The Truth About Crypto Scams: Fact Sheet

In the rapidly evolving world of cryptocurrency, the allure of digital riches has led to a surge in scams and fraudulent activities. Astonishingly, these illicit endeavors have grown into a formidable industry, representing a staggering $42 billion in the United States alone. Yet, it’s essential to recognize that crypto-related fraud is by no means a phenomenon exclusive to the digital realm. What’s particularly challenging in the crypto space is that once a transaction is initiated, there’s no turning back, and the funds are virtually impossible to retrieve. In this article, we’ll delve into the stark realities of cryptocurrency scams and fraud, shedding light on essential tips and precautions to protect your digital assets. Remember, if an opportunity seems “too good to be true,” it probably is. Never send funds to an unknown wallet, and be vigilant, as Margo will never contact clients soliciting money through cryptocurrency transactions.

Types of Fraud Schemes or Scams:

Store Owner Scam:
In this scheme, fraudsters pose as the store owner of a Bitcoin ATM location or the BTM operator and instruct store staff to use funds from the register/safe to purpose Bitcoin.

• Typically occurs during the overnight shift.
• Fraudster may try to create a sense of urgency by claiming to have knowledge of a pending robbery or some other emergency.

• Fraudster may appear in person and impersonate law enforcement or claim to be holding the store owner for ransom.

• Store employees may also claim to have fallen victim to such schemes but deposited funds into their own wallets.

Fake Investment Schemes or Initial Coin Offerings “ICO”:
In this scheme, fraudsters set up fake websites for investing in or mining crypto or a company claiming to be raising funds with an ICO.

• Contact victims through unsolicited social media messages, phone calls, or mailing.
• Messages may come from friends or family whose social media has been hacked.
• May claim affiliation with a celebrity or well-known institutional investment firm.
• Promises larger returns than reasonable, remember the average stock market return is between 4-10%.

Ponzi Scheme:
Operates very much like an investment scheme but the fraudsters may pay out returns to investors to lure them into making larger investments.

• Initial small investment which pays massive return.
• Investment tiers which promise even higher returns for larger deposit sums.
• Fraudster uses victim funds to pay out returns until they dump the scheme and keep all the investments.

Romance Scam:
In this scenario, victims are exploited by individuals who claim to love the victim but are otherwise unavailable to physically be with the victim for a variety of reasons.

• Victims are connected via social media and Dating Apps/Websites
• Fraudsters works to quickly build a relationship with the victim claiming to love them, want to marry them, etc.

• Fraudster claims to have no money or to need money for an emergency – usually something to do with being located overseas and in some sort of dramatic situation
  –Medical Bills
  – Family member in prison
  – Government/armed forces involvement

Law Enforcement/Government Official Scam:
In this scheme, fraudsters contact the victim and impersonate a person of authority engineering a sense of urgency and fear to entice the victim to pay some type of fee.

• Victim receives a phone call, text, or email.
• Scammer claims to be with local law enforcement, IRS, US Marshals, FBI, SSA, or other law enforcement/government agencies.
• Victim is told that some sort of fee must be paid to avoid prosecution, problems, or additional fines.
• Fraudster may claim the victim’s personal information is compromised which requires the use of cryptocurrency for the payment.

Giveaway Scam:
In this scheme, fraudsters contact victims and impersonate celebrities or well know crypto investors claiming they want to help grown your crypto investment.

• Contact victims through unsolicited social media messages or phone calls.
• Claim you need to send them some cryptocurrency in order to receive additional crypto back from them to multiple your investment.
• Fraudster keeps your investment and disappears.

Fake Job Offers:
In this scheme, fraudsters post fake jobs seeking people to mine crypto, sell it online, recruit investors, or help convert cash to Bitcoin.

• May require a fee to apply for the job and steal the victim’s money and personal information.
• Victim is convinced to send cryptocurrency as part of the initial job function, to build trust, to receive more money back, to purchase supplies, etc.
• May also put the victim to work converting cash to crypto for the fraudster, but funds transfers back to the victim never happen.

If you think you may be a victim of a digital currency scam, click here to report it. For more information about crypto scams and how to prevent them, visit our Help Center.