Beware of These 4 Bitcoin Scams – Forbes Advisor

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Bitcoin scams are like a box of chocolates. You never know what kind you’re going to get.

While the hottest crypto scams end up in the headlines, like the case of a Las Vegas poker player who stole $500,000 from another card thief, most attacks are more prosaic. Think of schemes that use threatening phone calls, a desperate demand for money or a request for money transfer or whatever.

Whatever form it takes, there is no denying that cryptocurrency fraud is on the rise. The Federal Trade Commission (FTC) received 7,000 reports of crypto theft, with a combined value of over $80 million, between October 2020 and March 2021. This represents a 12-fold increase in cases and a 1-fold increase 000% of the cash amount compared to the same period a year earlier.

When it comes to bitcoin fraud, the strengths of cryptocurrency backfire on the victims.

“Bitcoin scams follow other online criminal exploits until you try to recover your assets,” said cybersecurity expert Adam Levin. “Cryptocurrency is designed to be hard to track and even harder to recover. Once transferred, he left, with a few very high-level exceptions.

While the number of Bitcoin transactions has remained static in recent years, the value of the cryptocurrency has surged. One bitcoin was worth $9,000 in April 2020, compared to around $43,000 now.

Here are the Bitcoin scams you should be on the lookout for to avoid.

Bitcoin Fraud and Imposters

In the poker scam mentioned above, the suspect allegedly impersonated the victim’s business partner on the encrypted text application, Telegram. The fake partner wanted to exchange $500,000 worth of Bitcoin, plus a $50,000 fee, for cash. The victim sent the bitcoin, but never received the money. When he contacted his real associate through other means, the associate had no idea what was going on.

The numbers involved in Bitcoin impostor schemes are not always so large. For example, a scammer who posed as a Coinbase reporter contacted PR firms offering positive coverage for clients in exchange for a meager $600.

And then there are twists on old-fashioned Social Security scams. For example, a resident of Naples, Florida was said by a perp that his social security number had been stolen and was being used to open fraudulent bank accounts. He was asked to download an app and then transfer all his money from his bank account to Bitcoin. Luckily, a fraud alert popped up on her phone before the deed was done.

“Always take a moment before clicking on links sent via email or text message, and do not install apps on your mobile device unless you are 100% sure they are legitimate by checking reviews on the platform where you found them,” Levin said. .

The FTC warns of another Social Security scam where people are asked to deposit money into Bitcoin ATMs to pay scammers who claim to be from the Social Security Administration.

Fake Bitcoin Investment Scams

Bitcoin is an abstraction of an abstraction. It is a store of value that not only takes no physical form, but also lacks any backing of faith and credit from a sovereign government.

Enthusiasts find these aspects of cryptocurrency deeply appealing. Many bitcoin investors believe that the less government involved in the money, the better. Others prefer to engage in financial transactions that are difficult for authorities to trace.

Unfortunately, these are also big advantages for scammers who create fake websites claiming to offer new investors the chance to make a quick buck. This is what happened to a victim of a 2017 scheme from Australia.

The man, that ABC Everyday identified as Jonathan, saw an Instagram post that advertised the possibility of doing a 50% return mining for Bitcoin. He first sent $50 to the site, and soon after, he got back $30 in profit.

Additionally, the Instagram account was full of videos of testimonials and others endorsing the service, and had thousands of followers. It seemed legit.

He then prostelysed his new opportunity to his friends and family. In total, Jonathan, his family and friends raised approximately $20,000. Then the account disappeared, and the thief with it. Not only has he lost his money, but some of his friends no longer talk to him.

The total cost of these types of Ponzi-style Bitcoin scams can be enormous.

“Many people have reported being drawn to websites that look like cryptocurrency investing or mining opportunities but are fake,” according to the FTC. “Sites use fake testimonials and cryptocurrency lingo to appear believable, but promises of huge, guaranteed returns are just lies.”

Bitcoin Gift Fraud

In July 2020, something truly remarkable happened. Celebrities and famous people all over the world all simultaneously took to their Twitter accounts to promote the same Bitcoin giveaway offer. Surprisingly, it sounded too good to be true.

“I give back to my community thanks to Covid-19! wrote former President Barack Obama on his Twitter account. “All Bitcoins sent to my address below will be returned doubled. If you send $1,000, I’ll send you $2,000 back!

The accounts of Joe Biden, rapper Kanye West and former New York Mayor Mike Bloomberg, among others, have been published the same message.

As you probably guessed, the giveaways were all part of an unprecedented Twitter hack. Jack Dorsey, the former CEO of Twitter, called the day “difficult” for the social media company.

These types of scams, however, are nothing new. The FTC estimates that over a six-month period in late 2020 and early 2021, people allegedly sent over $2 million in cryptocurrency to investment frauds claiming to be run by Tesla Inc. founder and crypto enthusiast Elon Musk .

Crypto romance scams

Bitcoin’s meteoric rise has been accompanied by the massive adoption of dating apps that make it easier to find new romantic partners. While this can be a boon for people looking for love, it is also a goldmine for scammers.

In fact, cryptocurrency was the top payment choice for romance scams reported to the FTC in 2021 ($139 million), followed by bank transfers ($121 million), wire transfers ($93 million) and gift cards ($36 million).

While romance scams aren’t new, cryptocurrency adds a new twist: unsuspecting lovers believe they’re getting into a crypto investment opportunity.

Take Mike (pseudonym), who was recently featured by BNC News. Mike met a woman named Jenny on Tinder. They struck up a relationship by texting on Tinder and WhatsApp.

After about a month, Jenny told Mike she had a good tip. She claimed that her uncle worked at JPMorgan Chase and “…was the world’s Bitcoin options expert.” Mike was in the market for love, not Bitcoin, but he quickly took interest and invested $3,000 on, a legit cryptocurrency exchange.

Eventually, the scam got worse. Jenny persuaded him to move his money to another exchange and continue investing. His portfolio quickly reached $1 million in value.

Mike became suspicious when Jenny told him to send his tax payments to the Department of Homeland Security instead of the Internal Revenue Service (IRS). Then he found out he couldn’t withdraw his money from the new crypto exchange account, at which point he realized it was a long scam. Mike ultimately lost nearly $280,000.

How to recognize bitcoin scams

It’s easy to look at these individual cases and marvel at the stupidity of the victims.

Why was Mike listening to a woman he had never met and agreeing to invest hundreds of thousands of dollars? How could someone give $500,000 worth of Bitcoin to a business partner without at least picking up the phone to discuss the deal? How could anyone believe that they could get a guaranteed return of 50%?

The problem is that it’s easy to lose your skeptical faculties when you feel like you’ve met your future spouse, are discussing who you think you’re a close partner with, or are believes to have found a certainty. It’s easy to lose sight of the red flags when these confounding factors cloud your judgment.

That’s why it’s important to keep a few ground rules in mind whenever someone you’ve never met comes your way with a chance to win Bitcoin.

  • Don’t believe the hype. Any claim for a guaranteed return, especially a very large guaranteed return, should always be treated as a scam. There are hardly any legitimate investments that can double your money in a week or a month or even a year, as the victims of Bernie Madoff can attest. Likewise, ignore any claims that your Bitcoin investment can be “multiplied”.
  • Bitcoin for Bitcoin’s sake. The reason Bitcoin has risen so dramatically recently is because genuine investors think they can sell it to someone else at a higher price at a later date. This is what makes crypto a highly speculative investment. Always ignore “investment opportunities” that claim to help you land special or rare deals involving Bitcoin.
  • Obsessed with bitcoin. Let’s say you meet someone online and they really want you to invest in Bitcoin. They are almost certainly lying to you. Meanwhile, the government, especially the Social Security Administration, is not hounding you and demanding instant crypto payouts. If you’re dealing with someone asking you to somehow adopt Bitcoin, back off and call the cops.

If you suspect you have been the target of a crypto scam, file a report to the FTC. When you share information about Bitcoin scams, it can help the FTC investigate fraud methods and keep Americans up to date on new scams.

Lance B. Holton