Cryptocurrency has been a household name, pioneered by Bitcoin and Ethereum in a dynamically growing market. This phenomenal growth, however, has attracted a dark horse: cryptocurrency scams. Losses from these scams surged a whopping 45% in 2023, reaching over $5.6 billion per the FBI.
This article will delve into the rise in crypto scams, the tactics that scammers are using, and how one can protect themselves from becoming victims of such acts.
The cryptocurrency market rebounded in 2023, following its dismal performance in 2022. Due to this reinvigorated interest and the underlying nature of cryptocurrency itself, it suddenly became very fertile ground for scammers to take advantage of. Naturally, cryptocurrencies are designed to be faster and more global in transferring value. It's this very natural lack of intermediaries that makes them appealing to thieves, fraudsters, and those who would use them for money laundering activities.
Investment Scams: The Most Prevalent Menace The FBI report identifies investment scams as the most prevalent type of crypto scam, garnering an unprecedented 71% share of total losses. Usually, such fraudsters lure people into investments offering high returns and low risk. They tend to strike into the "fear of missing out" mentality across the market, especially when the victim does not exactly understand all the nuances of cryptocurrency and its associated risks. Losses due to investment scams leaped from $2.57 billion in 2022 to a staggering $3.96 billion in 2023.
While investment scams lead the way, crypto fraudsters utilize all kinds of techniques. Call center scams operate masquerading as government agencies scam artists issue threats, compelling targets to transfer cryptocurrency into their accounts. Unsuspecting users are tricked into giving out sensitive information or transferring funds through phishing emails or fake websites that mimic legitimate cryptocurrency exchanges.
The takeaway of the FBI report comes, however, with a surprising statistic: folks over 60 years old filed most complaints related to cryptocurrency scams with losses amounting to over an incredible $1.6 billion. And while the majority of complaints indeed involved folks within the 30-39 and 40-49 age brackets, older adults seemed to bear the financial impact disproportionately.
The FBI offers some very helpful tips in the realm of crypto scams for your protection:
Watch out for Urgency and Isolation: Scammers often create a sense of urgency and isolate victims to push them into making quick decisions.
Verify Calls and Emails: Don't trust unsolicited calls claiming to be from legitimate companies or government agencies. Verify the contact information independently.
No Crypto Payments for Officials: For certain, law enforcement will never demand payment through cryptocurrency.
Research Investment Opportunities: Do not invest in anything based upon the advice of individuals with whom you are unfamiliar, especially those you have never met.
Beware of Bogus Websites: Be cautious about a domain name that sounds like a large financial institution.
Suspicious Apps: Do not download or use an investment app unless you verify it as legitimate.
Seek Professional Advice: Invest according to your financial goals and resources. Consult a licensed financial advisor if in doubt.
If It Sounds Too Good, Probably it is a "Get-rich-quick" scam like any investment class, does come with some level of risk.
As more people begin to use various forms of cryptocurrency, it's also likely that scams involving them will increase. The regulatory agencies and law enforcement do their best to keep pace and prosecute the miscreants. The Virtual Assets Unit of the FBI is a highly specialized team tasked with investigating crimes involving cryptocurrencies.
With just these few tips and increased vigilance on your part, you shall be far better prepared for this exciting world of cryptocurrency, hence reducing the possibility of falling into the hands of any scam. Knowledge is power. Educate yourself about cryptocurrency and an ever-evolving landscape of scams to protect yourself and your hard-earned money.