What do dating apps, job websites, and artificial intelligence (AI) have in common? Well, they are all avenues for scammers to interact with you online. While financial scams are not solely isolated to cryptocurrency trading, cryptocurrency provides a unique opportunity for malicious actors to target potential victims. The nature of the blockchain makes it impossible to reverse cryptocurrency transactions once they are confirmed by the blockchain, making crypto scams a particular favourite of international scammers.
In this post, we'll explore some of the most prevalent scams—romance scams, employment scams, AI scams, and impersonation scams—and provide tips to protect yourself while transacting in cryptocurrency.
Romance scams rely on creating emotional connections, with scammers targeting individuals who are seeking companionship or love online. Scammers will create fake personas and cultivate relationships, building trust with their potential victims before soliciting cryptocurrency/money under false pretenses. These scams may also be called “pig butchering” scams; referring to the process when the victim sends increasingly large amounts of money to the scammer, only to be left hanging dry when the scammer disappears. They can be found on social media networks like Facebook, and popular dating apps such as Tinder.
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Example of a Romance Scam:
“The victim met a woman he thought was in love with him. After [the] victim shared his dream of wanting to buy a motor home and travel, the scammer convinced him she could help him reach his goal through cryptocurrency. The victim gave the scammer $64,000 to invest in [a scam company operating under the name] Tahoe Digital Exchange. The scammer then told him his investment was now worth almost $200,000, [b]ut when the victim tried to transfer the money out, Tahoe Digital Exchange told him he needed to pay more than $30,000 in taxes. After that, Tahoe Digital Exchange asked for another $20,000 for him to get his money back. The victim had no more money, so Tahoe Digital Exchange froze his assets, and he never heard from the woman again". (Excerpt taken from https://dfpi.ca.gov/crypto-scams/#)
Employment scams hinge on a promise of employment. These job postings can appear on reputable sites such as Indeed or LinkedIn and deceive individuals into paying upfront fees or participating in fraudulent schemes. The scammers use names of real companies and usually offer freelance job opportunities. Victims can promote products or apps using software created by the scammers. Once a victim has downloaded the software and created an account, they are given tasks/orders to complete. At first, the victim may receive some financial compensation to help solidify trust and convince them that the job opportunity is legitimate. However, soon enough the victim will be left high and dry.
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Example of an Employment Scam:
This is a real story about a Canadian man referred to as “Peter”:
“It all started after he received a WhatsApp message from a person offering part-time work…That work involved so-called tasks where Peter would be rating hotels using a phone software application set up by this company. But to get started, he had to deposit funds in the form of cryptocurrency into a wallet.” Peter was told he would need to have a balance of crypto in the account before he could rate hotels. He was told any money he deposited went to the merchants he rated, and as you performed tasks you could earn commissions that you would be able to withdraw alongside the initial deposit. “Peter spent a few hours rating hotels. It was easy work, with a few clicks he would rate each hotel five stars. After one day, he was able to successfully withdraw some of his earnings”. As Peter deposited more crypto to keep going, he tried to withdraw earnings that the app showed as worth more than $42,000, but he couldn’t. The “customer service” person told him that he needed to put in more money and do more work before he could withdraw anything. After borrowing another $9,000, Peter realized that it was a scam, and he was out $17,000 in total. (Excerpt taken from https://toronto.citynews.ca/2023/11/08/job-scam-fraud-speakers-corner/)
AI scams leverage advanced technology to create convincing illusions and manipulate individuals into taking actions they wouldn't otherwise. Some examples of these types of scams are the persistent videos of “Elon Musk” discussing his investment strategy on Facebook or YouTube. These videos are not, in fact, Elon Musk speaking about a certain cryptocurrency that will make you rich. The videos can use editing and voice cloning to make it appear as if Elon Musk is the person speaking in the video, but it is not authentic.
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Example of an AI Scam:
“Two separate Californian consumers have filed complaints with the DFPI after losing money they believed would be invested in cryptocurrency. Each consumer stated that they had seen videos on YouTube purportedly featuring Elon Musk, in which “Musk” claimed he would double the amount of cryptocurrency purchased by an investor using the text link or QR code link provided in the video or in its description". (Excerpt taken from https://dfpi.ca.gov/crypto-scams/#)
Impersonation scams involve fraudsters posing as legitimate businesses, government agencies, or trusted individuals to deceive victims and steal personal information or assets. One common impersonation scam involves individuals who pose as representatives of recognizable companies. They may even create emails and a website that appear similar to the legitimate business they are copying. These individuals may go so far as to take the names of current/previous employees by searching them on LinkedIn or from support tickets. For example, individuals could pose as Newton employees and email you from an email that has “Newton” in the name. They could also use the name of a current support representative to make you believe it’s a legitimate email.
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Example of an Impersonation Scam:
"A California resident invested in a trading platform…through its website…The victim initially deposited crypto assets worth $295 and noticed that their account displayed a balance of $11,000, supposedly attributed to a promotional offer on the site. But representatives from the website told the victim that they needed to pay more crypto assets to withdraw any money from the account”. (Excerpt taken from https://dfpi.ca.gov/crypto-scams/#)
By familiarizing yourself with these common scams and taking proactive measures to protect yourself and your financial information, you can navigate cryptocurrency investing with confidence. Remember that trust is earned, not given freely, especially in the digital landscape. Stay informed, stay vigilant, and if you are ever unsure about something, reach out to the team at support@newton.co - our Customer Success team will be happy to help you out.
