#CryptoScamSurge 0

Forbes Digital Assets

How Investors Can Avoid The Crypto Scam Surge

BySean Stein Smith,

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 Professor, entrepreneur, CPA, and enthusiast for everything blockchain

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Sep 15, 2024, 03:36pm EDT

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Crypto crime is on the rise

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Even as cryptoasset and associated products continue to make inroads and gain traction within the TradFi sector, crypto scams and frauds continue to represent a significant challenge to even broader adoption. In a report released by the FBI Americans lost more than $5.6 billion due to cryptocurrency scams in 2023. These losses comprise approximately 50% of total investor losses from financial fraud, and represent a 45% increase in crypto scams when compared to 2022. It is worth noting that the dollar figure associated with these scams and frauds is driven by both an uptick in incidents as well as the recovery in crypto prices that has driven much of the 2023-2024 market narrative. The fact that frauds and scams remain so prevalent, and actually increased year-over-year, should be noted and noteworthy for all members of the crypto community.

Specifics of the crypto-related scams included some of the methods more traditionally associated with the space, such as pump-and-dump tactics, but also included a number of other tactics as well. These include, but are not limited to criminals setting up entire call centers from which to run scam organizations from, fraudsters impersonating government agents, and making use of online dating sites to defraud investors of crypto holdings. While the report from the FBI centered around investors, and not specifically institutions, there are several important lessons that entrepreneurs and institutions looking to integrate and/or expand crypto operations should keep in mind.