US Federal Trade Commission Warns of Cryptocurrency Scams via Social Media – Regulation

The US Federal Trade Commission (FTC) has warned that social media is being used in cryptocurrency investment scams. “Social media is a tool for fraudsters in investment scams, particularly those involving fake cryptocurrency investments – an area that has seen a massive increase in reports,” the FTC said.

Federal Trade Commission warns about crypto scams via social media

The US Federal Trade Commission (FTC) released a “Consumer Protection Data Spotlight” last week warning the public about scams, including crypto investment scams, that use social media.

The FTC is an independent agency of the U.S. government whose primary mission is to enforce U.S. civil antitrust laws and promote consumer protection.

“More than 95,000 people reported approximately $770 million in losses from scams initiated on social media platforms in 2021,” wrote Emma Fletcher, FTC program analyst. “These losses represent approximately 25% of all reported fraud losses in 2021 and represent a staggering 18-fold increase over reported losses in 2017.” She added:

Reports make it clear that social media is a tool for fraudsters in investment scams, particularly those involving fake cryptocurrency investments - an area that has seen a massive increase in reports.

“More than half of people who reported losses from investment fraud in 2021 said the scam started on social media,” the FTC analyst continued. "Reports to the FTC show that scammers are using social media platforms to promote fake investment opportunities and even connect directly with people as supposed friends to encourage them to invest. People send money, often cryptocurrency, with the promise of huge returns, but they end up coming away empty-handed."

The FTC then offered some advice on how to stay safe on social media. One is to limit who can see your social media posts and information. The agency said you can also opt out of targeted advertising. Another piece of advice is to check the company you want to buy from by searching online to see if their name has been associated with a scam or complaint.

Additionally, "If you receive a message from a friend about an opportunity or urgent need for money, call them. Your account may have been hacked — especially if you are asked to pay by cryptocurrency, gift card, or wire transfer. This is how scammers ask you to pay," the FTC wrote.

Earlier this month, the FTC warned about cryptocurrency scams including ATMs.

According to blockchain analytics firm Chainalysis, fraudsters collected a record $14 billion in cryptocurrency in 2021, largely due to the rise of decentralized finance (Defi) platforms. Losses from crypto-related crime rose 79% year over year, driven by an increase in theft and fraud, the firm said.

What do you think about cryptocurrency investment scams on social media? Let us know in the comments section below.

Kevin Helms

As a student of Austrian economics, Kevin discovered Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open source systems, network effects, and the interface between economics and cryptography.

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