U.S. Federal Trade Commission warns of crypto romance scams

The United States Federal Trade Commission (FTC) has warned the public of the rise in romance scams that often involve cryptocurrencies.

In a Monday notice, the FTC advised Americans on how they can handle the situation if their online romantic interest is offering them investment advice.

“No one thinks their online love interest is going to scam them, but scammers are good at what they do,” the FTC noted.

Romance scams, often dubbed as pig butchering scams, involve attackers befriending victims under the guise of their potential love interest. Ultimately, the victims are tricked into making fraudulent cryptocurrency investments, and the scammers disappear.

Such scams have become a norm in the cryptocurrency sector. A recent study by the University of Texas revealed that over $75 billion was lost to these schemes in between January 2020 and February 2024.

As such, the advisory, authored by Colleen Tressler of the Division of Consumer and Business Education, delved into the detective tactics employed by bad actors to execute these scams.

According to the FTC, the attackers “establish an emotional connection” to convince victims into believing that they are “experts in cryptocurrency.”

The commission noted these scammers often promise high returns that are possibly risk-free. However, it added that all such investments carry risks and the guarantees on profits are false.

Further, the FTC stressed that these scammers usually do a background check on the victims. This helps them convince the victim and allows them to “say the right things” to gain their trust, “and before you know it, your new friend is talking money,” the FTC added.

The regulator also advised against transferring any funds, be it fiat or crypto, if requested by such parties, “if you think someone you met on social media is a scammer, cut off contact.”

The notice also urged users to file a report with the FTC if affected by such a scam.

Romance scams have made the headlines on several occasions. 

Back in February 2024, a Philadelphia woman lost $450,000 in cryptocurrency to these bad actors. Scammers befriended the woman and pitched a fraudulent crypto trading app, ultimately convincing her to drain her savings.

The growing prominence of these attacks has prompted regulatory intervention from the likes of the Federal Bureau of Investigation (FBI) and the Commodity Futures Trading Commission (CFTC).

The CFTC charged crypto exchange Debiex on Jan. 20, alleging the firm’s insiders of duping its customers by establishing amicable and “intimate” relationships. These individuals were then tricked into opening trading accounts with the exchange.

Debiex allegedly solicited $2.3 million from five customers.

Meanwhile, the FBI had also issued a warning before the 2023 Valentine’s day about the surge in romance scams. 

In April 2024, the Brooklyn District Attorney’s Office managed to crack down on a similar scam that duped several individuals across the United States.