Watch Out For The Sharks - Scams In Crypto
Dear Clients,
As we set sail into the oceans of opportunity in cryptocurrencies we need to be able to read the waters and feel the currents. “There be sharks in them waters.” Here are just a few of the well known scams in the crypto industry.
Pay fees before withdrawing crypto gains -
Group chat in Whatsapp and / or Telegram are notorious for luring investors with promises of very generous returns. These scammers will even “loan” you the starting capital for investment. They will show you an “exchange” where your investment is now worth exponentially more than your starting “investment.” The catch is that they claim you must pay some kind of fee or tax in order to withdraw your funds from this alleged “exchange.” There was never a functioning exchange. It is easy to create a convincing website. Everything they show you is fake, except the money you sent them and have now lost.
Romance scam -
The world can get pretty lonely and the internet has plenty of predators. Anyone can pretend to be someone they are not these days. AI technology is making this increasingly easy and scary. It is fine to start relating with strangers on the internet but do not send them money, even after two years of “friendship”, these predators take advantage of loneliness and start siphoning off retirement savings. These relationships can drag on for many years. Please protect yourselves.
I’ll pay you to buy me bitcoin -
This is common. Certain individuals, organizations, and jurisdictions are prohibited from purchasing cryptocurrencies directly. Scammers will solicit unsuspecting individuals to apply for an account at a US based crypto exchange, using their own verified identity and personal bank account information. The scammer will “deposit” money into the authorized individual’s bank account. This usually is a cashier’s check that is mailed to the individual that they then deposit. It may also be a wire transfer into their account or an ACH deposit into their account. As soon as the funds have been cleared by their bank they wire them to their crypto exchange and purchase bitcoin. They then send that bitcoin to an external wallet, belonging to the scammer. This is 100% illegal money laundering and most of the individuals do not think that they are doing anything wrong. Often, after a few successful smaller transactions, a large (+$100,000) transaction will seem to work like the others but after the bitcoin has been purchased and sent (gone forever) the cashier's check will turn out to be fraudulent and the individual is then responsible for the missing $100K. Smaller transactions that arrive by ACH can be reversed even months after the transaction occurred, resulting in similar loss for the participating individual. Not only is the individual losing thousands of dollars but they are now involved in felony international money laundering. Do not ever buy cryptocurrencies for any other person.
This is a short list and by no means a comprehensive one. If you ever are in doubt, please contact us and local law enforcement to discover if you are potentially at risk. Everyone loves a good opportunity and there are many legitimate ones available in this market, but the cliche is worth remembering: if it sounds too good to be true, it probably is. Stay aware.
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