How much do you know about cryptocurrency? If your answer is “not much,” that’s exactly what crypto scammers want to hear. And that’s exactly who Celsius Network, LLC company targeted with its false and misleading claims, according to a lawsuit filed by the Federal Trade Commission (FTC).
According to the FTC, Celsius marketed and sold financial services using YouTube and Twitter, now X, to promote marketing videos that were full of false and misleading claims. For example, Celsius claimed its crypto platform was safer and more stable than a bank. (It wasn’t.) And it told people that depositing crypto onto its platform came with a “no risk” promise that they’d earn high interest on their deposits. (A lie.) Even worse, the FTC claims the company used people’s crypto deposits without permission to spend, trade, invest, or pay business expenses. When Celsius started running out of money, it blocked people’s account access, preventing them from withdrawing their crypto. Now, Celsius is in bankruptcy, and consumers are unlikely to get all their crypto back.
Here’s how to avoid a cryptocurrency-related scam:
- Don’t trust people who make big promises or guarantees. Only scammers promise “no risk” and guarantee high returns.
- Research the company or cryptocurrency platform. Search online for the company or crypto platform name, plus “review,” “scam,” or “complaint” to see what people say.
- Know that cryptocurrency accounts are not backed by a government like traditional FDIC-backed bank accounts.If something happens to your crypto account or funds, the government may not have an obligation to step in and help get your money back.
- Learn about cryptocurrency and scams. Scammers take advantage of people’s understanding (or not) of cryptocurrency and how it works. Visit ftc.gov/cryptocurrency to learn more.
Using a crypto platform that isn’t living up to its promises or guarantees? Tell the FTC at ReportFraud.ftc.gov.
For more information, click here.
Teaching Suggestions:
- Ask students to create a list of factors to consider before investing in cryptocurrencies.
- Have students prepare a short paper describing a portfolio of cryptocurrencies they might consider now or in the future.
- Have students suggest exceptions to the disadvantages of investing in cryptocurrencies.
Discussion Questions:
- Are there any attractive aspects of investing in cryptocurrencies?
- What economic and other factors would be the main concerns when investing in cryptocurrencies?
- What actions can you take to avoid cryptocurrency scams?