Crypto currency, such as Bitcoin, has given investors a new way to avoid the devaluations of fiat paper money, and the inflation risks that go along with it.  In addition, Crypto has attracted many for other reasons as well.  Crypto payments have become the preferred method for online scammers and criminals, and there is a good reason for it. Cryptocurrencies have few regulations, there are less financial authorities controlling them, and most people don’t understand how they really work. Combine these factors and you create the perfect recipe for fraudsters to move funds around the world.

The high-tech nature of crypto attracts many investors, especially because they’ve been featured as the future, digital gold, and no one wants to be left behind. However, cryptocurrency scams remain a potential issue for investors. Early in 2021, the Federal Trade Commission said consumers lost a combined $80 million in the U.S. only (and this is only the reported number, a fraction of actual). This figure can very well be twice as much by this time of the year. In the U.K., the losses YTD are over £146 million.

“Unfortunately the impact of cryptocurrencies in online crime is not limited to investment only, as our investigators have uncovered many other schemes that involve virtual currency,” says Charles Wright, VP of Due Diligence Services at Russia PI.

The following are some of the most common threats online involving cryptocurrency.

Fake companies using crypto-only payments

If a seemingly credible company claims they cannot accept any form of currency other than Bitcoin, it’s likely a scam. Russian private investigators say credible companies usually use secure payment methods, like credit or debit cards that protect consumers, and normal means like wire transfers. A reliable business will have different options, not just one.

Russian criminals can create a fake website and online content in just a few hours (or minutes). Blockchain lacks the common know-your-customer protocols, which means fraudsters can open wallets without having to present valid identification, an address or any contact information. Criminals can do business anonymously, making it easy to deceive potential victims, take your money, and run with it. If people do not care to verify or hire someone to do due diligence, verify the company and the representative they’re dealing with before sending money, chances are they will never see their money again.

Romance scammers requesting financial help

Cryptocurrency is widespread throughout dating apps, bride searching websites and cam-girl services. According to the FTC, about 20% of the money lost in romance scams from October 2020 through March 2021 was sent in the form of cryptocurrency. Scams like this involve long-distance or digital relationships in which fraudsters pressure and convince their victim to send crypto money to help them out in a certain situation, or to buy or invest in cryptocurrency. The romance part is really just a way to trap people and scam them out of their money.  If you meet someone online, and there is Bitcoin or crypto currency involved, take a time out to verify the facts, get evidence, then decide.

Phishing Scams

This type of scam is as old as the internet, but with crypto there are some new implications. Criminals will send emails aiming to lure recipients into clicking links and inputting personal information, including crypto wallet key information, just in the same way that a traditional phishing scam would. The main problem is you only get one private key to your blockchain wallets, unlike most passwords and usernames, which can be very dangerous and inconvenient if you need to alter your key. If scammers prefer crypto, it might be wise to stay away from it, or at the very least, properly minimize your risk.

Communicating with someone in Russia and Bitcoin is involved?  Contact us today.

C. Wright
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