HONOLULU (HawaiiNewsNow) – As cryptocurrency grows in popularity, it’s also become a tool for scam artists.
In its latest report, the Better Business Bureau says cryptocurrency fraud accounts for millions of dollars lost.
While many people have heard of popular forms of digital currency such as Bitcoin and Ethereum, the BBB says many don’t know enough about the currencies and are vulnerable.
“There is a lot of unknowns,” said BBB communications manager Roseann Freitas. “People do not know how it works, but they hear a lot of stories of really great returns on investment and people are curious. So they go ahead and jump into it without the understanding of what cryptocurrency really is.”
The bureau says reports of fraudulent activity involving crypto have tripled in the past three years.
Reports show that cryptocurrency scams are six times more lucrative for crooks than more common schemes and many are found on social media.
“A lot of people are being taken in by the usual pump and dump kind of scams, like ‘hey, you want to get in on this on the ground floor?’” technology and cyber security expert Ryan Ozawa said.
“It’ll really get big and great, but you’re the one left holding the bag and a lot of times, they look for payments in cryptocurrency.”
Officials say what makes cryptocurrency exciting is also what can make it so dangerous ― lack of regulation.
“It’s not backed by the bank or the federal government, so it’s not federally-insured, which is what we’re used to when we deal with banks,” Freitas said.
“We know that we put our money into a bank and there are some protections there should things go wrong and we can get our money back. that doesn’t happen with cryptocurrency.”
BBB advises consumers to conduct thorough research, don’t be fooled by celebrity endorsements, and a promise of guaranteed returns usually means a scam.