The U.S. Federal Trade Commission (FTC) has issued a stark warning about the growing role of social media in cryptocurrency investment scams. In a new Consumer Protection Data Spotlight, the agency stated, “Social media is a tool for scammers in investment scams, particularly those involving bogus cryptocurrency investments — an area that has seen a massive surge in reports.”
Alarming Fraud Statistics
According to FTC program analyst Emma Fletcher, more than 95,000 people reported about $770 million in losses to fraud initiated on social media platforms in 2021. These losses accounted for approximately 25% of all reported fraud losses in 2021 and represented a stunning 18-fold increase compared to 2017. The FTC emphasized that the actual figures are likely higher, as many scams go unreported.
Social Media as a Breeding Ground for Scams
The report highlighted that more than half of people who reported losses to investment scams in 2021 said the scam started on social media. Scammers use platforms to promote fake investment opportunities and even impersonate friends to build trust. Victims are often asked to send cryptocurrency under the promise of huge returns, but end up losing everything. The FTC noted that the pseudonymous nature of crypto transactions makes it nearly impossible to recover funds.
FTC Safety Recommendations
To protect consumers, the FTC offered several actionable tips: limit the visibility of personal posts and information on social media; opt out of targeted advertising; research any company you plan to buy from by searching for complaints or scam reports; and if you receive a suspicious message from a friend about an investment or urgent need for money, call them directly. The agency warned that payment requests in cryptocurrency, gift cards, or wire transfers are red flags for scams.
Industry Confirms the Trend
Blockchain analytics firm Chainalysis corroborated the FTC’s findings, reporting that cryptocurrency scams raked in a record $14 billion in 2021, largely driven by decentralized finance (DeFi) platforms. Overall crypto-related crime losses rose 79% year-over-year. The FTC previously warned about scams involving cryptocurrency ATMs, reinforcing the need for continued vigilance.
Consumers are urged to stay skeptical of any “guaranteed return” investment opportunity seen on social media and to report suspicious activity to the FTC at ReportFraud.ftc.gov.