We’ve all heard of the dangers of crypto scams, and there are numbers to justify caution. According to the FTC, 64,000 people in the United States alone lost $1 billion between 2021 and 2022. Currently, 25% of all fraud is cryptocurrency-related, and crypto scams are 60 times higher than they were in 2018, as reported by the Washington Post.
As staggering as these numbers are, they are most likely only a fraction of the real crypto crime numbers, since many victims don’t report these frauds and law enforcement agencies and police departments are struggling with the sheer number of complaints while trying to upgrade their cyber crime services.
Topping the list of types of crypto fraud are fake trading deals, often advertised on social media. These frauds are intended to appeal to desperate people who need extra money to cover rent, bills and day-to-day expenses. The fact that Americans are not able to save money and are working multiple low-wage jobs in the gig economy creates a perfect target for these quick trading scams. In the end, these deals are nothing more than a way for criminals to line their bitcoin wallets.
Social media is crypto scam central. It’s easy to set up a fake identity on Facebook and Instragram and reach an instant audience. The scams will create an attractive quick crypto trade with promises of huge returns. Not only do the returns never materialize, but victims lose their principal.
If victims manage to track down the scammers, the people behind the scheme will blame the volatility of cryptocurrency and say the money was simply lost in a high-risk trade, when victims’ funds aren’t lost at all but are sitting in their anonymous bitcoin wallets.
Some crypto scams intend to attract would-be investors for the longer term and pretend to be legitimate brokers. They may have a website that offers trading services along with promises of specific rates of return. They may have no licensing information or could be faking a license, passing themselves off as a regulated broker.
Many of these longer-term crypto trading operations are Ponzi schemes, which fund the few withdrawals they give with deposits from new clients. Victims are lured into a false sense of security with the one or two small withdrawals they receive until the Ponzi scheme closes shop suddenly with the rest of their funds.
Romance scams are big business for crypto scammers, since many people are looking for love online. According to a Stanford University study, 39% of people met their romantic partners online. Of course, crypto schemes capitalize on this by chatting up would-be romantic partners only to ask them for a loan in crypto currency or entice them with a fake crypto trading deal.
Despite frequent PSAs online to avoid giving money to strangers on social media, the FTC reports that $185 million was lost in 2021 to romance scams. These aren’t just individuals, but can be huge operations with many people working for the scam, reaching out to strangers on social media. A single romance scam operation took $66 million from thousands of victims.
If you’ve lost money to a crypto scam you are in good company–people from all walks of life are being robbed. It’s important to take action and try to find your lost funds. How? Kointrail forensic services investigate bitcoin transactions and to identify the crypto wallet where your funds are hidden.
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