In the last few years, the popularity of cryptocurrency has exploded. While its quick growth is wonderful for those who invest in it, it has also resulted in a significant increase in frauds. Crypto frauds on social media have expanded almost as quickly as cryptocurrency itself.
Scammers prefer crypto because transactions aren’t always protected by the law and aren’t always reversed. All of the excitement surrounding cryptocurrencies can make people more vulnerable to scams, especially if they’re new to bitcoin. For these con artists, social media is the ideal hunting ground.
Scammers are exploiting cryptocurrency to entice victims on social media. Here’s why you should be cautious before investing and how to protect yourself.
According to the Federal Trade Commission (FTC), social media scams will account for 25% of all fraud losses in 2021. Many of these involve cryptocurrency, either by requesting cryptocurrency payments or by promising a bogus cryptocurrency investment opportunity.
These scams are most commonly perpetrated on Facebook and Instagram. The most common Instagram Bitcoin scam is online shopping fraud, in which an account sells something for cryptocurrency but never delivers the product. Some of these bogus advertisements, which account for 45 percent of all social media scams, even impersonate legitimate retailers.
Scammers frequently impersonate celebrities, even hacking into their personal accounts. They’ll then post about an investment opportunity or a giveaway that appears to be from a reliable source. Users will give away their crypto or send their crypto wallets to these accounts, only to receive nothing in return.
Fake initial coin offerings (ICOs) or NFT projects, which solicit investors when there is no actual project, are another common social media crypto scam. Other scammers pose as potential romantic partners or family members. According to Fortune, Chainalysis experts discovered that crypto scammers will make over $14 billion in 2021, owing to the growing popularity of decentralized finance (DeFi).
Can we identify a crypto scam?
Yes, we can check the scammer account first if a seemingly legitimate source promises something that sounds too good to be true. If there is no checkmark to confirm that it is a verified account, or if the user has fewer followers than they should, it is most likely a fake account. Of course, hackers can take over verified accounts as well, so just because a profile is legitimate doesn’t mean the posts on it are.
Remember that if a crypto post appears to be too good to be true, it most likely is. Bold claims with no explanation or details, free giveaways, and a money-back guarantee are all red flags. Any guarantees should raise an eyebrow because cryptocurrency is so volatile that nothing can be guaranteed.
In general, never send money or information to someone you haven’t met in person. If you’ve met the person and they insist on sending money via cryptocurrency, wire transfer, or gift cards, their account is most likely compromised.
Can we report a crypto scammer?
Yes, we can. The FTC takes cryptocurrency enforcement very seriously, especially when it comes to these scams. If users come across a Bitcoin scammer on social media, here’s how they can report them.
First, take down as many details about the scam as you can, but don’t interact with the scammer. Then, navigate to the FTC’s cryptocurrency enforcement (https://reportfraud.ftc.gov/#/) and reporting tool and select Report Now. The form will guide you through the next steps.
It is also a good idea to report Bitcoin scammers to the social media platform where they are active. Users can report profiles and posts on Facebook, Instagram, and other social media sites by clicking a button next to them. If there is enough evidence in the report or enough people report the user, the site will most likely disable the scam account.