What You Need to Know About Cryptocurrency Scams Javascript must be enabled to use this site. Please enable Javascript in your browser and try again. × Search search POPULAR SEARCHES SUGGESTED LINKS Join AARP for just $9 per year when you sign up for a 5-year term. Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP the Magazine. Leaving AARP.org Website You are now leaving AARP.org and going to a website that is not operated by AARP. A different privacy policy and terms of service will apply. Close

Cryptocurrency Fraud

Cryptocurrencies such as , Ethereum, Solana and hundreds more are a hot commodity in online trading, and it’s possible for a smart investor to make a big profit. But the prospect of quick riches can blind some people to the risks and enable crooks to lure them into scams. This virtual money isn’t backed by any government or central bank. Even so, you can use “crypto” to buy goods and services, exchange it for U.S. dollars and other conventional currencies on digital markets, and even obtain it at specialized ATMs. Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP the Magazine. But unlike government-backed money, the value of virtual currencies is driven entirely by supply and demand. That can create wild swings that produce big gains for investors, or big losses. And crypto investments are subject to far less regulatory protection than traditional financial products like stocks, bonds and mutual funds. Cryptocurrency fraud has taken a quantum leap in recent years. The Federal Trade Commission (FTC) received nearly 6,800 complaints of cryptocurrency investment scams from October 2020 through March 2021, up from 570 in the same period a year before. Reported losses grew more than tenfold to above $80 million. Cryptocurrency Safety For all cryptocurrency’s high-tech gloss, many of the related scams are just newfangled versions of classic frauds. For example: Bogus websites. Phony sites festooned with fake testimonials and studded with crypto jargon promise huge, guaranteed returns on investments. "Celebrity" endorsements. Con artists as billionaires or other big names promise to multiply your investment in crypto but instead pocket what you send. . Some crooks peddling crypto create the illusion of big returns by paying off old investors with new investors’ money. Federal authorities are pursuing criminal and civil cases against one such operation, called BitConnect, that before it was shut down. Flowers & Gifts 25% off sitewide and 30% off select items See more Flowers & Gifts offers > Romance scams. Crooks persuade people they met on dating apps or social media to invest or trade in virtual currencies. The FBI’s Internet Crime Complaint Center (IC3) fielded more than 1,800 reports of crypto-focused romance scams in the first seven months of 2021, with losses topping $133 million.
Other scammers pose as legitimate crypto traders or set up phony exchanges to lure people into giving them money. Another con involves fraudulent sales pitches for “IRS approved” individual retirement accounts in cryptocurrencies. There are also straight-up hackers who break into the “digital wallets” where people store their virtual currency. And crypto is creeping into everyday , with crooks pretending to be or officials demanding payment in virtual currency for supposed debts, bills or prize fees, directing their targets to crypto ATMs and walking them through the transaction.

Warning Signs

Someone you don’t know sends you a message out of the blue about a virtual currency investment opportunity. The pitch claims that the investment involves no risk and surefire profits.A call, text, email or social media message claiming to be from a government agency, utility or other official body seeks a crypto payment to cover a bill, debt or fee. AARP NEWSLETTERS %{ newsLetterPromoText }% %{ description }% Subscribe . Do thoroughly research any virtual currency platform or digital wallet provider before providing any credit card information, wiring money or disclosing sensitive personal data.Do carefully read any agreement with a digital wallet provider. Unlike banks and credit card companies, they might not accept responsibility for replacing your money if it is stolen, the Consumer Financial Protection Bureau warns. Don’t put money in a virtual currency investment if you don’t really understand how it works. Don’t speculate in cryptocurrencies with money that you can’t afford to lose. Don’t invest in or trade virtual currencies on the advice of someone you've only dealt with online, whether it's an anonymous tipster on social media or a supposed romantic partner.Don’t make cryptocurrency payments in response to threats over bills or promises of a prize. Government agencies and legitimate businesses do not demand payment in crypto. Anyone who does is a scammer.Don’t put money into an individual retirement account advertised as “IRS approved” or “IRA approved.” Some self-directed IRAs do allow investment in virtual currencies, but the Internal Revenue Service does not approve or review IRA investments. Don’t share your “private keys” — the long letter-and-number codes that enable you to access your virtual currency — with anyone. Keep them in a secure place.

More Resources

If you think you’ve been the victim of a virtual currency scam, contact the CFTC at 866-366-2382 or . You can also report cryptocurrency fraud to the , the and the . MORE FROM AARP Scam Tracking Map No matter where you live, fraud is never far away. Report a scam or search for existing scams near you. AARP VALUE & MEMBER BENEFITS See more Health & Wellness offers > See more Flights & Vacation Packages offers > See more Finances offers > See more Health & Wellness offers > SAVE MONEY WITH THESE LIMITED-TIME OFFERS