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What is a Crypto Scam?

Almost 6,800 consumers reported more than $80 million in cryptocurrency-investment scam losses during the six months ending March 31, the Federal Trade Commission (FTC) warned. The median loss was $1,900. That is 10 times more than a year earlier when there were 570 complaints and $7.5 million in losses reported to the FTC.

Here are some things you should know about cryptocurrency scams. .

Some scammers impersonate Elon Musk or other celebrities. The FTC received reports of more than $2 million in such losses due to impersonators between October 2020 and the end of March 2021. A common scam “involves a promise that a celebrity associated with cryptocurrency will multiply any cryptocurrency you send to their wallet and send it back,” the FTC cautions.

Government agencies have had their identities hijacked, too. Many victims reported loading cash into a Bitcoin ATM (a kiosk lets you buy and sell Bitcoin) to pay crooks claiming to be from the Social Security Administration. Its Office of Inspector General issued a related warning early this year.

Crypto scams start in a variety of ways. They may begin with offers of investment “tips” or “secrets” in online message boards that lead people to bogus websites touting what appear to be chances to invest in or to mine popular cryptocurrencies such as Bitcoin and Ethereum.

Romance scammers are using crypto. Victims may think they are in a relationship when their new “love” started chatting about a hot crypto opportunity he or she had acted on. About 20 percent of the money people reported losing in romance scams in general during the six months ending March 31 was sent in cryptocurrency. Some $35 million was reported lost from 1,147 such reports, indicating a romance scammer was bankrolled by a victim who sent cryptocurrency. Victims “thought they were investing,” the FTC says.

Guarantees of huge returns and claims that your cryptocurrency will be multiplied always signal a scam.

Cryptocurrencies can be legitimate investments. Investors make money by selling their cryptocurrency for more than they paid, but there’s no guarantee its value will go up. “Don’t trust people who say they know a better way,” the agency says. Younger adults are more vulnerable to these scams. Consumers ages 20 to 49 were more than five times as likely than older people to report losing money to a crypto investment scam during the six months examined.

Always remember, if anyone insists on buying, selling or giving you cryptocurrency, you can bet it’s a scam.

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