May 18, 2021 - Economy & Business

Crypto hype gives scam artists a new gold rush

Reproduced from FTC; Chart: Axios Visuals
Reproduced from FTC; Chart: Axios Visuals

The cryptocurrency hype is real. New numbers show how scammers are benefiting.

Driving the news: Reported losses tied to crypto scams spiked 1,000% in the past year, the Federal Trade Commission said Monday. That includes over $2 million that people have sent to Elon Musk impersonators. (Yes, really.)

Why it matters: Crypto trading has exploded alongside an unprecedented spike in retail investing. Online communities drive the activity, but they're also where investors are lured into scams.

By the numbers: Since October 2020, about 7,000 people have reported total losses of more than $80 million on crypto-related scams.

  • The median loss was $1,900.

Among the lines of attack are "Giveaways" that claim to be sponsored by celebs — like the Elon Musk ruse — that promise to multiply the crypto that a victim sends.

  • Online chat groups — and online dating— are where scammers appear friendly and share "tips" or ask people to invest in schemes.
  • Scammers also pose as exchanges like Coinbase, or as government officials from agencies like the Social Security Administration.

What's next: Government agencies are trying to understand the full scope of illicit activity in the largely unregulated cryptocurrency markets.

  • Binance, the world's largest crypto exchange, is being probed by the Justice Department and Internal Revenue Service, Bloomberg reported.

The bottom line: Scammers are cashing in on the "cryptocurrency FOMO" that's gripped swaths of the country.

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