Crypto Scams and Women

"In the US more than twice as many men as women invest in cryptocurrency."

"Compared to the stock market, where 48% of women currently invest money and 66% of men currently invest money."

"One of the most prolific crypto scams and other scams relying on the psychology of its victims is romance scams.."

It’s May 2023. I’m out in central London getting my laptop replaced when I receive a frantic call from my best friend. She shares a screenshot of an email from a self-proclaimed ‘professional hacker’ claiming to have full access to her account and threatening to release an explicit video. It then lists a demand for 500 USD in Bitcoin, providing an address before cheerily signing off with a ‘good luck!’

To anyone unfamiliar with crypto, this would have been unsettling. Fortunately, my background in blockchain analytics helped me identify this as a scam immediately. I ran the address, tagged it in our database, and told her not to worry. Sure enough, she has never heard from the scammer again.

While this is now a fond memory shared between us, this brings me to a larger question. Anyone can be vulnerable to crypto scams; however, how are women affected by crypto scams in particular?

This phenomenon has recently captured the attention of popular culture with documentaries such as the Tinder Swindler sparking both support for women and criticism for perceived naivety. However, despite the significance of this issue, there is a lack of qualitative or quantitative research addressing it. Nonetheless, and breaking my own training in methodology, I propose a hypothesis and present a review to suggest further, more structured consideration of this issue.

In 2023, cryptocurrency users lost nearly $2 billion to crypto scams, rug pulls, and hacks, a figure down by half from 2022 due to security improvements. However, this doesn’t address scams like the one targeting my friend which rely on people compromising themselves.

Types of Crypto Scams?

One of the most prolific crypto scams and other scams relying on the psychology of its victims is romance scams. The US Federal Trade Commission compiled data in 2022 on the most common lies told in romance scams. Several of interest include:

* “I or someone close to me is sick, hurt, or in jail” – the most common lie told at 24%
* “I can teach you how to invest” – the second most common lie told at 18%
* “We’ve never met, but let’s talk about marriage” – one of the more frequent lies told at 12%
* “You can trust me with your private pictures” – and one of the least frequent but most damaging lies told at 3%

While these efforts of manipulation can affect any gender or sex, I am particularly interested in the second most common lie told – let’s call it the investor-mentor gambit.

In the US more than twice as many men as women invest in cryptocurrency. Globally approximately 70% of those investing in cryptocurrency are men with women comprising 30% of holders despite representing 52% of the general population. Compared to the stock market, where 48% of women currently invest money and 66% of men currently invest money, we can see two clear trends. First, is that more men invest than women in general; and second, even fewer women invest in crypto.

The WHY? #CryptoScams

This is in line with an empirical study on the gender gap in crypto adoption in Spain. As one of the first studies of its kind, Alonsa et al in September 2023 found several barriers that ‘limit the acceptance and use of cryptocurrencies by females’.[1] These are as follows:

‘The lack of investment experience in traditional assets,’
‘The general lack of knowledge on the part of females about cryptocurrencies; as well as concepts such as blockchain, how to carry out transactions.’
And the lack of a sense of security from cryptocurrency as a result of women prioritising risk aversion.

These findings are particularly interesting when coupled with Alonsa et al’s additional conclusions that there is ‘no evidence that females do not accept or use cryptocurrencies due to a lack of trust in traditional money, pressure from social media and influencers, fear of not doing the same as the next guy or speculation, which are mostly present in the motivation of males.’ Secondly, income or lack of digital skills were not found to be barriers of entry to investing in crypto for women. Indeed, it seems that Alonsa et al’s findings are consistent with the results of a BNY Mellon study that showed only one in ten women felt they understood investing. [2]

I would offer these findings are situated within the historical exclusion of women from STEM and finance, and the broader trend that women are less educated on personal finance despite having significant buying power within many economies.[3] Therefore, my long-awaited hypothesis is that due to the historical and continued exclusion of women from finance and STEM more generally, women are more vulnerable to crypto scams, specifically the investor-mentor gambit. If contextualised by broader feminist literature, there is an additional claim that sexploitation romance scams also affect women differently.

Solutions to avoid getting scammed? #Cryptoscams

Now I won’t leave this problem I have identified without some potential solutions.

The first of which is to improve education around finance across age groups and demographics beyond improving the education of only women. A well-informed society is a more productive one. Improving financial literacy for women doesn’t just benefit women; it benefits society as a whole.

Secondly, we need targeted efforts against the most distressing scams, particularly sexploitation scams that disproportionately affect young people and are linked to broader issues like revenge porn and digital violence. Given that Gen Z is rapidly adopting cryptocurrency, it’s crucial to develop specific education around these themes for schools and universities.

Thirdly, and in relation to the prior two points, we need to nurture platforms for disseminating this education, such as Women in Blockchain Talks (WiBT). WiBT’s trajectory is aligned with the call to action in this article and mirrors the work of traditional finance influencers such as herfirst100k, Female Invest, and Mrs. Dow Jones.

There is no quick fix to inequality. However, by building global networks of ambassadors through organizations like WiBT, we can gradually eliminate the crypto scams- make the crypto safer and more inclusive.