Since last year, cryptocurrency prices, including Bitcoin, have soared, and frauds using cryptocurrency in the United States more than 10 times.
The Wall Street Journal (WSJ) quoted the U.S. Federal Trade Commission (FTC) data yesterday (on the 7th), saying, “Consumer damage from cryptocurrency fraud reached $82 million from the fourth quarter of last year to the first quarter of this year.”
Compared to the same period a year ago, the amount of damage has increased by more than 10 times.
Given that the amount was mainly reported to authorities by victims in the U.S., the actual damage is estimated to be much greater if countries outside the U.S. are included.
Not only individual investors but also veteran investors in the financial sector are said to have suffered from virtual currency fraud.
Australian Stephen Chinn, who pleaded guilty in February in a federal court in New York, faces up to 20 years in prison for lying to customers about returns while running a $90 million virtual currency fund, mostly from “rich” investors.
He promoted that arbitrage using market differences between cryptocurrency exchanges could lead to a monthly yield of more than 20%.
The victims include two financial experts working at a New York-based multinational bank.
Cryptocurrency frauds are rapidly increasing in DeFi, a decentralized financial market based on blockchain.
In Defi, where loans, asset transactions, and insurance services are made using blockchain, there are many products that promise much higher returns than usual on investors’ virtual assets.
However, it is known that many of them are fraudulent methods of siphoning off customers’ investment.
The Wall Street Journal analyzed that the lack of regulations and anonymity of digital currencies have created an environment favorable to fraudsters amid the widespread social atmosphere that virtual currency can make a lot of money.
