Scams are running rampant in the cryptocurrency markets as a huge rally in bitcoin, a lack of regulation and the anonymity of digital money have created a ripe environment for fraudsters.
Consumers reported losing nearly $82 million to crypto scams during the fourth quarter of 2020 and first quarter of 2021, more than 10 times the amount from the same six-month period a year earlier, according to the Federal Trade Commission.
From October to March, the price of bitcoin jumped 450% to nearly $59,000, while rival coins such as ether and dogecoin also surged. Bitcoin has since retreated to around $36,000, still substantially higher than where it traded for all of last year.
Scammers have targeted everyone from small investors scouring social media for investing tips to the Wall Street veterans who backed an Australian crypto-fund manager recently charged with running a $90 million fraud.
Sebastian, a 28-year-old pharmacy technician, is still kicking himself after he lost about $10,000 in ether to a crypto venture whose anonymous creators vanished in May, leaving behind hundreds of unhappy investors.