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Cryptocurrency scams on course for record numbers in 2022

In a year that has been anything but stable for crypto, more than $1bn has been scammed from digital traders. This puts 2022 on course for a worrying record, according to the FTC.

Enthusiasts are finding it harder by the day to defend the integrity of decentralised financial platforms.

The blockchain dream seemed a little too good to be true in its infancy, and its lack of stability is now grabbing headlines for all the wrong reasons.

Amid the ongoing crypto crash, which recorded devastating losses of $600bn in just one week, a report from the Federal Trade Commission has just revealed that crypto coins have become more entangled in scammer practices than ever.

The FTC says approximately 46,000 victims of digital grifting contacted them with combined losses of over $1bn between January 2021 and March 2022. That means in the first quarter of this year alone, numbers have superseded roughly half that for the entirety of 2021.

The report notes that the reality of the situation is likely worse too, as a large number of targets don’t reach out to the FTC at all.

Credit: FTC report

More than half of the cases that were reported relate to investment scams: where grifters promise aspiring stakeholders that their shares will return big profit – only to close shop abruptly and make off with all the assets.

Second most common, ‘romance scams,’ involve someone gaining a victim’s trust and then acting as an intermediary to invest their coins. Obviously, this never happens and the second money changes hands, they’re gone with the wind.

These are nefarious tactics we’ve seen plenty of way before digital trading was even around, but the recreational and spontaneous nature of crypto makes it way easier to carry out.

Six months ago, you couldn’t move for crypto trading advertisements, constant YouTube and Facebook tipsters, and incessant Tweets from high-profile fanatics like Elon Musk.

Cryptocurrency is constantly being legitimised as a key financial player, and as long as it remains seriously unregulated, there will always be huge risk factors tied to it. The pros of going decentralised are constantly touted about, but the drawbacks perhaps aren’t given the appropriate level of consideration.

It probably won’t come as a surprise, that younger folk (aged between 20 and 49) were three times more likely to be scammed than other age groups. The promise of quickly turning a buck, paired with constantly having crypto shoved down our throats on social media has all but ensured that.

In-fact, almost half the victims from this demographic stated that their scammer originally targeted them through the guise of social media – Instagram and Facebook being the most mentioned platforms, among others.

The older victims in this data pool were found to lose far larger sums of money at once, which also makes sense.

While the majority of young people dabble in the practice to test the waters, more mature opportunists may be allured by the prospect of cutting banks and governments out of the loop altogether with long-term savings and larger investments.

Now, it has to be stated that we’re in no way victim blaming here. It’s incredibly discouraging to know that people of all ages are being shafted out of their hard-earned money. With discussions around the downsides of crypto finally getting louder, however, we can hope to see a tail off in the numbers by the end of year reports.

Scammers aside, legitimate investments are losing massive amounts of dough right now. Crypto isn’t all bad by any means, but keep your wits about you and exercise caution with your own financial endeavours, please.

 

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