People have reported sending more than $2 million in cryptocurrency to Elon Musk impersonators over just the past six months, the Federal Trade Commission said in a statement yesterday.
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The so-called “giveaway scams,” supposedly sponsored by celebrities or other known figures in the cryptocurrency space, promise to immediately multiply the cryptocurrency you send. But, people report that they discovered later that they’d simply sent their crypto directly to a scammer’s wallet, the FTC said.
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Ron Geffner, partner at financial services law firm Sadis & Goldberg, tells GOBankingRates that to avoid these scams, one needs “a healthy dose of skepticism, with a sprinkler of mistrust.” He adds that “the three magic words in the investment community are verify, verify and verify. Check multiple sources to confirm the accuracy of information.”
The FTC reports that since October 2020, reports of crypto scams have skyrocketed, with nearly 7,000 people reporting losses of more than $80 million with a median loss of $1,900. This compares to 12 times the number of reports and 1,000% more in reported losses to the same period a year earlier.
In terms of age groups, people ages 20 to 49 were five times more likely to report losing money on cryptocurrency investment scams than older age groups, which flies in the face of typical thinking about who is susceptible to being conned online.
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“Some say there’s a Wild West vibe to the crypto culture, and an element of mystery too. Cryptocurrency enthusiasts congregate online to chat about their shared passion,” the FTC says in the statement, “And with bitcoin’s value soaring in recent months, new action. All of this plays right into the hands of scammers. They blend into the scene with claims that can seem plausible because cryptocurrency is unknown territory for many people. Online, people may appear to be friendly and willing to share their ‘tips.’ But that can also be part of the ruse to get people to invest in their scheme. In fact, some of these schemes are based on referral chains, and work by bringing in people who then recruit new ‘investors.'”
Other ways scammers operate include impersonating a government authority or a well-known business, the FTC warns. For example, many people have told the FTC they loaded cash into Bitcoin ATMs to pay imposters claiming to be from the Social Security Administration. Others reported losing money to scammers posing as Coinbase, the largest crypto exchange.