DEFENDERS: Cryptocurrency scams skyrocket as popularity increases
COLUMBIA, Mo. (KMIZ)
It's a popular trend hitting the financial market, investing in cryptocurrency. However, with the rise in popularity comes online scammers.
According to a report from the Federal Trade Commission since October 2020, consumers have reported losing more than $80 million to cryptocurrency investment scams. In that report, nearly 7,000 reports were received from consumers about these scams in the last quarter of 2020 and the first quarter of 2021.
The median amount people lost to a scam was $1,900.
Christopher Leach, is an attorney in the Federal Trade Commission's Division of Financial Practices and told ABC 17 News cryptocurrency scams are skyrocketing for several reasons.
"People are hearing a lot about it," he said. "It's also very new which means a lot of people don't understand all the ins and outs of investments."
Leach said it's that sort of gap between popularity and knowledge that scammers can come in and fill the void and unfortunately deprive people of their hard-earned money or cryptocurrency.
Some of the most common ways scammers are tricking a consumer is by offering investment tips that redirect consumers to fraudulent sites. Scammers could also pose as celebrities, tricking people to buy into their fake endorsements. They could also promise big payouts with guaranteed returns.
"You're never going to get this again, you don't want to miss out before the market falls again," Leach said. "Those are things scammers say to try and get people to turn off some of their common sense things."
David Minnick, Commissioner of Securities for Missouri, told ABC 17 News the state of cryptocurrency is "the wild wild west."
"There are certain cryptocurrencies that have been out for a bit long such as Bitcoin that have some level of legitimacy, there isn't always crooked people or activities," Minnick said. "However, it has a value that is purely speculative. There is no underlying backing to it."
Minnick said despite cryptocurrency being highly unstable, the interest in investing in it continues to surge. He attributes that to in some cases it's cheap to invest in cryptocurrency, you can stay anonymous, profit potential and fear of missing out on a popular trend.
With the rise in popularity, there are a lot more options of types of cryptocurrency to invest in. Minnick advises going with a registered broker to get further advice. You can find more information on registered Missouri brokers here.
According to the FTC, people in their 20s and 30s reported losing far more money to crypto investment cons than any other type of fraud.
