Beware of Celebs Bearing Bitcoin, As Crypto Scams Spike

IT Worker Mining Cryptocurrency

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If Elon Musk contacts you about Bitcoin, run.

Unwitting victims of cryptocurrency-related scams have lost more than $2 million to people impersonating Musk, the Tesla CEO and prolific Twitter user, since October. 

And that’s not the worst of it. In the six months between October 2020 and March 2021, U.S. consumers reported $80 million lost to investment schemes involving the increasingly popular digital currencies—more than 10 times the amount from the same period a year earlier, according to data released by the Federal Trade Commission (FTC) Monday.

Key Takeaways

  • U.S. consumers lost $80 million to cryptocurrency investment scams between October 2020 and March 2021—more than 10 times the amount from the same period a year earlier, according to Federal Trade Commission data.
  • The average scam victim lost $1,900 worth of cryptocurrency.
  • Scammers created phony investment websites, impersonated celebrities, and even made online dating profiles in order to steal crypto from unsuspecting people.

The FTC received nearly 7,000 reports of scams involving Bitcoin or other cryptocurrencies in the fourth quarter of 2020 and the first quarter of 2021, with the average loss totaling $1,900 worth of cryptocurrency.

Cryptocurrencies have become increasingly mainstream, so it stands to reason scams would, too. Bitcoin, Ethereum, Dogecoin, and other digital (or virtual) currencies have soared in popularity and value, inviting speculation and promises of instant wealth. They have a reputation for volatility because they’re not tied to any government or central bank and can swing wildly in value from one day to the next.

One survey, conducted in the fall, estimated the number of cryptocurrency investors would nearly double over the next 12 months. Payment apps like PayPal and Venmo now allow users to buy, sell, and hold cryptocurrencies on their platforms, and the IRS has started to pay more attention this year to underreported income from digital currency trades.

Investors in Bitcoin and other cryptos trend young, and so do the victims of the scams. People 20 to 49 were more than five times more likely to say they’ve lost money to a crypto-related scheme than other age groups, according to the FTC’s data.

Some crypto scammers will tout secret investment strategies on online message boards, with links to phony investment websites that ask you to send cryptocurrency to their digital wallet. Others promise to multiply your funds with the help of a celebrity, like Musk, who has made headlines with his crypto investments. Still others impersonate a government authority or a well-known business in an attempt to pry your Bitcoin away. 

Scammers have even used online dating to draw people in, forming long-distance relationships with their victims before recruiting them for a fake “hot cryptocurrency opportunity,” the FTC said in a statement accompanying the data.

The FTC said investors should be aware of the following when dealing with cryptocurrencies:

  • Promises of guaranteed huge returns are always scams.
  • The cryptocurrency itself is like any investment: You make money by selling it for more than you paid. Don’t trust anyone who says they have another way.
  • If anyone insists on payment in cryptocurrency, it’s likely a scam.