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FTC: Crypto scams will total $3 billion by end of 2018

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Scams include deceptive investment opportunities, bait-and-switch schemes and deceptive mining tools.

The Federal Trade Commission (FTC) has reported that in the first two months of 2018, consumers were defrauded out of $542 million in cryptocurrency scams and will lose a total $3 billion by the close of the year.

The FTC’s Bureau of Consumer Protection director Andrew Smith revealed these statistics to attendees of the Decrypting Cryptocurrency Scams conference, held at DePaul University in Chicago, Illinois earlier this week.

“With the rise of cryptocurrencies we’ve seen many signs, from public sources to law enforcement actions brought by us and many of the other participants today, that scammers are using the lure of cryptocurrencies to rip off consumers,” Smith said.

“We’ve all seen media reports where cybercriminals target hospitals and schools, holding data hostage and demanding payment in bitcoin. Indeed, one source estimates that in just the first two months of 2018, consumers have lost $542 million just from known cryptocurrency scams. If losses continue on that trend, consumers will lose more than $3 billion by the end of 2018.”

The event, live-cast to audiences online, expounded on reported cryptocurrency-related scams including deceptive investment and business opportunities, bait-and-switch schemes and deceptive mining machines.

The workshop was free and open to public attendance. The event attracted executives from consumer groups, law enforcement, research organizations and the private sector. Panelists included specialist in digital currency and blockchain developments Rumi Morales, Consumers’ Research executive director Kyle Burgess, CFTC senior trial attorney Michael Frisch and Coin Center’s director of research Peter Van Valkenburgh among others.

In April, Crypto Aware revealed that the cryptocurrency industry had suffered US$673 million in losses during the first quarter 2018, as a result of global hacks, ponzi scams, phishing attacks and digital currency theft.

The scam alerts website also reveals that estimated losses from the most significant crypto hacks and scams between 2011 and 2018 is valued at approximately US$1.7 billion. This includes 1.7 million bitcoin, 4.5 million Ether, 304,000 litecoin, 500 million NEM, 30 million USDT, 17 million NANO and 670,000 Lumens.

Crypto Aware lists the Mt. Gox theft as the biggest bitcoin hack of all time. Around 800,000 bitcoin was stolen. The largest Ethereum hack was the DAO incident. 3.6 million ether was lost and the blockchain hardforked.

A recent research report suggests that Tether, a digital currency reportedly pegged to the US dollar, may have been used to influence the price of bitcoin and other cryptocurrencies during the recent price explosion.

Earlier this year, billionaire British entrepreneur Richard Branson penned a warning to people against false bitcoin trading schemes implicating endorsements from prominent business executives and celebrities, such as himself. In a blog post on Virgin’s website, Branson warned of a growing problem of fake stories linking him to get-rich-quick schemes, fake pages, misleading ads, false endorsements and fake binary trading schemes.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

Picture: Shutterstock

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