Cryptocurrencies are a new part of our financial world but are rapidly gaining popularity. One of the best known is Bitcoin, which has rapidly risen in value over the past decade.
Investors and criminals, however, are trying to take advantage of this new technology.
“Crypto is both new and crypto is all the rage,” said Christopher Leach, an attorney with the Federal Trade Commission who focuses on consumer protection. “A lot of people are making a lot of money and people sitting at home might think they want to participate as well.”
Bitcoin and other cryptocurrencies are all the rage, but what exactly are they and how do they work?
Cryptocurrencies are digital payment methods that only exist online. The FTC says Bitcoin and Ethereum are two of the best known, but new ones are constantly being created.
In a new report, the FTC said that between October 2020 and the end of March 2021, it received more than 7,000 cryptocurrency-related scam complaints totaling more than $ 80 million. This is more than 10 times the number of crypto scams reported for the same period in the previous year. Unfortunately, these scams often end in the disappearance of the money.
“It’s not like someone is fraudulently accessing your credit card and asking the company to waive the charges,” Leach said. “With cryptocurrency, a lot of you can’t do that.”
Leach said investment scams are nothing new, but criminals are now feeding off people’s excitement for cryptocurrency.
“They’ll say, ‘Give us your cryptocurrency and we’ll grow it 2 times, 3 times, 10 times,” “Leach said. “They almost present themselves as a broker or a broker or an investment advisor.”
People who have been investing in cryptocurrencies for years know the dangers that come with the territory.
“I’m pretty cautious about where I’m going to get it,” said Jarom Olson, who has been investing in cryptocurrencies for five years. “When there is a lot of hype around it, there are people who will benefit from the hype without adding any real value.”
Olson and Leach said people who might fall for the scams don’t know much about cryptocurrency.
“They know people make a lot of money but they don’t quite understand how,” Leach said. “For people in their 20s and 30s, cryptocurrency scams are the biggest form of investment scams.”
Olson said if you really want to get started, do your research.
“Don’t play with the newbies you don’t understand until you get a good base in the big guys first,” Olsen said. “A lot of people buy cryptocurrency like a bet, like a lottery ticket, and they have no idea what’s really behind it, who made it or why it exists.”
The FTC said people over 50 lose more money to these cryptocurrency scams than 20 and 30 year olds.
“If someone promises guaranteed returns, sky-high returns, get rich quick, those are red flags of a scam,” Leach said. “It’s the same old playbook but with a new kind of financial instrument.”
Since cryptocurrencies are digital, they can be closely linked to online trends on social media, which is another way criminals try to steal cryptocurrency from people. The FTC said people lost more than $ 2 million to Elon Musk impersonators online.
“They say, ‘Give us the cryptocurrency and you could have a chance to earn a lot more cryptocurrency,” Leach said.
The FTC encourages anyone who thinks they’ve been the victim of a cryptocurrency-related scam to report it. You can learn how to do this here.