Scams are not a new occurrence; in fact, there are scriptural references to them. The ease with which con artists may reach millions, if not billions, of people with the click of a button is what has fundamentally changed. The terms of the game have simply changed as a result of the internet and other technologies, with cryptocurrency coming to represent the cutting edge of these new prospects for cybercriminals.
Cryptocurrencies were initially developed by “cypherpunks,” or those concerned with privacy. They are decentralized, digital currencies that employ encryption to create anonymous transactions. But since the COVID-19 pandemic, when the price of cryptocurrencies soared up and they became more popular, they have grown to ensnare the brains and wallets of both ordinary people and criminals. Scammers profited from their fame. The pandemic also disrupted traditional business, which increased reliance on substitutes like bitcoins.
According to a research released in January 2022 by Chainanalysis, a blockchain data platform, investors were defrauded of close to US$14 billion in 2021 using cryptocurrency.
For instance, two brothers from South Africa were successful in stealing $3.6 billion from investors in 2021 through a bitcoin investing website. The FBI reported in February 2022 that it had apprehended a pair who had defrauded investors of a further $3.6 billion by using a fictitious cryptocurrency platform.
Two primary categories of cryptocurrency fraud target various demographics.
One aims at cryptocurrency investors, who frequently have riskier portfolios and are active traders. Most of them are under-35 investors who have high incomes, excellent educations, and careers in engineering, finance, or IT These frauds include con artists creating bogus currency or trades.
SQUID, a digital coin called after the TV program “Squid Game,” is a recent example. The new coin’s designers just vanished with the cash after its value surged.
In an initial coin offering, which is a variation of this scam, investors are enticed to be among the first to buy a new cryptocurrency with promises of huge returns quickly. However, unlike the SQUID proposal, no coins are ever produced, leaving potential investors with nothing. Despite the fact that many initial coin offerings turn out to be false, even knowledgeable, seasoned investors might be duped due to the complexity and constant evolution of these new coins and technology.
Anyone thinking about investing in cryptocurrencies should, like with any risky financial endeavor, conduct extensive due diligence on the offer. Who is the offer’s sponsor? What is understood about the business? Are there any white papers, which are informational documents that list the features of a company’s product?
The fact that purchasers of the coins were unable to resell them was one warning sign in the SQUID case. The SQUID website was littered with grammatical errors, which is typical of many scams.
The second sort of fundamental cryptocurrency scam merely employs cryptocurrencies as a means of payment to transfer money from victims to fraudsters. You can target people of all ages and demographics. These include sextortion instances, Ponzi schemes, romance scams, computer repair scams, and ransomware cases. Scammers are only taking advantage of cryptocurrency’ anonymity to conceal their identity and escape punishment.
In the recent past, con artists would ask for money through wire transfers or gift cards because they are untraceable, anonymous, and irrevocable. Such payment methods do, however, force potential victims to leave their houses, where they can run into a stranger who can step in and potentially stop them. Contrarily, cryptocurrency can be purchased at any time and from any location.
In fact, with close to 98 percent of ransomware cases requesting it, Bitcoin has emerged as the most popular form of payment. The U.K. National Cyber Security Center reports that Bitcoin and other cryptocurrencies are frequently demanded as payment in sextortion scams. The use of bitcoin in romance scams aimed at younger folks is on the rise.
You should immediately recognize a huge red flag if someone requests that you send them money via cryptocurrencies.