Cryptocurrency Scams Bilk Victims Out Of $80 Million
Free Book Preview Money-Smart Solopreneur
Cryptocurrency scams involving people claiming to be Tesla CEO Elon Musk resulted in the theft of $2 million over six months, according to a report from the Federal Trade Commission. Between October and March, almost 7,000 investors lost $80 million in various cryptocurrency scams, including those in which scammers claimed to be Musk.
Cryptocurrency scams involving Elon Musk
The FTC said fraudsters impersonating Musk bilked investors out of $2 million in six months. Despite the large amount, that was still just a small amount of the total amount lost in cryptocurrency scams. Almost 7,000 investors lost $80 million total between October and March due to scams involving bitcoin and other cryptocurrencies like Dogecoin. Musk has been extremely bullish on cryptocurrency and tweeted about it constantly, especially Dogecoin.
According to the FTC, the number of cryptocurrency scam cases spiked by almost 1,000% compared to the same timeframe the previous year. The reported median loss on scams is $1,900, and the number of reports is up by about 12 times year over year.
Details on the fraud
The agency explained what many of the cryptocurrency scams look like. Fraudsters make claims that seem plausible because most people don't know much about cryptocurrency. Many of them appear to be friendly and share their "tips" online, but their comments are merely designed to convince people to invest in their scheme. Some of the scams are done through referral chains and involve people who bring in other people, who then bring in others.
The FTC said many people are being lured to websites that look like opportunities for mining or investing in cryptocurrencies, but they are fake. Such scams often suggest several investment tiers, and the more an "investor" puts in, the greater the supposed return.
Websites use fake testimonial and crypto jargon to appear credible, but their promises of massive, guaranteed returns are lies. They might even make it look like the victims' investment is growing, but then they're required to send more cryptocurrency when they try to withdraw the supposed profits. However, they don't get anything back.
Fraudsters also tout what the FTC calls "giveaway scams," which are supposedly sponsored by celebrities or other well-known people like Elon Musk. The scams involve a promise to multiply the cryptocurrency victims send. However, they report later that they had sent their cryptocurrency to a scammer's digital wallet.
Some scammers use online dating to draw victims into their schemes. Many people thought they were in a long-distance relationship when the other person started talking up a hot crypto opportunity. About 20% of the money people lost through romance scams since October was sent in cryptocurrency.