The rug pulls, scams consisting of selling a new NFT or cryptocurrency project before disappearing with all the money raised, have become common. Just like hacks, they sometimes steal several million dollars from the victims, and generally make the headlines of the specialized press (including Numerama).
However, even if they are impressive and contrary to what one might think, they are not the most frequent scams. This is shown by a new study, carried out by the US Federal Trade Commission (FTC), and published on June 3, 2022. Almost half of people who said they lost money to a scam deceived by social media posts.
Social networks are the main tools of scammers
The figures revealed by the FTC are impressive: since the beginning of 2021, some 46,000 people have declared that they have lost the equivalent of a billion dollars in cryptocurrency due to scams. Taken down to an individual level, that’s $2,600 lost for each person scammed.
Between January 1, 2021 and March 31, 2022, the FTC recorded the equivalent of $417 million lost due to fraudulent social media posts. The main cryptos used to pay scammers are ETH, the currency of the Ethereum blockchain, which accounts for 9% of thefts; the stablecoin Tether, which accounts for 10%; and finally bitcoin, used in 70% of cases. As for social networks, the most popular are Instagram, where 32% of posts promoting scams are posted, Facebook, which accounts for 26% of posts, WhatsApp (9%), and Telegram (7%).
The FTC study reports that the most widely used types of scams on social media are fake investments, which alone have earned scammers $273 million. These are most often advertisements for investment opportunities that promise significant income. Scammers mostly convince people who do not have a thorough knowledge of cryptocurrencies.
In second place are the romance scams “, which have cost the equivalent of 69 million euros to the victims since 2021 for an average of 10,000 dollars lost per person. These scams, which are particularly deceitful, are more and more numerous and particularly target men. The scammers are either women or pretend to be women and spend a long time talking with their victims on dating sites in order to convince them to invest in cryptocurrencies.
Finally, the third most common type of scam is that of fake businessmen or fake government officials – they have extorted a total of $35 million from social networks. Imposters start by texting about an expense related to their Amazon account or a security alert, and claim that their money is at risk of being stolen. Then they convince their victim to convert their savings into crypto, which they believe would be the only way to protect them, before walking away with the loot.
It is possible to avoid scams
Fortunately, there are several ways to protect yourself from scams. First of all, you should always be wary when an advertisement or posts on social networks boast of yet unknown projects, surf on the popularity of a series like Squid Game, or guarantee rapid and significant returns on investment. As a general rule, if an offer seems too good to be true, it isn’t.
Before investing in a project, it is also important to carry out some checks, as Numerama explains in a special guide. We advise you to carefully read the white paper of the project, a document that details the founders’ vision and next steps — if there isn’t one, or the information is very vague and unverifiable, that’s usually a bad sign.
Finally, it is possible to check on Chainabuse if a project has already been reported as fraudulent. The site lists numerous scam attempts and lists the addresses of suspicious crypto wallets. If ever you are the victim of a scam, you can also report the project on this site.