Crypto Complaints Rise as Currencies Fall
Cryptomania is fast becoming a dangerous, money-losing proposition for investors, according to a recent bulletin from the Consumer Financial Protection Bureau (CFPB).
The CFPB announcement dovetails with a flurry of reports last week about the collapse of cryptocurrency exchange FTX, leaving possibly more than 1 million creditors at risk of losing tens of billions of dollars.
“Our analysis of consumer complaints suggests that bad actors are leveraging crypto-assets to perpetrate fraud on the public,” said CFPB Director Rohit Chopra.
The CFPB received 8,300 such complaints from October 2018 through September 2022. Most involved frauds and scams. Many consumers report having difficulty accessing funds, verifying identity, or encountering technical snafus. Poor customer service is another common complaint, the CFPB said.
Among the risks highlighted in the bulletin are:
“Pig Butchering”—A latter-day con in which someone manipulates a victim by feigning persistent romantic interest, convinces them to set up a crypto-asset account, then steals the assets.
No Recourse—If consumers are defrauded or their crypto-asset account is hacked, there is nowhere to turn for help.
Vulnerability—Investors may be unaware of the public nature of every crypto-asset transaction. “Malicious actors may be able to link those transactions and the crypto address with a consumer’s identify or their other transactions,” according to the CFPB.
Sudden Volatility—There have been dramatic fluctuations in cryptocurrencies recently, with assets being frozen or becoming worthless.