The popularity of cryptocurrency has come with an unfortunate side effect: a corresponding rise in the number of scams involving crypto.
Such crimes have become the “flavor of the year,” as Peter Diskin, assistant regional director at the U.S. Securities and Exchange Commission’s Atlanta office, put it Wednesday (Aug. 25) at a virtual event on consumer fraud trends.
“We see this all the time — that whatever is a popular topic becomes a way for fraudsters to get people’s attention,” Diskin said, as reported by Marketwatch. “They say this is something new and profitable,” while playing on people’s fear of missing out on the next big thing.’
Crypto-related fraud complaints have risen sharply in the past few months, according to the Federal Trade Commission.
More than 7,000 people reported scams involving digital assets between last October and May, with a median loss of $1,900. That’s 12 times as many complaints from the previous year, the median reported loss increasing 100-fold.
According to Marketwatch, Diskin noted that the online nature of digital assets makes these scams more treacherous than traditional financial crimes carried out in person or over the phone, as international criminals can more easily target unsuspecting people over the net.
“Not infrequently the money can be removed from U.S. bank accounts and go overseas, which makes it even more difficult to recoup things if something goes wrong,” he said.
Earlier this month, Diskin’s boss, SEC Chairman Gary Gensler, called on Congress to give the commission more oversight when dealing with cryptocurrencies.
“Right now, we just don’t have enough investor protection in crypto. Frankly, at this time, it’s more like the Wild West,” Gensler told the Aspen Security Forum. “We have taken and will continue to take our authorities as far as they go.”