As new computer technologies continue to change the way we engage each other and experience the world, so too criminals use these new technologies to serve their own malicious purposes. Russian private investigators estimate that the existence of this kind of currency has facilitated the growth of many online criminal organizations throughout the country.

Cryptocurrencies have been around globally since 2009, with Bitcoin being the first one openly available to anyone who wanted to use it. Cryptocurrency does not require a central authority like other currencies, which is why there is no regulation over the origin of the funds, or the ownership.

Since cryptocurrencies are fairly new in our economic ecosystem, their legal status varies substantially from country to country and is still undefined or changing in many of them. While some countries have explicitly allowed their use and trade, others have banned or restricted it. In Russia, for example, though cryptocurrencies are legal, it is illegal to actually purchase goods with any currency other than the Russian ruble. This fact makes it clear that cryptocurrencies are not used by regular people who need to pay for their food, rent, etc., but more likely by people with dubious intentions.  Victims of online fraud have skipped safety verification processes like background checks or due diligence, or are simply too afraid (especially in the cases of cyber extortion) to even think about hiring a background check in Russia before providing any payments.

Online criminals and mafia rings have chosen Bitcoin and other cryptocurrencies to launder millions of dollars. With no regulation whatsoever, the chances of being caught are very little. Funds from hacking jobs, online romance scams, marriage fraud, investment fraud, extortion, and many more crimes are being moved from one account to another through the dark corners of the web, without anyone really noticing what is going on.

Approximately two years ago, a Russian man was arrested for creating an international scheme through Bitcoin to legalize stolen money and help hackers and drug dealers for seven years, all totaling an amount of $4 billion. Despite that arrest, the cases of money laundering and criminal money moving throughout Bitcoin continue to happen.

How to avoid fraud if cryptocurrency is a requirement for your deal?

First of all, try to avoid cryptocurrency all along. If it’s not a possibility, make sure the crypto website that you are using is not a scam. If the website uses an https connection the data that you send will be secure. Otherwise, if it is an http connection then your information is not secured and you should not use it.

Individuals, companies and investors need to understand in full that any international relationship carries serious legal, financial and reputation risks. If the whole deal is taking place in cryptocurrency grounds, where no jurisdictions apply, then the risks are even greater. Background check investigations and due diligence in Russia allow people to find any questionable or illegal practices prior to agreeing in sending any funds. Fraud happens with any currency and verifying the legitimacy of a person or a business is a must always.

Keep in mind that your hard-earned money could be taken by a Russian online criminal, converted to a cryptocurrency and lost and untraceable forever. Do not put your money at risk!

C. Wright
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