BALTIMORE — As Bitcoin skyrockets, so have scams. The Federal Trade Commission received reports of losses of more than $80 million in seven months to cryptocurrency scams.
During that same time, the price of one Bitcoin more than doubled from $13,000 to over $35,000. In a year, it’s more than quadrupled, now topping $60,000. And it's these price jumps that have more people looking to put cash into cryptocurrency.
“It’s sort of that lottery, hey, someone won millions of dollars. Maybe if I play, I’ll win as well,” said Angie Barnett, President and CEO of the Better Business Bureau serving Greater Maryland.
This gamble isn't paying off for everyone.
The BBB is constantly receiving complaints involving cryptocurrency, including from Sherrett Jacobs, who received an Instagram message to start investing through a company called FX-Switchtrade.
“I figured, hey, we’ll start with $100, $100 is not bad,” Jacobs said.
She received instructions to create an account on their website.
“They said in order to start trading on my behalf, I’d need to give them an additional $200,” said Jacobs.
She sent $300 total in Bitcoin to the company, then watched her investment take off. It quickly rose to more than $800, past $3,000, over $5,000, and maxed out at $9,500.
“It never went down. It only went up over the course of three days. They said that would be my trading session and at the end of the three days, I’d be able to withdraw those funds,” Jacobs said.
But first, she was told she’d have to pay a one-time fee of $1,500, and she did via Bitcoin.
“I got an email from their ‘customer service’ that in order for the withdrawal to be processed, I had to pay the IRS a fee of $2,500,” Jacobs said.
She then called her brother, another cryptocurrency investor, who confirmed her earnings on the platform didn’t match the market.
During those three days, the value of Bitcoin dropped. If her initial investment of $300 went into Bitcoin, it would’ve been worth around $287.
“I guess me being a rookie and not really understanding how cryptocurrency really works, all I saw is my investment is going up in increments and like wow,” said Jacobs.
The company didn’t respond to WMAR-2 News Mallory Sofastaii’s emails or chats. Their phone number is supposedly only for VIP clients.
“There are no legal protections,” said Barnett. “Once you send cryptocurrency to whatever that destination is, you can’t reverse it most often.”
Cryptocurrency is also not backed by a government, so if you are thinking of investing in it, educate yourself first.
The FTC provided the tips below:
- Promises of guaranteed huge returns or claims that your cryptocurrency will be multiplied are always scams.
- The cryptocurrency itself is the investment. You make money if you’re lucky enough to sell it for more than you paid. Period. Don’t trust people who say they know a better way.
- If a caller, love interest, organization, or anyone else insists on cryptocurrency, you can bet it’s a scam.