Cryptocurrency crime had a record-breaking year in 2021, with a new report finding scammers took $14 billion worth of crypto last year.
That’s nearly twice the $7.8 billion taken by scammers in 2020, according to blockchain data firm Chainalysis’ “2022 Crypto Crime Report,” findings from which were released Thursday, Jan. 6.
With a boom in cryptocurrency interest over the past year, it’s no wonder that “Olympic-level scammers” have taken notice of new opportunities for illicit activity, says William E. Quigley, a prominent investor and co-founder of the WAX blockchain. The high-tech nature of crypto will continue to attract sophisticated scammers, Quigley said during a panel discussion hosted by blockchain firm Light Node Media last month.
Consider a recent “Squid Game” scam in which investors allege a new SQUID cryptocurrency token and related immersive online game were actually just an elaborate scam. Investors claim the developers disappeared after the currency skyrocketed in price and seemingly cashed out with more than $3 million.
Before You Invest In Crypto
Experts say it’s smart to keep your crypto investments under 5% of your overall portfolio. Crypto prices fluctuate wildly by the day, and experts also say you’d be smart not to invest more than you’d be OK losing if the market dropped out altogether. Crypto investments should also never get in the way of other financial priorities like saving for emergencies, paying off high-interest debt, and saving for retirement using more conventional investment strategies.
Like it or not, crypto investors are opening themselves up to this new and evolving risk of fraud and scams. If you’ve incorporated crypto into your investment portfolio or are interested in investing in Bitcoin or Ethereum in the future, here are some common scams and red flags to look out for.
What Are Some Common Cryptocurrency Scams?
In the U.S., almost 7,000 people lost upwards of $80 million in crypto scams from October 2020 through March 2021, according to the Federal Trade Commission (FTC), based on scam reports filed in the U.S. That’s a huge jump over the 570 cryptocurrency investment scams and $7.5 million in losses during the same months just the year before. With cryptocurrency scams on the rise, here are some patterns to look out for:
Demanding Crypto-Only Payments
If a seemingly credible person or retail establishment claims they cannot accept any form of currency other than Bitcoin, it’s likely a scam. Bitcoin and other altcoins are a burgeoning asset class, so experts say credible institutions aren’t going to accept crypto and not also accept U.S. dollars through normal means like wire transfers, checks, credit and debit card payments,…
Read more:Scammers Stole $14 Billion in Crypto in 2021. Here’s How Investors Can Protect Their