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The main targets in France were people aged 18 to 34, according to a report for French financial watchdog AMF.
The AMF pointed to a high concentration of crypto in trading scams since 2023, which it says usually involve social networks directing victims to fake trading platforms.
Here is a breakdown of the main cryptocurrency scam schemes.
‘Pig butchering’
Under this scam, fraudsters disguise themselves as female “influencers” or seductive female crypto traders to mainly target men on social media networks, Margaux Frisque, a lawyer at d&a partners, told AFP.
Excited by the prospect of fast profits, victims fall into the trap without checking out the reliability of the sites they are being directed to, losing hundreds or even millions of euros, she said.
The term “pig butchering” comes from fraudsters referring to their victims as “pigs” that they gradually “fatten up” by luring them into a fake romance or friendship before “butchering” them by convincing them to invest in fake cryptocurrency schemes.
The victims are often left with devastating financial losses as well as psychological harm.
Interpol, in a bid to avoid stigmatising victims, has moved away from the term in favour of “romance baiting”.
‘Rug pull’
Rug pulls happen when developers lure investors to invest in apparently legitimate projects which are actually bogus, says lawyer Jasson Gottlieb of Cohen Morrison.
These scams mainly take place in decentralised finance, in the absence of middlemen, according to Sonia Rogez, a lawyer at HSF Kramer.
Two of the biggest “rug pulls” took place in 2021.
One was a scam in which the token Squidcoin was used to lure viewers of the Netflix series Squid Game before a mass sell-off by its investors, resulting in losses of between US$2.5m and US$3.5m.
The second happened when the creator of a virtual fighting game based on ape-themed NFTs (non-fungible tokens) disappeared with roughly US$2.7m that investors had earmarked for the project.
More subtle versions of rug pulls involve siphoning off investment funds over a long period by hacking smart contracts – a computer code which should secure and automatise trading without the need for an in-between, Rogez said.
‘Pump-and-dump’
Often involving “meme coins”, which are generally purely speculative, prices are artificially inflated until insiders dump them in a co-ordinated manner, leaving investors with heavy losses.
Unlike rug pulls, which can only be carried out by a project’s purported developers, pump-and-dump schemes can involve anyone.
This practice has long existed in traditional financial markets with so-called penny stocks, but there it has been curtailed by regulators imposing strict rules on banks and traders.
But in the world of cryptocurrencies, the human middlemen are usually replaced by blockchain, a decentralised register outside traditional banking networks.
Frisque, the lawyer, urges investors in cryptocurrencies to be on “maximum alert” and “ultra informed, ultra prepared and ultra meticulous, because one is one’s own bank”.
-Agence France-Presse
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