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Cryptomania: How Crypto Scams Emerged from a Financial Trend

Cryptomania may sound like an exaggerated term, but looking at the growth of interest in cryptocurrency since 2020, it seems appropriate. From the time the first digital currency was introduced in 2008, it received some attention, first peaking at 2017 and then dropping. However, 2020 was the time when cryptocurrencies truly captured the public’s imagination the world over. Although bitcoin has pulled back a bit since mid-2021, there is no doubt crypto is here to stay. 

Cryptomania, as the term suggests, is an intense enthusiasm about digital currencies. Trends fuel commerce and trade, but excessive excitement can lead to problems. First of all, getting very excited about a volatile and risky asset such as cryptocurrencies can lead to traders losing money with impulse buys and the desire to get in as soon as possible. 

The other problem with intense hype over cryptocurrencies is its tendency to encourage fraudulent parties to create crypto scams and take money from consumers. If you have lost money to a crypto scam, it is possible to recovery your funds. The blockchain poses significant challenges to fund recovery, but with the right experts, clients can improve their chances of getting their money back.

Professionals at Pengeretur provide information to consumers about credit card chargebacks, cryptocurrency refunds, wire recalls, and other fund recovery strategies. We advise clients on the chargeback process and the best ways to pursue fund recovery whether the issue is merchant or broker dispute or if the charges were unauthorized.

The Origins of CryptoMania

There was chatter about cryptocurrency since it was first invented, but it didn’t capture the imagination until the crypto market skyrocketed in 2017. Then, everyone was talking about cryptocurrency. Bitcoin ran in 2017 from $900 to $20,000. Naturally, everyone wanted to get in on the crypto game, including crypto scammers. 

As a result, in 2017, China shut down its big three crypto exchanges and US regulators cracked down on unauthorized ICOs because of high-profile frauds. In 2017, the plethora of crypto scams was responsible for bringing down cryptocurrency and as a result, digital currency had a shady reputation for several years. 

However, in 2020, the crypto market perked up again. The reason was a perfect storm created by the COVID-19 crisis, mainstream currency fluctuations, growing mistrust of government and regulations, as well as the increase in online financial activity. With many people out of work around the globe when the pandemic began in 2020, consumers had the time to re-discover cryptocurrencies.

 In addition, given the shutting down of many companies, people were looking for creative ways to make money online. Cryptocurrency was fueled by new ways to trade and purchase objects and as it rose in value during 2020, more people jumped in to avoid getting left behind. Unfortunately, that led many to be taken advantage of by crypto scams, which have increased in step with legitimate cryptocurrency services. 

The value of bitcoin increased from $10,000 to nearly $60,000 from October 2020 to April $60,000. However, bitcoin did not completely drop down and nearly out of sight as it did in 2017 but has corrected the way any asset would. Cryptocurrency fell in value partly due to Elon Musk’s stating concerns about the environmental impact of cryptocurrency and the natural correction of the asset.  

One thing is clear–this time bitcoin and other crypto currencies are here to stay. Recently, Coinbase, a cryptocurrency trading platform, went public on the Nasdaq in the spring of 2021. Lear Investment Management founder Rick Lear said of cryptocurrencies, “If you’re not talking about it, you’re really stuck in the past,” he told Marketwatch. “Having another currency creates a whole lot more problems, but it’s happening and you’ve got to be able to deal with it.” 

The Problem of Crypto Scams

Whenever there is a major trend, unfortunately, scams arise to cash in on the enthusiasm. The SEC has received 7,000 complaints about crypto scams in 2021, which is 12 times higher than it was the previous year. There are many reasons why crypto scams have increased so dramatically.

  • The popularity of cryptocurrencies–Cryptomania
  • Haste–the need to “get in quick”
  • Tapping into a general distrust in regulations and government oversight
  • Exaggerated stories about people making millions
  • The popularity of advertising financial products and social media
  • Manipulating confidence in celebrity endorsements

The first thing that contributes to crypto scams is the enthusiasm for crypto currency. Anything that is trendy will attract millions of people. Of these millions, scammers will then cast a wide net with hyped-up claims. Even if most people may stay away, these scammers will attract enough people to make it worthwhile. 

Given the need to get into cryptocurrencies fast before they increase in value, there is an urgency that will cause people to jump into these trades faster than they would otherwise. In this case, haste makes waste. Financial services should be regulated to be secure. However, in the current climate, there is a general distrust of government oversight.

Lack of regulation is one thing that attracts people to cryptocurrency, to begin with, however, this notion can be used by unregulated brokers as a way to alienate consumers from government bodies that can protect them. Crypto scams often use hyped-up language to attract consumers. They guarantee returns and claim that people make millions. Very few people do manage to make large amounts of money on volatile trades, but often they lose a few times before winning. The truth is cryptocurrencies are volatile assets and huge returns on the first try are unlikely. 

Another problem leading to the increase in crypto scams is the use of social media for financial services rather than secured websites. Scammers can be anonymous and hide on social media conveniently. In addition, they can impersonate celebrities and create a fake endorsement or can also hack high-profile accounts. 

If you have lost money in a crypto scam, fund recovery is possible. Pengeretur professionals assist clients in fund recovery. We provide information about the chargeback process and tools that will help you analyze your situation and assess the best strategies for pursuing fund recovery. 

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