Federal Trade Commission cautions against cryptocurrency romance scams in the United States
The Federal Trade Commission (FTC) in the United States has issued a caution to the public regarding the increase in romance scams involving cryptocurrencies.
In a notice released on a Monday, the FTC provided guidance to Americans on how to handle situations where their online romantic partner is offering them investment advice.
Despite the fact that individuals do not anticipate being scammed by their online love interest, the FTC emphasized that scammers are skilled at their craft.
Romance scams, also known as pig butchering scams, typically involve scammers befriending victims under the pretense of a potential romantic relationship. Ultimately, victims are deceived into making fraudulent cryptocurrency investments, after which the scammers vanish.
These types of scams have become commonplace in the cryptocurrency industry. A recent study by the University of Texas uncovered that over $75 billion had been lost to these scams between January 2020 and February 2024.
The advisory, authored by Colleen Tressler from the Division of Consumer and Business Education, explored the methods used by perpetrators to execute these scams.
According to the FTC, scammers “establish an emotional connection” with victims to make them believe they are “cryptocurrency experts.” While promising high returns that are supposedly risk-free, the FTC clarified that all such investments come with risks and the profit guarantees are false.
The FTC emphasized that scammers often conduct background checks on victims to gain trust and manipulate them into talking about money.
The regulator advised against transferring any funds, whether fiat or crypto, if requested by such individuals. If there are suspicions that someone met on social media is a scammer, the FTC suggested cutting off contact and reporting the incident to them.
Romance scams have garnered attention in the media on numerous occasions. For instance, in February 2024, a Philadelphia woman lost $450,000 in cryptocurrency to scammers who convinced her to invest in a fraudulent crypto trading app, depleting her savings.
The increase in these scams has led to regulatory action from agencies like the Federal Bureau of Investigation (FBI) and the Commodity Futures Trading Commission (CFTC).
In a recent case, the CFTC charged crypto exchange Debiex on Jan. 20 for allegedly duping customers by establishing close relationships with them and tricking them into opening trading accounts, resulting in soliciting $2.3 million from five customers.
Similarly, the FBI issued a warning before Valentine’s Day in 2023 about the rise in romance scams. In April 2024, the Brooklyn District Attorney’s Office successfully cracked down on a similar scam that defrauded multiple individuals across the United States.
