Scammers impersonating Elon Musk have stolen millions of dollars from US consumers in cryptocurrency scams as online financial fraudsters seek to capitalise on public interest in trading highly volatile cryptocurrencies such as bitcoin.
Consumers lost more than $80m to cryptocurrency scams between October 1 and March 31, according to new data from the Federal Trade Commission, which on Monday reported a “huge spike” in this type of fraud.
Scammers impersonating outspoken cryptocurrency enthusiast and Tesla co-founder Musk were responsible for more than $2m of losses.
The value lost to cryptocurrency investment scams has increased 10 fold versus the same period last year, according to the regulator. More than 7,000 scams were reported in the six-month timeframe, 12 times as many as the year before.
Investors lost an median amount of $1,900 to the scams, which usually purported to offer investors tips or “secrets” to help them trade e-currencies, the FTC said.
The regulator cited the “Wild West vibe” surrounding cryptocurrency culture as one reason for the jump in scams, as well as an “element of mystery” that created fertile ground for fraudsters targeting young consumers who wanted to make a quick return.
The FTC report followed a sharp decline drop in the trading price of bitcoin, after Musk last week tweeted that the electric carmaker would no longer accept the cryptocurrency as payment for its vehicles, citing concerns over the environmental impact of “mining” the cryptocurrency.
Bitcoin traded at just below $44,000 on Monday, down about $20,000 from the record high it hit just a month ago.
“Promises of enormous, guaranteed returns are simply lies,” the regulator said, adding fraudsters had built sophisticated websites that made it appear as though a consumer’s fictitious cryptocurrency investment was growing in value.
A common scam involved promising that a celebrity associated with cryptocurrencies would multiply a person’s purchase.
Young consumers who started trading financial assets for the first time in record numbers at the start of the pandemic were particularly vulnerable to the scams, the FTC found.
Consumers under the age of 30 lost more money to investment scams than any other type of fraud.