Federal officials have issued a warning regarding the increase in “relationship investment schemes,” in which criminals assume the identity of romantic partners.
Federal officials have cautioned that investors are at a significant risk of falling victim to crypto schemes that are associated with fabricated relationships on social media, dating apps, and networking sites. Gurbir S. Grewal of the US Securities and Exchange Commission contends that these “relationship investment schemes” are on the rise and have the potential to be catastrophic for retail investors.
Scammers are infiltrating users’ direct messages, assuming the identities of familiar acquaintances or romantic partners, and subsequently leading them into the realm of cryptocurrency investments. Ultimately, they present a fraudulent cryptocurrency investment that can result in substantial financial losses for the user.
The SEC is urging investors to select the sources from which they obtain information and to verify the accuracy of their sources during World Investor Week (WIW) 2024, as stated in the release. October 7-13 is the duration of the initiative. It is highly recommended that investors obtain information from reliable sources, regardless of whether they are seeking an investment professional or determining which investments will assist them in achieving their financial objectives.
In 2023, the FBI received nearly 70,000 complaints regarding financial fraud involving cryptos. The investor losses were $3.96 billion and were attributable to investment fraud. Over the course of weeks or even months, scammers establish trust by slipping into direct messages on dating apps or social media. It is akin to a subpar romantic comedy narrative, but with your financial security at risk.
The eighth anniversary of WIW, which unites regulators from six continents to increase awareness of investor protection, is this year. The SEC is collaborating with the Commodity Futures Trading Commission, FINRA, and other organizations to establish significant knowledge traces.
Gary Gensler, the chairman of the Securities and Exchange Commission (SEC), declared, “Investor protection is the cornerstone of the SEC’s three-part mission.” SEC staff will conduct outreach events that concentrate on the fundamentals of investing and saving throughout the week.
Lori Schock, the Director of the SEC’s Office of Investor Education and Advocacy, addressed the uproar surrounding emerging technologies such as AI, finfluencers, social media, and aggressive investing marketers. These factors can complicate the process of selecting the appropriate support for an investor.
The FBI has reported a significant increase in the use of digital currencies such as Bitcoin (BTC) and Ethereum (ETH) among criminals. In 2023 alone, consumers lost approximately $5.6 billion to crypto-related schemes, a 45% increase from 2022. Approximately 71% of these losses were the result of investment schemes. Nevertheless, relationship schemes were the most prevalent form of deception last year.
Reportedly, criminals are increasingly employing cryptocurrency for fraudulent activities as a result of its decentralized nature, rapid irreversible transactions, and global transfer capabilities. The detection of romance schemes associated with cryptocurrency is expected to be further complicated by the integration of AI.
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