FTC Says Crypto Scams Cost Consumers Over $1 Billion Since 2021

Key Insights:

• Cybercrime across the digital asset space surged in 2021 and continues to draw scrutiny.
• On Friday, the Federal Trade Commission (FTC) reported consumers losing more than $1 billion in cryptocurrency scams since 2021.
• Illicit activity continues to rise despite the formation of the National Cryptocurrency Enforcement Team and the FBI’s Virtual Asset Unit.

Illicit activity across the digital asset space has surged in recent years. Increased investor interest in cryptos, including bitcoin (BTC), and NFTs have given cybercriminals incentive to target an ever-increasing consumer base.

In February, FX Empire reported estimated crypto ransomware figures for 2021. Chainalysis tracked $602 million in ransomware payments for 2021. Based on later revisions to 2020 figures, the figure is likely to break $1 billion once finalized numbers are available.

This week, the US Federal Trade Commission delivered the markets with an update on criminal activity in the crypto space.

US Federal Trade Commission (FTC) Release Crypto Scam Figures

On Friday, the Federal Trade Commission published a report on crypto scams.

According to the report,

“Consumers reported losing over $1 billion to fraud involving cryptocurrencies from January 2021 through March 2022.”

More than 46,000 consumers reported losing money in crypto scams over the period.

The report went on to say,

“Most of the cryptocurrency losses consumers reported involved bogus cryptocurrency investment opportunities, which totaled $575 million in reported losses since January 2021.”

Romance scams and business and government impersonation scams also resulted in sizeable losses.

The FTC offered some red flags for consumers to look out for, including:

• Anyone claiming to big crypto returns or guarantee profits from crypto investments.
• Love interests wanting to show you how to invest in cryptos or send them cryptos.
• People who request payments and purchases in crypto.

The report did not provide any breakdown in terms of the likely location of cybercriminals.

If the trends are similar to the findings of Chainalysis, cybercriminals from Iran, Russia, China, and North Korea are likely to be most active in the digital asset space.

In 2021, Conti, DarkSide, and Phoenix Cryptolocker were reportedly the biggest ransomware strains. Conti extorted at least $180 million based on the numbers in February.

The surge in cybercriminal activity in the digital asset space has drawn government and regulatory scrutiny.

Governments and Regulators Aim to Curb Illicit Digital Asset Activity

Such has been the rise of illegal activity across the digital asset space that governments and regulators responded to curb cybercrime.

Last year, the US Department of Justice launched the National Cryptocurrency Enforcement Team (NCET).

This year, the FBI also ramped up its cybercrime division with the creation of a Virtual Asset Unit (VAU).

The launch of the VAU coincided with a White House Executive Order targeting cryptos over fears of Russia looking to evade sanctions via the crypto market.

With the crypto market in the midst of a crypto winter and the collapse of TerraUSD (UST) and Terra LUNA, greater regulatory oversight and success in curbing illicit activity will likely be two key priorities for lawmakers near-term.