An Analysis of Crypto Scams during the Covid-19 Pandemic: 2020-2022

Abstract

Blockchain and cryptocurrency adoption has increased significantly since the start of the Covid-19 pandemic. This adoption rate has overtaken the Internet adoption rate in the 90s and early 2000s, but as a result, the instances of crypto scams have also increased. The types of crypto scams reported are typically giveaway scams, rug pulls, phishing scams, impersonation scams, Ponzi schemes as well as pump and dumps. The US Federal Trade Commission (FTC) reported that in May 2021 the number of crypto scams were twelve times higher than in 2020, and the total loss increased by almost 1000%. The FTC also reported that Americans have lost more than $80 million due to cryptocurrency investment scams from October 2019 to October 2020, with victims between the ages of 20 and 39 represented 44% of the reported cases. Social Media has become the go-to place for scammers where attackers hack pre-existing profiles and ask targets’ contacts for payments in cryptocurrency. In 2020, both Joe Biden and Bill Gates’ Twitter accounts were hacked where the hacker posted tweets promising that for all payments sent to a specified address, double the amount will be returned, and this case of fraud was responsible for $100,000 in losses. A similar scheme using Elon Musk’s Twitter account resulted in losses of nearly $2 million. This paper analyses the most significant blockchain and cryptocurrency scams since the start of the Covid-19 pandemic, with the aim of raising awareness and contributing to protection against attacks. Even though the blockchain is a revolutionary technology with numerous benefits, it also poses an international crisis that cannot be ignored.