Avoiding Cryptocurrency Scams
Over the years our blog posts have covered a number of modern-day scams, what the telltale signs of those scams are, and what to do if you become a victim of one. While much has been written about Cryptocurrency, the average individual knows little about the risks associated with a Cryptocurrency investment. According to the FBI, Crypto scammers primarily target individuals who are on a fixed income, but with the increased dollar value of these scams, wealthier individuals are becoming a prime target.
What exactly is Cryptocurrency? Investopedia, an online investing and banking website, defines Cryptocurrency, or Crypto, as virtual, or digital assets purchased with real money ($, £)and traded on blockchain technology”. Blockchain technology is an advanced database mechanism that allows information sharing within a business network. Crypto does not have all the values of real or national currencies. Cryptocurrencies, like Bitcoin and Ethereum, are different from stocks and real money.
According to a recent article in the Wall Street Journal titled Pig Butchering Scams Cost Americans Billions at www.wsj.com-pig-butchering-scams, online scams are proliferating. Pig Butchering scams (also known as Shāzhūpán, originating from a Chinese term) are a form of financial fraud where scammers target victims over an extended period of time to “fatten” them up before eventually draining them of significant amounts of money. Many WSJ readers, who tend to be upper-income white-collar business people, have written to the newspaper about how sophisticated and prolific these scams have become among their socioeconomic communities.
Scammers often approach their victims through social media, dating apps, or even random messages on messaging platforms. They usually pose as friendly, trustworthy individuals, sometimes pretending to be successful business people or investors. Where dating scams focus on engaging individuals through one-to-one chat messaging, crypto scammers are developing fraudulent chat groups made up of different individual scammers through fake brokerage services providing reassurance to the victim that the conversations and potential investments are believable and legitimate.
Fake brokerage accounts that appear believable with corporate offices and branch locations guide the potential victims into setting up an online profile. Money invested in the scam initially gets transferred from your bank account into a cryptocurrency exchange typically located in the United States, to create an illusion of confidence that the victim still has control of their money. As the victim sees what they believe are successful returns, the scammer pressures them to invest more and more money. The victim may even be encouraged to take out loans or liquidate personal assets to invest further. Once the potential victim becomes fully engaged and continues to invest, the scammers will shut down the fake brokerage account and the conversation will evolve into a one-to-one chat. At this point, the scammer will lure the victim into moving the money from the cryptocurrency exchange (called a wallet) into an investment platform equipped with a dashboard erroneously reflecting that the money has doubled in a short time. At this point, the victim’s money is now fully controlled by the scammer.
Common Tactics:
- Professional-Looking Platforms: Scammers often create very sophisticated, legitimate-looking websites or apps to fool victims.
- Fake Proof of Returns: Victims may see fabricated returns on the platform, which encourages them to invest more.
- Fear of Missing Out (FOMO): Scammers leverage psychological tactics, like FOMO, to rush victims into making large investments.
- Emotional Manipulation: Scammers use personal relationships, romantic ties, or friendships as a tool to manipulate victims into trusting them.
Warning Signs:
- Unsolicited messages or investment advice from strangers.
- Investment platforms that require cryptocurrency transfers without regulatory oversight.
- Unrealistic promises of high returns with little or no risk.
- Pressure to invest quickly without providing thorough documentation
How to Prevent Becoming a Victim
As we have discussed in the past, if an individual has any suspicion regarding a potential fraudulent scam, consider retaining the services experienced licensed & bonded private investigator to assist you in understanding the risks and possibly uncovering a fraud. Be skeptical of unsolicited investment advice, particularly from people you meet online. Research any platform or investment opportunity before participating. Avoid sending money or personal information to people you’ve only met online. Use only well-known and regulated investment platforms. These scams have been growing in prominence, especially in the cryptocurrency space, where transactions can be difficult to trace and recover. Authorities in many countries are aware of this scam and are trying to crack down on the fraudsters behind them.
How can a Private Investigator Help
In a “pig butchering” scam, private investigators (PIs) can play a crucial role in helping victims recover lost funds or gather evidence to support legal actions. Verifying the Legitimacy of Investments- If someone suspects they are being scammed but hasn’t yet been “butchered,” a PI can conduct a thorough background check on the individual or entity offering the investment to determine whether they are legitimate. PIs can analyze communications, such as emails, social media, or messaging apps, to trace IP addresses, account registrations, and other digital footprints to potentially unmask the identity of the scammer or at least gather clues about their location and network. Private investigators can compile detailed reports, collect evidence from conversations, and track financial transfers, which can be used to file complaints with law enforcement agencies or regulatory bodies like the FBI or SEC. The information and evidence collected by a PI can support civil lawsuits aimed at recovering funds from the scammer or freezing their assets before they disappear entirely.
Lastly, finding yourself victim of a financial scam can be a lonely and scary place. Experienced investigators can offer victims support and advocacy with law enforcement authorities. A PI can work with local, state, and international law enforcement to provide leads and evidence, especially when the scammers operate in multiple jurisdictions or internationally.
Discussion
While recovery of funds can be challenging in pig butchering scams due to the complex international nature of the fraud, private investigators can provide valuable assistance in navigating the process and maximizing the chances of holding scammers accountable.
The time to act is during the initial conversations with the potential scammers. As licensed private investigators the staff at Integrated Security Services are well-trained to spot red flags and bogus investment platforms. We are always available 24/7 and can be reached at www.intesecurity.com or 888-808-9119.
For a detailed and descriptive article on pig butchering and crypto scams please refer to an article called “Unmasking Pig-Butchering Scams and Protecting You” which can be accessed on a trade publication called Trend Micro www.trendmicro.com-vinfo-security-news.
