The Consumer Financial Protection Bureau of the US government has issued a warning, noting that it is receiving more complaints about cryptocurrencies and other digital assets. Although they are the most frequent complaints the agency hears about, as shocking as that may be, the CFPB says consumers have also been raising concerns about difficulty with transactions going through, lost savings, and other issues.
The 45-page bulletin analyses the complaints the CFPB received from October 2018 to September 2022 regarding cryptocurrencies. It demonstrates the rise in consumer support requests and offers numerous examples of inappropriate behavior. Nearly 40% of the more than 8,300 complaints the agency got during that time period were about fraud and scams, 25% were about various transaction issues, and 16% were about money not being available as promised. California had the most complaints, or about 13 percent, followed by Florida with 689 complaints, or about 8 percent.
The research also delves into the unexpectedly widespread practice of exchanges freezing cash, which according to the CFPB has harmed “millions of clients.” And that’s just when it’s done on purpose; the bureau has also received numerous complaints about technical difficulties at exchanges, particularly during periods of high price volatility, when being unable to trade could lose consumers a lot of money.
The majority of the information in the document won’t be very shocking for those who have been paying attention. Over the past few years, it has been difficult to ignore the crypto fraud, which has ranged from various NFT hijinks to phoney livestreams that attempt to divert viewers to dubious websites. There are also plenty of traditional frauds with a crypto twist, such wire transfer and romance frauds. The latter is really mentioned by the CFPB, and it takes the shape of the horrifyingly titled “pig butchering” scams, in which a fictitious love interest coerces a victim into paying money for a fictitious investment.
But it serves as a sobering reminder of what transpired when the general public became engrossed in a crypto-frenzy that saw Bitcoin and Ethereum reach absurd highs of $68,789.63 and $4,891.70, respectively, before plummeting earlier this year. (If you purchased either at its height, you are today facing a loss of more than 70%.) It’s no surprise that the CFPB is receiving more complaints as NFT frenzy, the decline of purportedly “stable” coins, and what appears to be the collapse of a major exchange (which wouldn’t be the first major cryptocurrency corporation to file for bankruptcy) all come into play.
Additionally, it demonstrates that the fraud taking on there is still being monitored by the government. The Department of Justice has been going after both large-scale and small-scale fraud schemes over the past year, and state and federal governments have been discussing ways to regulate cryptocurrencies and the exchanges that deal in them.
