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Information on Cryptocurrency Scams

Updated: Aug 8, 2022

The World Anti-Internet Fraud Alliance has done research on internet scams. To spread awareness and education, we share with you these stories of internet scams:


Pig Butchering


Pig butchering is a scam that involves the creation of a fictitious connection with the victim over the course of weeks or months. It is also known as "pig slaughtering," or "butchering," and it is a form of fraud that typically involves sending cryptocurrency.


  • Victims are often women, and there is often a significant amount of money being stolen; enough to change people’s lives.

  • This scamming strategy started in China and is influencing across borders, transforming into a global fraud organization. (Read more about this here: Weibo Chinese Report on Pig Butchering and rising cases in America+ real cases in China)

  • Statistically speaking, an average of $98,000 (USD) was lost and over 240 victims were involved.

  • This fraudulent plan has unbelievably impacted many young people’s bright futures by destroying their careers - separating families, divorcements, triggering suicides, etc.

  • It's a slow scam in which the scammers first earn your trust, allow you to withdraw some dollars to feel assured, and then gradually drain your assets until you have nothing left.


Ways To Prevent Pig Butchering:


  • Don’t believe in financial gimmicks such as you always gain, no losses, and high risk for high reward.

  • Don’t be greedy and resist the temptation of gambling and high investments.

  • If possible, try not to send money to strangers, if you do, be very careful.

  • Consider opening a digital protective layer for your social media accounts by blocking suspicious messages that were sent by strangers.(https://www.ft.com/content/b325b37a-ae62-4af1-ba56-568598d2dbe7)


 

Massive Losses Define Epidemic of ‘Pig Butchering’

  • The article discusses that the most common pig butchering scam now being practiced involves sophisticated cryptocurrency investing platforms, where investors always experience tremendous returns on their deposits—until they attempt to withdraw their money.

  • The pig butchering scam cost Courtney Nolan, a divorced mother of three daughters, more than $5 million, she claims. Nolan, who is from St. Louis and has experience in investment banking finance, has only recently begun to invest in cryptocurrencies.

  • According to Erin West, “One woman was a university professor who lost her husband to COVID, got lonely and was chatting online, and eventually ended up giving away her retirement,” West recalled a recent case. “There are just horrifying stories that run the gamut in terms of victims, from young women early in their careers, to senior citizens and even to people working in the financial services industry.”

 

LONGFIN CRYPTOCURRENCY STOCK FRAUD

  • Cryptocurrency has become one of the most popular alternative investments in recent years. Because cryptocurrency and associated enterprises are unregulated, this is a highly speculative and dangerous investment opportunity. Unfortunately, this industry has witnessed far too many investment scam schemes.

  • The SEC unveiled a fraud complaint in Manhattan in April, announcing that more than $27 million in assets had been frozen in connection with the illegal sale of the cryptocurrency stock LongFin. Insiders at Longfin committed major stock fraud, according to federal regulators, when they sold more than $27 million in unregistered securities in their business.



 

My Big Coin Founder Convicted of Cryptocurrency Fraud Scheme

  • A 51-year-old man named Randall Crater founded the My Big Coin Pay Inc and was recently convicted of the cryptocurrency fraud scheme. According to the Department of Justice, his scheme was “to defraud investors by marketing and selling fraudulent virtual currency”.

  • His company, My Big Coin Pay Inc., was a fictitious cryptocurrency and virtual payment services firm located in Las Vegas that provided virtual payment services through the phony digital currency "My Big Coins," which he misrepresented the nature and value of to be able to market it to investors between 2014 and 2017.

  • Crater deceived his investors by making a false claim of being backed up by $300 million in gold and other assets, being in a partnership with MasterCard, and ensuring that the “Big Coins” were easily transferable.

  • Due to his scheme, Crater was able to steal more than $6 million from investors for his own benefit and spend hundreds of thousands of dollars on jewelry, artwork, and antiques.

  • Crater was found guilty on four charges of wire fraud, each of which has a possible sentence of 20 years in prison, and on three counts of money laundering, each of which carries a maximum sentence of 10 years in jail.

 

An Atlanta Film Producer Enters a Guilty Plea For $2.5 Million in Cryptocurrency Investment Fraud

  • On the fourth day of his jury trial, an Atlanta film producer named Ryan Felton pleaded guilty to multiple counts of wire fraud, securities fraud, and money laundering charges related to his deceptive advertising of two cryptocurrency investment schemes that resulted in investors losing millions of dollars.

  • Felton advertised an initial coin offering (ICO) for FLiK, a new entertainment streaming service that he claimed would outperform Netflix, in 2017. A unique cryptocurrency "token" or "coin" issuer will set a fundraising goal during an initial coin offering (ICO), offer it to the public in a crowd sale, and collect cryptocurrency from investors in exchange.

  • To boost or pump the price of FLiK coins, Felton misled investors by saying that a well-known Atlanta rapper and actor was a co-owner of FLiK, the US military had agreed to make the streaming service available to service personnel, and FLiK was close to closing licensing agreements with significant movie and television studios.

  • In truth, the rapper played no part in the business other than to approve a social media post for marketing, FLiK had no military contract, and Felton never spoke with any studios about licensing content.

  • Felton transferred almost $2.4 million in investor funds to his own account from the ICO and trading marketplaces. The majority of the investor revenues were utilized to support his luxurious lifestyle, which included paying for a $1.5 million home, a red 2007 Ferrari 599 GTB Fioran Coupe for $180000, a new $58,250 Chevy Tahoe, and almost $30000 in diamond jewelry.

  • In 2018, Felton sponsored a second initial coin offering (ICO) for a new business called CoinSpark, a cryptocurrency trading exchange.

  • Felton asserted that Spark coin investors would earn dividends equal to 25% of the trading exchange's profits in order to entice investors to the ICO.

  • Felton also asserted that a major international accounting organization would review CoinSpark's financial statements on a quarterly basis, although he never communicated with the organization.

  • In order to spread distorted information and generate interest in CoinSpark, Felton also pretended to be a potential investor while utilizing fictitious names on numerous online forums and social media platforms.

  • After Felton raised more than $200000 from the ICO, he made an announcement that he and his company CoinSpark would not give any dividends to his investors, but instead offered them a refund.

  • Despite saying he would offer refunds, Felton ignored any request for refunds from investors.

 

Crypto Scammers Are Running Riot In Australia


  • Australians have been warned to be “wary” of investing in or sending crypto after the country’s investors fell victim to more than $113 million worth of scams in the first five months of this year alone.

  • Scammers were found to have turned to deepfakes of celebrities, NFT projects, and even journalists, to try and swindle a victim’s holdings, adding to the rampant rug pulls, phishing attacks, fake coins, and general hacks that have run rampant in the space since its inception.

  • Most alarming about the findings, according to the FTC, was that crypto-related scams were coming to amount to about one in every four dollars lost to fraud across the country, at an average of about US$2,600 per incident. It’s a trend that is only likely to continue, too.

  • The frenetic rise of crypto’s crypto scam ecosystem comes as the market—and web3, along with tech stocks more broadly—begins to wobble after a six-month crash that has wiped out about US$1.6 trillion of the asset class’s market capitalization.


 

As Fraud Cases Rise in CA, a Bay Area Investor Loses $1.2 Million in a Cryptocurrency Scam

  • In a cryptocurrency scam that targets Silicon Valley investors, a Bay Area man lost $1.2 million.

  • The man who was scammed will be called CY to keep his identity under wraps.

  • The cryptocurrency scam began in late October 2021 on an app called WhatsApp.

  • CY was approached by a woman who called herself Jessica. CY thought she was an old colleague of his and she was able to gain his full trust because his dying father had made him vulnerable at the time.

  • She started contacting him every day for a month, according to CY. When she found out about CY’s dying father, she offered him a chance to use cryptocurrency as a way to help CY cover the costs of the funeral. CY didn’t tell his family about the offer at the time.

  • With a background in finance and accounting, CY was cautious at first by starting with $5000 and $10000 to see how the cryptocurrency worked.

  • CY sent funds from his bank to a reliable cryptocurrency exchange. Later, the money was transferred to a trading platform that Jessica had given him. The app she sent him seemed to be genuine, but CY found out the hard way that it wasn't.

  • CY suffered his first $500,000 loss four days after his father's passing. The alleged con artist, though, urged him that he could recover the money.

  • At this point CY still believed the app with legitimate and with Jessica’s encouragement, CY took out a $200,000 loan despite having a balance of -$65,000 in his personal account and borrowed $100,000 from his brother-in-law.

  • On December 3, he lost everything. CY liquidated his entire portfolio, which contained 30 years' worth of savings, including his daughter's college fund, and suffered a total loss of $1.2 million.

  • After losing everything, the scammer disappeared along with CY’s money.

 

Cryptocurrency Romance Fraud that Cost One Woman $8 Million

  • Divya (who wished to keep her last name confidential) is one of many victims of the "pig slaughtering" scam. The FBI estimates that more than 20,000 Americans lost money to romance scams last year, totaling close to $1 billion. But tragically, Divya might hold the record for being the biggest victim of this pig butchering scam.

  • Authorities estimate that each victim of the scam loses about $180,000 on average. Still, Divya allegedly witnessed more than $8 million in cryptocurrency disappearing, according to a complaint brought against a purported pig butcher.

  • It speaks to the insidiousness of the conspiracy and to its highly organized and skilled procedures that the thieves were able to fool Divya, a well-educated businesswoman in her 20s.

  • Data indicate that 67 percent of the victims are unmarried women between the ages of 25 and 40, and the majority are highly educated and technologically savvy.

  • Divya started talking to "Jerry Bulasa", her scammer, on WhatsApp after they met on Tinder.

  • As their online friendship developed, Bulasa persuaded her to transfer money to a crypto platform that appeared to be legitimate by promising her financial advantages from cryptocurrency investments.

  • Divya, who had some experience trading on Coinbase, looked into the website and the investment strategy Bulasa was recommending, and everything seemed legitimate to her.

  • The con artists pretended to match or add money of their own that would appear on the sites while directing Divya to an app and website where she could monitor the status of her investments. Additionally, it demonstrated her tremendous progress. But the issue only started when she attempted to withdraw money.

  • Divya was told that she needed to pay taxes on her gains and they kept hitting her with more taxes and fees while assuring her that she’d get her money.

  • There are many more victims besides Divya.

  • A young Asian woman living in Canada named Cynthia lost all her savings to a pig butchering scammer. She posted on YouTube, “I never thought in a million years I’d fall victim to a scam, especially through online dating, but hey, shit happens, and I’m trying my best not to blame myself or fall into a perpetual spiral of self-hate.”

  • Cindy Tsai, a local Asian American single in the Boston area who was receiving treatment for terminal cancer, claims she met "Jimmy," who provided her with support during her treatments, but then stole $2.4 million in cryptocurrency assets, on Whatsapp.

 

Scammers Use Elon Musk Deepfake to Steal Crypto


  • Online videos of Elon Musk endorsing BitVex, a purported cryptocurrency fraud, have gone viral. It was a deepfake, fake video produced by artificial intelligence, and it signified a new development in dubious cryptocurrency advertising.

  • The phony Musk asserts that BitVex is a startup he started to make sure Bitcoin is widely used and makes daily returns of 30% on any crypto placed over a three-month period.

  • On a version of the BitVex website, the project advertises Musk as its CEO, along with, Binance CEO Changpeng Zhao, and Ark Invest CEO Cathie Wood. You can monitor stats on a dashboard, deposit cryptocurrency, view investment plans, withdraw your money, and review the terms of service after creating an account and logging in. The issue is that everything here is phony.

  • A few wallet addresses connected to the website got a bit more than $1,500 in deposits, according to BeepingComputer. However, it's possible that deposits were dispersed throughout several unknown accounts.


 

CEO of Titanium Blockchain, Guilty of Cryptocurrency Fraud Scheme

  • Titanium Blockchain Infrastructure Service Inc., a cryptocurrency investment platform that provides the cryptocurrency coin "BARs," is managed by Michael Alan Stollery.

  • In addition to failing to register TBIS's ICO with the U.S. Securities and Exchange Commission (SEC), Stollery also lacked a legitimate exemption from the SEC's registration requirements.

  • Stollery claimed to have authentic connections with the Federal Reserve and other prestigious companies while admitting to using fabricated client testimonials on TBIS's website. He also claimed to have utilized the funds for other purposes, such as condo payments in Hawaii.

  • Stollery will receive a sentence that might result in a 20-year prison term on November 18.

 

Inside the QAnon Crypto Scam That Cost People Millions and One Man His Life

  • Tom was closely monitoring two influential Telegram channels called Whiplash347 and PatriotQakes, which were actively promoting several tokens connected to the Stellar blockchain, the third-most prominent cryptocurrency network in the world after Bitcoin and Ethereum.

  • Tom was unaware that these influencers weren't just offering neutral investment advice, as they had claimed to be doing. They were associated with the tokens and brought in millions of dollars from investors like Tom.

  • According to the report, the WhipLash347 and Quantum Stellar Initiative Telegram channels collaborated to create a weekly curated list of cryptocurrency assets, claiming to have access to top-secret military intelligence and knowing which assets will thrive.

  • The investigation also claims that the leaders, WhipLash347 and PatriotQakes, fabricated information about cryptocurrency projects to mislead their tens of thousands of followers and capitalize on the general lack of faith in financial institutions and the media to support the assets they advocated.

  • According to estimations from Logically, there have been millions of dollars lost and tens of thousands of people could have been victims.

  • The dozens of tokens that these fraudsters produced over the previous year were given names that gave the impression that they were associated with actual businesses, such as the Sungold token, which the fraudsters purported was associated with a legitimate gold mine in Kazakhstan and a Russian corporation of the same name.

  • The influencers persuaded their followers to invest in these tokens and to hold onto them even when the price appeared to skyrocket by promising that they would soon be rewarded when a great financial reset occurs and the wealth of the world is redistributed, a prevalent belief among QAnon adherents.

  • But eventually, the tokens were moved to another wallet under the influencers' control, where they were either cashed out or exchanged for Bitcoin or Ethereum.


 

North and South Carolinians Have Lost Up to $75k to Cryptocurrency Fraud

Some Key Points:

  • The individual was taught how to start an account, get a loan, and then "invest" in cryptocurrencies after meeting "Vether Weber" on a dating app.

  • According to their first-hand report to the Better Business Bureau, the victim eventually lost $75,000 to the bitcoin fraudster.

  • The sum lost in that scam, which was reported in February, is the most money anybody in the Carolinas has ever lost to a cryptocurrency scheme, a kind of fraud that has grown significantly since the outbreak of the epidemic, says the authorities.

  • Between January 1, 2020 and mid-July of this year, the Better Business Bureau received reports of more than 1,680 cryptocurrency frauds nationwide.

  • From 2015 until the end of 2019, there were five bitcoin scams recorded in South Carolina.

  • Then from 2020 to mid-July of this year, there were 17 more cases with losses as large as $10,000.

  • One victim in Horry County's Carolina Forest lost $4,500 in fraud in November after being persuaded to pay bitcoin and gift cards to purchase office supplies as part of a work-from-home plan.

  • In September 2020, a resident of the Florence region paid a scammer $500 as part of a cryptocurrency pyramid scheme after being informed that they needed to find two more participants in order to be eligible to earn $4,000 from that "investment."

  • According to Parker, bitcoin fraud cost the nation $100 million in 2020.

  • According to 2021 research from the Better Business Bureau, males are more prone to fall for bitcoin scams than women, and younger age groups seem to be more vulnerable to them than older generations.

  • Across all age categories, 3.4 % of frauds used cryptocurrency payments.

  • Although cryptocurrency scams increased from the seventh to the second-most dangerous category between 2020 and 2021, online purchase scams still rank as the riskiest fraud customers encounter.

  • Social media influencers may also promote cryptocurrency frauds.

Learn more here:

 

FBI warns of cryptocurrency scam in Northwest Arkansas


Some Key Points:

  • According to FBI agents in Arkansas, cybercriminals have started focusing on their victims in a scheme that threatens people’s home computers, cryptocurrencies, and a potential compromise of Social Security accounts.

  • The victim will get a pop-up on their computer telling them a virus has been detected and to call this number. If they call, they are usually told that their computer has been hit by viruses, or that they are victims of identity theft and need to be issued a new Social Security account.

  • Once the scammers have a victim on the line, they're told an official from Social Security will call them. Scammers will pretend to be the Social Security Administration by using a “spoofed” number and demanding that victims terminate all of their bank accounts and transfer all of their bitcoin.

  • "Several victims have called in to say they've lost hundreds of thousands of dollars of their life savings," Kevin Corlew, a supervisory special agent with the FBI, said, "They go to the bank and transfer their money to bitcoin and deposit it in a wallet. If we can be notified within a few hours, 24 hours at the most, there's a chance we can recover the money, but if too much time goes by it's almost impossible."


Learn more here:

 

BitKRX- Fake South Korean Bitcoin Exchange


Some Key Points:

  • BitKRX posed as part of a legitimate cryptocurrency exchange business, real Korean Exchange(KRX). According to the company, they are a branch of the KRX, which was created by KOSDAQ, South Korean Exchange, and South Korean Stock Exchange.

  • Investors believed BitKRX to be a legitimate business and started using the platform for cryptocurrency exchanges. The scam was exposed in 2017 when investors started reporting that the Bitcoin they purchased on the platform vanished.

  • Investors can avoid this type of scam by researching and contacting the official company(in this case, KRX) if such a company exists.

Learn more here:

 

Six People were Charged with Participating in Bitcoin and NFT Fraud Schemes that Generated Over $130 Million


Some Key Points:

  • Federal prosecutors have made it known that six individuals led a cryptocurrency fraud scheme that stole over 130 million dollars

  • Prosecutors say that the NFT scheme involved a group, the Baller Ape Club, that purported to offer NFTs in the form of cartoon depictions of apes.

  • Tuan and his accomplices laundered the cash by transferring it into cryptocurrencies.

  • Tuan, 26, of Vietnam and the rest of the Baller Ape Club were charged with wire fraud and international money laundering.

  • Tuan could spend up to 40 years in prison if found guilty.

  • In a different instance, Titanium Blockchain Infrastructure Services' founder and former CEO were accused of one count of securities fraud in relation to the company's ICO.

  • Federal prosecutors in California say that CEO Michael Alan Stollery fabricated documents describing the project's goals and falsely stated that his company had connections to the U.S. Federal Reserve Board and organizations like Apple, Disney, and Pfizer. Stollery can face charges up to 20 years if he’s convicted.

  • They were able to get $21 million from investors investing in the ICO.

  • In another case, California authorities accused David Saffron, from Las Vegas, of four counts of wire fraud, one count of obstructing justice, one count of conspiracy to commit wire fraud, and one count of conspiring to commit commodities fraud. If found guilty, Saffron may spend up to 115 years in prison.

  • Prosecutors claim that David Saffron raised roughly $12 million from investors through the use of his cryptocurrency investing platform Circle Society for a bogus cryptocurrency fund that pretended to operate on the futures and commodity markets.

  • In the fourth instance, Emerson Pires, Flavio Goncalves, and Joshua David Nicholas were charged with one count each of conspiring to commit securities fraud and conspiring to commit wire fraud. Pires and Goncalves were also accused of conspiring to engage in international money laundering. They were also involved in a crypto-Ponzi scheme that prosecutors claim defrauded investors out of about $100 million.

  • According to the prosecution, Pires, and Goncalves, the proprietors of the cryptocurrency investment platform EmpiresX, collaborated with Nicholas to promote the site by making fictitious promises about investor returns.

Learn more here:

 

Siblings Involved in $124 Million Crypto Fraud Operation


Some Key Points:

  • The SEC charged John and JonAtina (Tina) Barksdale with conducting two unregistered fraudulent securities offerings by exploiting a digital token called "Ormeus Coin" to swindle thousands of retail investors out of more than $124 million.

  • They made Ormeus Coin available for purchase and sale to investors on several cryptocurrency trading platforms. Tina created advertising materials using social media while John Barksdale did roadshows all over the world. They also fraudulently stated that Ormeus Coin had a $250 million operation and made $5.4 million to $8 million in mining earnings every month and that it was backed by one of the biggest cryptocurrency mining companies in the world.

  • Check if the securities or sellers are licensed through the website https://www.investor.gov. Do not believe in anything posted on the Internet before researching and proving its legitimacy.

Learn more here:





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