When a post or press release mentions cryptocurrency and scams, the fastest useful question is not "is this true?" but "what exactly is being claimed, and who is accountable if it fails?" A consumer-facing explainer from the U.S. Federal Trade Commission, published February 10, 2025, gives a compact baseline you can use to vet almost any crypto announcement or warning. It describes cryptocurrency as a type of digital currency that generally exists only electronically, and it flags the practical gaps that matter most to readers: custody, insurance and recovery.
The core facts worth carrying into any review
The explainer states that you usually buy cryptocurrency using your phone, computer or a cryptocurrency ATM, and that purchases can run through an exchange, an app, a website or an ATM. Bitcoin and Ether are named as well-known cryptocurrencies, with the note that many others exist and new ones keep being created. People use crypto for quick payments, to avoid transaction fees that traditional banks charge, or because it offers some anonymity; others hold it as an investment, hoping the value goes up.
Two mechanical details are easy to skim past but important for reading announcements. First, some people earn cryptocurrency through mining, described as a complex process requiring advanced computer equipment to solve highly complicated math puzzles. Second, cryptocurrency is stored in a digital wallet that can be online, on your computer or on an external hard drive, and each wallet has an address that is usually a long string of numbers and letters.
Where the accountability gap sits
The source is blunt about failure modes. If something happens to your wallet or funds — an online exchange platform goes out of business, you send crypto to the wrong person, you lose your wallet password, or your wallet is stolen or compromised — you are likely to find that no one can step in to help recover the funds.
It also draws the comparison to traditional money. Cryptocurrency accounts are not backed by a government, and crypto held in accounts is not insured by a government the way U.S. dollars deposited into an FDIC-insured bank account are. If a wallet storage provider goes out of business or is hacked, the government has no obligation to step in and help get your money back.
Value behavior is part of the same picture: cryptocurrency values change constantly, can change rapidly, even by the hour, and the amount of change can be significant.
A reading checklist for crypto claims
Use this against any release, help-center page or scam warning you are about to cite:
- Custody: Does the text say who holds the funds — an exchange, an app, a personal wallet — and does it match the storage description in the source?
- Insurance wording: Does it claim government backing or insurance, or does it correctly say crypto accounts are not government-backed and not government-insured?
- Recovery promises: Does anyone promise to get lost or stolen funds back? The source says recovery help is unlikely to arrive, so treat such promises as a flag to investigate, not a feature to quote.
- Value language: Are hourly or significant value changes acknowledged, or is stability implied without support?
- Channel details: Where is the purchase or storage said to happen — phone, computer, ATM, exchange, app, website, online wallet, computer wallet, external hard drive?
Worked example: grading a hypothetical announcement
Suppose a hypothetical company issues a release saying users can buy its token through its app and hold it in a wallet the company manages, and that "funds are protected." Using the source, you can split the sentence into three checks.
Calculation: the release makes one custody claim (company-managed wallet), one channel claim (app purchase) and one protection claim ("protected"). The source supports the idea that apps and online wallets exist, but it says crypto accounts are not government-backed and not government-insured, and that if the storage provider fails or is hacked, the government has no obligation to help recover funds. So the protection claim needs its own definition. Hypothetical: if the release means an internal promise rather than government insurance, that is a materially weaker statement than a reader may assume.
A second hypothetical: a release says a token "cannot lose value overnight." The source says values change constantly, can change rapidly, even by the hour, and the amount of change can be significant. The claim is not supported by the explainer and should be labeled as the company's assertion, not as a fact.
Announcement versus implementation
Keep status labels separate. A statement that a feature exists, a plan to launch it, and a live, working system are three different things. The source describes how crypto generally works; it does not audit any particular company, app or ATM. When you summarize a release, write which stage it is in, and do not upgrade a proposal into a confirmed capability.
What the source does not say
The explainer does not name any specific scam, company, exchange or token, and it gives no figures on losses, prevalence or recovery rates. It does not say crypto is illegal, does not recommend or discourage buying it, and gives no price, return or investment guidance. It also does not explain tax treatment, licensing rules or dispute procedures. Any article that needs those points must source them elsewhere rather than attributing them to this page.
The practical takeaway for readers: quote the custody, insurance and recovery language precisely, mark company promises as promises, and keep the source's own limits visible.