Cryptocurrency and Scams
In 2021 there were over 81,500 investment scams reported to the government with an estimated loss of $1.8 billion dollars. Of course, we observed little to no news coverage. Thanks to 30-year-old Sam Bankman-Fried, cryptocurrency fraud is in the news now more than ever.
What exactly is cryptocurrency?
Cryptocurrency is a digital currency that exists only electronically. To purchase cryptocurrency, you can use your phone, computer, or a cryptocurrency ATM (yes this is a real thing). Funds are not backed by the by the government and does not come with legal protections, like a credit card.
What are examples cryptocurrency scams?
Investment scam: Investment scams use key terms like “zero risk” or “you’ll make a lot of money”. Typically, an investment manager contacts the victim out of the blue with the promise to grow your money by investing in cryptocurrency. There is normally an upfront fee collected from the victim with no return on their investment.
Impersonator scam (well-known businesses or government agencies): Impersonator scams use big names like FedEx, Amazon, PayPal and so on. They use pop up alerts advising there is fraudulent activity with your account, or your money is as risk. They provide a link to click for customer support. Scammers impersonating government agencies such as law enforcement will note there is a legal problem and you owe money and your assets are frozen as part of an investigation.
Blackmail scams: Scammers may send an email or letter nothing they have compromising video or photos of you or that they have personal information about you. A threat is given the information will go public if payment is not made in cryptocurrency.
First and foremost, do not click, pay, or provide personal information to the scammers. Before accepting the story provided by the scammer, do a thorough background check and research.
What to do if a victim of a cryptocurrency scam?
Report the scam or fraud to the following agencies:
a. Federal Trade Commission: https://reportfraud.ftc.gov/#/
b. S. Securities and Exchange Commission: https://www.sec.gov/tcr