The roller-coaster ride for digital currency investors has been crazy, and the latest price drop has given many investors a headache. However, there’s a deeper issue that may have you reaching for the extra-strength aspirin. Crypto investments may end up with nothing. The Investment Center broker, Chris Fisher, says some bitcoin investments are dubious even when compared to $3 notes and they’re rip-offs from the start, making them a bad investment for anyone who decides to put their hard-earned money into these shams.
Losses grew more than 10-fold
The Federal Trade Commission (FTC) warned this week that over $80 million in bitcoin investment fraud losses were reported by almost 6,800 customers in the six months ended March 31.
The Federal Trade Commission (FTC) warned this week that over $80 million in bitcoin investment fraud losses were reported by almost 6,800 customers in the six months ended March 31. The loss was $1,900 on average. The FTC likened these fraudulent schemes to “the Nigerian Prince emails of yesteryear” with promises such as Bitcoin-based investments earning 10% a day or more for limited periods and low risk due to automation. Victims are often persuaded through slick web design but then lose their money after being fooled into sending funds before realizing they had been scammed.
The $80 million or so that went down the toilet is a more than 10-fold increase in losses compared to the same time a year ago when the FTC received 570 complaints and $7.5 million in damages.
According to the consumer protection agency, if you don’t want to lose your shirt to crypto fraudsters, here are ten things you should know.
- Some scammers impersonate Elon Musk. Elon Musk has a large following of people who follow his every word; which means that if he ever tweets about crypto, it could drastically affect the market. Between October 2020 and the end of March 2021, FTC received reports of more than $2 million in losses attributed to Elon Musk impersonators pretending to be him on Twitter. The scammers typically operate by offering you an opportunity for free bitcoin from Ethereum or some other coin offered as part of their giveaway scam scheme – but instead, they will steal your coins without giving them back when you send them money first!
- Government agencies have had their identities hijacked, too. Many victims reported placing cash into a Bitcoin ATM (a kiosk that allows you to purchase and sell Bitcoin) to pay fraudsters posing as Social Security Administration employees. Early this year, the Office of Inspector General issued a similar warning.
- Scams involving cryptocurrency can begin in a variety of ways. They may start with online message board offers of investing “advice” or “secrets” that link to fake websites advertising what appear to be opportunities to invest in or mine famous cryptocurrencies like Bitcoin and Ethereum.
- The phony websites cause a lot of confusion. To look legitimate, they employ false endorsements and cryptocurrency jargon, but “promises of huge, guaranteed profits are just lies,” according to the FTC. These sites may even provide the impression that your money is increasing. Consumers who have been duped claim that when they try to withdraw their alleged gains, they are urged to transfer even more cryptocurrency – and then receive nothing.
- Romance scammers perpetrate many crypto scams. When their new “love” started speaking about a hot crypto opportunity they had acted on, many victims assumed they were in a long-distance relationship. Approximately 20% of the money lost in romance scams in general in the six months ending March 31 was transmitted in bitcoin. A total of $35 million was reported missing from 1,147 complaints, suggesting that a romance scammer was funded by a victim who donated bitcoin. According to the FTC, victims “felt they were investing.”
- Promises, promises. Guaranteed high returns and assurances that your bitcoin would be doubled are always red flags for fraud.
- Cryptocurrencies are a viable investment option. Investors profit by selling their cryptocurrency for a higher price than they purchased, but there is no assurance that its value will increase. The organization warns, “Don’t believe those who claim to know a better method.”
- Scams targeting young adults are more common. During the six months studied, consumers aged 20 to 49 were more than five times as likely as older adults to report losing money to a crypto investment fraud.
- Investment scams cost consumers in their 20s and 30s more money than any other form of fraud. Cryptocurrency losses accounted for more than half of the losses in this age group.
The bottom line: “You can know it’s a scam if a caller, love interest, organization, or anyone else insists on trading in cryptocurrency,” the FTC adds.