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Crypto investments can be exotically enticing and alluring, and sometimes pretty lucrative too; but unfortunately these sort of attractions are also a fertile ground for another type of endeavors, much more sinister – crypto scams.
On June 25th, the U.S. Federal Trade Commission (FTC) hosted a workshop in Chicago on cryptocurrency scams, dubbed “Decrypting Cryptocurrency Scams.” The event generated a plethora of fascinating statements and figures regarding the current and future state of crypto-related frauds.
Just in the first couple of months of 2018, consumers lose over half a billion USD (!) to scams associated with cryptocurrencies, according to the FTC’s director of the Bureau of Consumer Protection Andrew Smith. And this staggering piece of data does not end there; Smith went on to estimate that by the end of the year, crypto scams will swipe up to a whopping $3 billion.
So why do people fall for such swindles? The event’s speakers, Joe Rotunda (Director of the Enforcement Division of the Texas State Securities Board) and Peter Van Valkenburgh (Director of Research at Coin Center) suggest that the potential of a very high return-on-investment in the crypto market makes people overlook a proper (or any, really) due diligence. Rotunda clarified that regulators are not biased against cryptocurrencies themselves, but that they are only concerned with stopping con-artists.
— FTC (@FTC) June 25, 2018
Rotunda even gave examples of how scammers had used stock images to depict auspiciously their alleged enterprises, and another scam that had alleged that U.S. Supreme Court Justice Ruth Bader Ginsburg had been a legal advisor of the company. It seems that fraudsters have to be creative in order to lure in investors in an industry that presently encompasses over 1,600 different cryptocurrencies and nearly $300 billion in market capitalization, astounding numbers confirmed by Andrew Smith.
In March this year, the FTC shut down the fraudulent operations of four people who had promoted “deceptive money-making schemes involving cryptocurrencies” with fallacious promises of high gains in return to investments in frauds titled Bitcoin Funding Team, My7Network and Jetcoin. The FTC calls for anyone who fell victim to a similar crypto-related fraud to file a complaint with the agency.
— FTC (@FTC) June 25, 2018