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US Federal Trade Commission Labels Social Media And Crypto Combustible Combination For Fraud

Reports said that the United States Federal Trade Commission has labeled social media and crypto a “combustible combination for fraud,” with nearly half of all crypto-related scams originating from social media platforms in 2021.

It has been reported that as much as $1 billion in crypto has been lost to scammers throughout the year, which was more than a five-fold increase from 2020, and nearly sixty times up from 2018. As of March 31, the amount of crypto lost was already approaching half of the 2021 figure, showing that momentum doesn’t appear to be slowing.

However, the FTC found that Instagram (32%), Facebook (26%), WhatsApp (9%), and Telegram (7%) were the top platforms used for crypto scams. Twitter, the social media platform widely adopted by the crypto-community, was not mentioned despite being littered with spam and scam bots touting fake crypto giveaways.

The report said that based on fraud reports to FTC’s Consumer Sentinel Network, the most common type of crypto scam was Investment Related Fraud, making up $575 million of the total $1-billion figure.

It stated:

“These scams often falsely promise potential investors that they can earn huge returns by investing in their cryptocurrency schemes, but people report losing all the money they ‘invest.’”

Likewise, according to the FTC, common investment scams include cases in which a so-called “investment manager” contacts a consumer, promising to grow their money, but only if the consumer buys cryptocurrency and transfers it into their online account. Other methods include impersonating a celebrity who can multiply any cryptocurrency that a consumer sends them or promises free cash or cryptocurrency.

The FTC also lists scams that involve investment in fake art, gems and rare coins, bogus investment seminars and advice, and other miscellaneous investment scams as part of this group. The next largest crypto-scam-related losses came from Romance Scams at $185 million, in which a love interest tries to entice someone into investing in a crypto scam.

Thus, it concluded:

“These scams can start with a text about a supposedly unauthorized Amazon purchase, or an alarming online pop-up made to look like a security alert from Microsoft. From there, people are reportedly told the fraud is extensive and their money is at risk.”

Source: Cointelegraph



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