Federal officials have warned that investors are facing high risks of crypto scams linked to fake relationships on social media, dating apps, and networking sites. US Securities and Exchange Commission’s Gurbir S. Grewal suggests these “relationship investment scams” are on the rise and can be catastrophic for retail investors.
Scammers are sliding into DMs, posing as romantic interests or old friends, and then luring users into the world of crypto investments. Eventually, they pitch a fake crypto investment which can lead a user to high financial losses.
Crypto love scams are on the rise
As per the SEC’s release , the commission is encouraging investors to choose where they are getting information from and rectify their sources during World Investor Week (WIW) 2024. The initiative is running from October 7-13. It advises that even if investors are looking for an investment professional or deciding which investments help them meet their financial goals, it becomes crucial to access the information from trusted sources.
The FBI received nearly 70,000 complaints about financial fraud involving cryptos in 2023. Investment fraud accounted for $3.96 billion of the investor losses. Scammers slide into DMs on dating apps or social media, building trust over weeks or even months! It’s like a bad rom-com plot but with your money at stake.
This year marks the eighth anniversary of WIW which brings together regulators on six continents to raise awareness regarding investor protection. The SEC is teaming up with the Commodity Futures Trading Commission, FINRA, and more to drop some serious knowledge trails.
US SEC chair Gary Gensler stated, “Investor protection is at the very core of the SEC’s three-part mission.” Throughout the week, SEC staff will host outreach events focused on the basics of saving and investing.
$5.6B crypto related scam reported in 2023
Director of the SEC’s Office of Investor Education and Advocacy, Lori Schock, mentioned the hype around emerging technologies like AI, finfluencers, social media, and aggressive investing marketers. These factors can make it hard for an investor to choose the correct support.
According to the FBI, the use of digital currencies like Bitcoin (BTC) and Ethereum (ETH) has surged among criminals. Just in 2023, consumers lost around $5.6 billion to crypto-related scams and it has been an alarming 45% jump from 2022. Investment scams accounted for about 71% of these losses. However, relationship scams emerged as the most prominent form of fraud last year.
Reportedly criminals are increasingly using crypto for fraud due to its decentralized nature, fast irreversible transactions, and global transfer capabilities. AI integration is likely to complicate the detection of romance scams tied to crypto.
