There's a lot of uncertainty and risk surrounding cryptocurrency, which can make investors susceptible to getting scammed. The US Federal Trade Commission on Monday said reports to its Consumer Sentinel indicate "scammers are cashing in on the buzz around cryptocurrency and luring people into bogus investment opportunities in record numbers." Since October 2020, around 7,000 people reported losing more than $80 million on scams. That's around 12 times the number of reports from a year ago, the FTC says.
Scammers are using every trick available to pry money from people's hands. According to the FTC, people have sent more than $2 million in cryptocurrency to impersonators of Tesla and SpaceX CEO Elon Musk in just the last six months.
A representative for Musk didn't immediately respond to a request for comment.
Last week, Musk tweeted Tesla will no longer accept Bitcoin as a form of payment for its vehicles, sending the crypto world into a frenzy. After Musk's announcement, multiple crypto coins took a dive, including the popular meme coin Dogecoin.
Cryptocurrencies like Bitcoin were initially meant to be uncentralized digital currencies, but have become more of an investment in recent years. Bitcoin's value has surged in the last few months, which can make new investors "eager to get in on the action," the FTC said. "All of this plays right into the hands of scammers."
Many have been targeted by people pretending to share "tips" who actually are trying to get them to invest in their schemes, according to the FTC. Others have been fooled by websites that look like ways to invest in or mine cryptocurrencies, but that are actually fake.
"Sites use fake testimonials and cryptocurrency jargon to appear credible, but promises of enormous, guaranteed returns are simply lies," the FTC said. "These websites may even make it look like your investment is growing. But people report that, when they try to withdraw supposed profits, they are told to send even more crypto -- and end up getting nothing back."
"Giveaway scams," which purport to be sponsored by celebrities or well-known figures in cryptocurrency, pledge to instantly multiply the cryptocurrency people send. Instead, people say they later found they'd merely given their crypto to scammers, like the Musk impersonators.
To help dodge these scams, the FTC says, "promises of guaranteed huge returns or claims that your cryptocurrency will be multiplied are always scams." Also be weary of any callers, supposed love interests, organizations or anyone else who insists on crypto. "You can bet it's a scam."
On Wednesday, seemingly every cryptocurrency, including Bitcoin, Dogecoin and Ethereum, saw values drop after China confirmed it's banning the services for its financial institutions, due to the digital coins' volatility. Growing concern about the large energy consumption required for cryptocurrencies like Bitcoin has also forced prices to drop lately.
And on Thursday, the US Treasury outlined proposed changes to IRS reporting requirements, as laid out in the Biden administration's American Families Plan. If the bill becomes law, it'll require people to report cryptocurrency transfers to the iRS when they're over $10,000. This would help curb tax evasion and other crimes, the Treasury says.