As the use of cryptocurrency is becoming mainstream globally especially in this Covid-19 pandemic era, scammers have found it as the easiest way of making free money. Scammers have managed to steal more than $80 million from cryptocurrency investors in just 6 months.
The fact was reported by the Federal Trade Commission (FTC), an agency responsible for the implementation of civil US antitrust law and the promotion of consumer protection. The crypto asset scams hit their new record in Q1 of 2021.
Between October 2020 to March 2021, there was a massive increase in cryptocurrency-related fraud and scam activities from all parts of the globe. From the fourth quarter (Q4) of 2020 to Q1 of 2021, more than 7,000 customers reported scam cases to the FTC. This figure is too high compared to the one that was reported to the same agency between Q4 of 2019 and Q1 of 2020.
During that period, the agency received 570 reports related to cryptocurrency scams that totaled about $7.5 mln in losses. This means that the reported cases have multiplied by over 12 times and the losses have increased to nearly 1000%.
Crypto asset scams are increasingly seizing the media attention this year and as per a report by CipherTrace, cryptocurrency criminals managed to launder about $432 mln by the end of April 2021 and around 56% of the laundered money was linked to decentralized finance (DeFi).
When in the entire of 2020 registered only $1.9 bln loss related to crypto scams (scams caused by viruses and malware, DeFi put off the stroke, fake ICOs, non-fungible tokens scams, pumps and dumps of altcoin, etc.) down from the record of $4.5 bln registered in the entire of 2019, the community had thought that the scams had reduced but surprisingly, this seems not to be reducing or ending soon.
The regulators also revealed that Tesla CEO Elon Musk impersonators alone managed to run away with over $2 million in cryptocurrency scams from investors, especially from giveaway scams. Musk is popularly known as one of the biggest supporters of cryptocurrencies such as Bitcoin (BTC) and Dogecoin (DOGE), so that is why impersonators are using his identity to scam investors.
These scammers tend to pose as Musk and promise to double or triple or even multiply the cryptocurrency sent by the investors further. These scammers tend to be active when the prices of cryptocurrencies are enjoying the bull run. For instance, the month of March is when BTC/USD was averagely trading about $55k, and the entire crypto market cap was over 2.53 trillion.
So, whenever there is a bull run in the market, customers are always fearing to miss out (FOMO) hence becoming more vulnerable to giveaway scams.