FBI Warns U.S. Consumers on Crypto Scheme Fraudsters on Social Media and Dating App Sites
Posted on 07/25/2023
A record US$ 3.82 billion was stolen from Americans through investment fraud in 2022, according to the Federal Trade Commission (FTC). This is more than any other type of fraud. This was a 128% increase on the US$ 1.67 billion lost in 2021.
The U.S. Federal Bureau of Investigation (FBI) claims this increase is driven by a surge in cryptocurrency investment scams. The FBI registered that Americans lost a record US$ 2.57 billion to this type of fraud in 2022 alone. This was almost three times the amount in 2021. The FBI’s Internet Crimes Complaint Center says cryptocurrency scams are the fastest growing type of investment fraud.
Pig-Butchering Schemes
The U.S. Secret Service warns that victims are lured into romantic relationships before being convinced to invest in bogus cryptocurrency schemes.
Watchout for excessive flattery, as these crypto dating scammers invest a lot of time in their victims, maintaining a relationship until they feel that trust has been established. These scams are called “pig butchering,” or “sha zhu pan” (杀猪盘) in Chinese. Once the trust is established, the scammer sees that the “mark” is ready to be exploited. Crypto romance scammers target people on apps like Tinder, Bumble, and Hinge. They also try social media sites like Instagram, Telegram, or even WhatsApp. Instagram and Whatsapp are owned by Meta (formerly Facebook).
FBI’s Richmond office put out a note back in March 9, 2023, saying, “Cryptocurrency Investment Fraud Schemes are typically initiated when fraudsters contact victims on social media or dating application sites, portraying some sort of “innocent” connection when in all actuality it’s a heavily scripted, calculated first move of many to build rapport and gain trust. Eventually these conversations lead to discussions of investment opportunities, wherein victims are lured into investing cryptocurrency funds using fake website/apps that allow them to track their investment progress. The deception becomes apparent when victims attempt to cash out their investments, or when communication with the fraudster is terminated. Unlike the more well-known fraud schemes such as Business E-mail Compromise, Ransomware, Elder Fraud, and Holiday and Romance Scams, where if quickly reported some restoration of financial losses may occur, victims of Cryptocurrency Investment Fraud Schemes should be aware they will not see recovery of their cryptocurrency losses.”
The FBI has suggestions for recognizing and preventing victimization from fraud schemes:
Keep a sharp eye out for domain names that impersonate legitimate financial institutions, especially cryptocurrency exchanges; or ones that may have misspelled or slight differences in URLs from actual financial institutions.
Unless you can verify their legitimacy, refrain from downloading or using suspicious looking apps as tools for investing.
Before purchasing digital currency or making investments, research what is being offered and the entity offering it. The Securities and Exchange Commission offers investment guidance and tools.
Be wary of online retailers offering goods at significantly discounted prices, and ones requesting payment with gift cards.
Do not respond to or click on links within unsolicited e-mails.
Secure credit card and reward accounts with strong passphrases. Change passwords and review credit and bank accounts routinely.
Conduct a business inquiry of online retailers with the Better Business Bureau.
