The reported losses in 2021 were nearly sixty times what they were in 2018.
The top cryptocurrencies people said they used to pay scammers were Bitcoin (70%), Tether (10%), and Ether (9%).
According to the FTC, since the start of 2021, nearly four out of every ten dollars reported lost to a fraud originating on social media was lost in crypto, far more than any other payment method.
The top platforms identified in these reports were Instagram (32%), Facebook (26%), WhatsApp (9%), and Telegram (7%).
Of the reported crypto fraud losses that began on social media, most are investment scams. Since 2021, $575 million of all crypto fraud losses reported to the FTC were about bogus investment opportunities, far more than any other fraud type.
Romance scams are a distant second to investment scams, with $185m in reported cryptocurrency losses since 2021 – that’s nearly one in every three dollars reported lost to a romance scam during this period.
Business and Government Impersonation Scams came in third at a total of $133m, in which scammers target consumers, claiming that their money is at risk due to fraud or a government investigation.
According to the FTC, in some cases, scammers impersonate border patrol agents who have told people their accounts will be frozen as part of a drug trafficking investigation. 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.
About the author
Murtuza Merchant is a senior journalist and an avid follower of blockchain and cryptocurrencies.