US Cryptocurrency Scam Victims Surge Tenfold in One Year

High-Profit Bait Through Establishing a Front Venture
Damage Amounting to 91.2 Billion Won from Last Q4 to This Q1

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Suhwan] As investors flocked to the United States due to the soaring prices of cryptocurrencies including Bitcoin, it has been revealed that fraud cases involving cryptocurrencies have also surged sharply.

The Wall Street Journal (WSJ) reported on the 7th (local time), citing data from the U.S. Federal Trade Commission (FTC), that consumer losses from cryptocurrency fraud reached $82 million (approximately 91.2 billion KRW) from the fourth quarter of last year through the first quarter of this year. This represents more than a tenfold increase compared to the same period last year.

According to the report, some fraudsters disguised themselves as cryptocurrency-related venture companies aiming to launch new cryptocurrencies, promising high returns to investors and then embezzling the invested funds. WSJ added that not only individual investors but also professional investors from New York Wall Street financial firms fell victim to cryptocurrency fraud crimes.

The FTC data only accounts for losses officially reported to authorities, suggesting that the actual scale of damage is likely larger.

The period during which consumer losses surged coincided with the time when cryptocurrency prices were skyrocketing. Analysts suggest that the rapid rise in cryptocurrency prices and the resulting investment frenzy drove the increase in fraud crimes.

From October last year to March this year, Bitcoin’s price rose by about 450%.

WSJ analyzed that the widespread social atmosphere that one could make big money with cryptocurrencies, combined with insufficient regulations and the anonymity of digital currencies, created a favorable environment for scammers.

Furthermore, it was reported that such cryptocurrency frauds have mainly surged within ‘DeFi (Decentralized Finance)’, a decentralized financial system built on blockchain technology.

DeFi is a financial system that provides services such as lending, asset trading, and insurance using blockchain. Fraudsters reportedly deceived investors by promising high returns through these DeFi products.

In particular, WSJ reported that the operators of various projects established under the pretext of launching new DeFi products are unclear, exposing investors to significant risks.

According to blockchain analytics firm CipherTrace, losses from fraud cases in DeFi from January to April this year amounted to $83.4 million (approximately 92.8 billion KRW), already exceeding twice the total amount for last year.

This content was produced with the assistance of AI translation services.