The FTC reported that the data is based on fraud reports made directly to the agency, which means that most crypto scams on Americans are likely underreported, given that many victims do not report their experiences to authorities.
The government agency reported that the median loss from an individual scam was $2,600.
“There’s no bank or other centralized authority to flag suspicious transactions and attempt to stop fraud before it happens.”
“Crypto transfers can’t be reversed—once the money’s gone, there’s no getting it back. And most people are still unfamiliar with how crypto works. These considerations are not unique to crypto transactions, but they all play into the hands of scammers,” Fletcher concluded.
These scams tend to propose its victims invest their cryptocurrency into a scheme that would earn huge returns, with the entrapped victims usually reporting a total loss in the money that they invest.
The FTC reported that social media has become the primary breeding ground for crypto-related fraud.
Nearly half of those who reported losing money to cryptocurrency scams admit that it was through an online ad, post, or message on a social media platform.
The report said that out of those reporting being a victim of fraud on social media, 32 percent said it was on Instagram, 26 percent on Facebook, 9 percent on WhatsApp, and 7 percent on Telegram.
People ages 20 to 49 were more than three times as likely than older age groups to have reported losing money to a cryptocurrency scam.
However, older age groups have reported losing more money when reporting a cryptocurrency-related scam.
“People report that investment websites and apps let them track the growth of their crypto, but it’s all fake,” said Fletcher.
The scams often offer promises of large returns on an initial investment, which is then siphoned off into the scammer's crypto wallet.
Meanwhile, the value of cryptocurrencies such as Bitcoin, Ethereum, and Ether has taken a nose dive in recent months.
In November, the total market capitalization of cryptocurrencies had reached its historic peak of nearly $3 trillion but has since fallen to roughly $1.2 trillion at the present.