SEC Warns of Uptick in Crypto Relationship Scams

According to the Securities and Exchange Commission (SEC), so-called crypto relationship scams are emerging as a growing threat, with fraudsters using social media and networking platforms to exploit unsuspecting investors. 

These scams typically involve criminals building trust with their victims over time through platforms like Instagram, WhatsApp, and LinkedIn, before introducing fraudulent cryptocurrency investments in assets such as bitcoin and ethereum.

According to the Federal Bureau of Investigation (FBI), losses from crypto scams surged to $5.6 billion in 2023, a 45% increase from the previous year. Investment scams, including those linked to crypto assets, accounted for 71% of these losses. Many of these frauds, particularly relationship scams, involve criminals posing as romantic interests or professional connections to lure victims into investing in fake crypto opportunities. The average loss per victim can be significant, with some losing as much as $178,000.

Experts predict that these types of fraud will become even more difficult to prevent. Victims often fall prey after weeks or months of communication, with scammers gradually building their trust before introducing the investment pitch. Once invested, victims typically lose large sums, as evidenced by the growing number of cases reported to regulatory authorities.

Crypto-related relationship scams continue to evolve, posing a serious risk to retail investors. However, with increased awareness and regulatory oversight, individuals can better protect themselves against falling victim to these sophisticated fraud schemes.