As new cryptocurrencies emerge and an increasing number of investors are inclined towards investing in cryptocurrencies, there are an increasing number of crypto scams as well. 2020 marked the year with the highest online crypto scams, as over 26,000 scams were reported to the government.
Calculations show that the total loss resulting from the scams exceeded 400 million USD. Unfortunately, things are looking even worse in 2021. Over 14000 fraud cases have been reported in the first quarter of 2021, and the numbers are rising fast.
Scammers are taking advantage of social media and the ongoing crypto hype, getting people to invest their money in fake crypto coins. The shocking part is studies reveal that most online scams and frauds go unreported, and the person being scammed simply stops investing online. If every scam were to be reported, the numbers would be much higher.
According to Chain analysis, a blockchain researcher, the losses resulting from online scams have exceeded 2.6 Billion USD this year. While many countries, including China, stepped up and banned crypto trading from avoiding such scams and protecting people’s money, several major countries are still subject to such frauds, including the US and the UK.
Keeping in mind the large-scale losses resulting from these scams, several research authorities dug into possible solutions. It was revealed that there are an enormous number of scammers out there, some working solely as individuals and others working in the form of groups or large gangs. Most of these scammers saw a huge financial opportunity as a growing number of people are investing through online platforms and want to make money ‘the easy way’.
The age group targeted the most is people in their thirties and early forties. Not only do people of this age group have savings, but they’re also looking for a way to capitalize on their funds. Some get lucky; others get scammed.
Many scams that were reported showed that the scammers rose in number when the crypto market crashed. Many people had invested in cryptos, and they were losing their money, so the scammer would offer them help by offering help such as ‘transfer your remaining coins to me, and I’ll help you recover your money, or ‘Transfer your funds to me to invest in XYZ crypto and recover your money in no time.’
The idea is to use people’s moment of weakness as they lose money and get them to transfer whatever they have left. The primary reason scammers can get away with it is that there are too many. Researchers have shown concern regarding the rising number of scammers that are everywhere around the globe and nearly impossible to hunt down. An effective way to deal with this is by spreading awareness amongst people and using licensed and registered platforms to buy and sell crypto. The FCA and several other financial authorities are continuously working on protecting people’s money and avoiding online scams of this sort.