Federal regulators warn investors of cryptocurrency schemes using bogus social media, dating app, and networking links.
Scammers masquerade as love interests, old friends, investment professionals, or other acquaintances on dating apps, social media, professional networking sites, or encrypted messaging applications.
Over time, fraudsters earn targets' confidence. They suggest investing in crypto and swindle people with false investments.
Gurbir S. Grewal, director of the Securities and Exchange Commission's Division of Enforcement, said in a press statement that relationship investment scams, including crypto asset scams, can cause catastrophic harm to retail investors and are growing rapidly.
Last month, the SEC filed its first crypto relationship fraud enforcement proceedings. The SEC said crooks stole millions of dollars from investors in two scams including WhatsApp, LinkedIn, Instagram, and bogus crypto asset trading sites NanoBit and CoinW6.
Cryptocurrencies include bitcoin and ethereum. According to the FBI, criminals utilize it more.
According to an FBI fraud analysis, crypto-related frauds cost consumers $5.6 billion in 2023, up 45% from 2022.
Investment frauds caused 71% of 2023 losses, the bureau stated.
The FBI claimed there are “many variations” of crypto investment fraud, but the relationship scam was the most popular last year.
“The dollar losses can be huge,” Kim Casci-Palangio, leader of the Cybercrime Support Network's romantic scam recovery division, stated on a Financial Industry Regulatory Authority podcast.
Casci-Palangio claimed our program loses $178,000 each individual.
The FBI claimed crypto's decentralization, speed of irreversible transactions, and global reach have made it a more attractive fraud target.
Micah Hauptman, head of investor protection at the nonprofit Consumer Federation of America, predicted that artificial intelligence would make crypto romance frauds tougher to identify.
Hauptman called these scams “long cons.”
On a recent FINRA podcast, crypto romance fraud victim Jules described her experience. FINRA just used Jules' first name to protect her. What she lost is unknown, but she said “thousands of dollars of transactions.”
In spring 2022, Seattle native Jules started contacting a potential love partner on a dating app while completing her college degree.
After a “couple of weeks of regular communication” via text, the guy “slowly” suggested investing in bitcoin, she added.
“This person was nice. The interaction was great, Jules remarked. “It started with friendship. Communication began it. Not like, ‘Hey, give me your money.’”
Jules stated his love interest, a fraudster masking his identity, presented bogus images of thousands of dollars in a digital wallet to give the impression he was a crypto investor.
She stated she invested in crypto using personal debts. She began with a “little bit” of money, approximately $1,000, and moved up to “larger dollar amounts,” Jules added.
FBI, SEC, and financial professionals provide crypto romance scam prevention advice:
Do not believe investing advice or advertisements from internet strangers, even if you have talked on the phone or video chatted.
Beware of bitcoin exchange domains and websites that spoof real financial organizations. To seem legitimate, fraudsters utilize websites that resemble actual financial businesses but are somewhat different.
Never invest in suspicious-looking applications without verifying them.
Be wary of investment pitches that promise early withdrawals or “profits.”
Beware of phony money-making testimonials.
Investments that seem too good to be true usually are.
