The banking crisis triggered by the collapse of Silicon Valley Bank has produced an unexpected result. The value of Bitcoin, which had fallen below $20,000, is rising again.
That, in turn, has led to a resurgence of cryptocurrency scams. In two weeks in March, Bitcoin’s value rose almost 34%. Scam operators have stepped up their efforts to lure potential victims hoping to cash in.
The Federal Trade Commission (FTC) warns that criminals behind crypto scams usually promise that you can “make lots of money” with “zero risk.” A sophisticated investor knows that investments never fall into that category.
Lately, these scams have started on dating apps. The scammer establishes a romantic relationship with his victim before offering to let them in on the “can’t miss” investments. The FTC says that in these scams, crypto is central in two ways: it can be both the investment and the payment.
Here’s how it plays out
According to the FTC, here are some of the ways crypto scams can unfold:
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You get a call, out of the blue, from someone claiming to be an “investment advisor. They promise to grow your money – but only if you buy a cryptocurrency and transfer it to their online account. The investment website may seem legitimate, but it is fake. Your money is gone.
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The scammer may pose as a celebrity who contacts you through social media with a “big opportunity”. But wait a minute – why would a celebrity contact you? If you click on an unexpected link they send or send cryptocurrency to a so-called celebrity’s QR code, the money will go straight to a scammer and it will be lost.
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Scammers may guarantee that you will make money or promise large payouts with guaranteed returns. Again, remember that no investment offers a guaranteed return without risk. The closest thing to it is a government bond or CD. And there is no such thing as “low risk” with cryptocurrency investments. So if a company or person promises that you will make money, it is a scam.
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Scammers promise free money. They promise free money or cryptocurrency, but promises of free money are always false, the FTC says.
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Scammers make big claims without details or explanations. Whatever the investment, find out how it works and ask questions about where your money is going. Honest investment managers or advisors want to share this information and will back it up with details.
The FTC suggests that before investing in crypto, search the web for the name of the company or person and the cryptocurrency name, plus words like “review,” “scam,” or “complaint.” See what others are saying.
