By Morgan Cole
Cryptocurrency is everywhere these days: in the news and in many Americans’
financial portfolios. Crypto, or digital, currencies have created a paradigm shift in
the way we look at money. Crypto usage is expected to continue its meteoric rise in
2022, with the number of US adults who own and use cryptocurrencies for
payments estimated to reach 33.7 million through 2023.
While the interest in and legitimate usage of cryptocurrencies is increasing, digital
currency remains an excellent vehicle for fraud. Cryptocurrency crime had a
record-breaking year in 2021. The blockchain data company Chainalysisfound that
scammers took $14 billion worth of crypto last year through various scams.
Criminal methods included pushing victims to send money in the form of crypto
and presenting victims with cryptocurrency-based investment scams.
Crypto is moving into the mainstream. Governmental regulations of
cryptocurrencies are being drafted, and some digital currencies being offered as
investments in retirement accounts. The blockchain- the decentralized system that
records crypto transactions- is safeguarded using cryptography and encryption.
Cryptocurrency is described as secure, transparent, and efficient, so why is it still
so attractive to scammers?
- Cryptocurrency payments do not come with legal protections.
Unlike bank accounts or credit cards for federally regulated currency,
there is no such thing as fraud protection or FDIC insurance on
transactions of cryptocurrency. When crypto is stolen, the only way to
get it back is for the recipient to return it directly. This is unlikely to
happen in a cybercrime situation. - Cryptocurrency payments are not reversible.
Cryptocurrency is designed to be hard to track and even more difficult
to recapture. Transactions on the blockchain are irrefutable and
irreversible. No central authority governs the authenticity of
transactions, and once a transaction has been approved, it cannot be
deleted from the blockchain. Once it is transferred, the crypto is gone,
with very few exceptions. - Fake cryptocurrency apps and websites are easy for fraudsters to launch.
Modern criminals are adept at creating legitimate-looking websites
and smartphone apps with which to deceive their victims. These fake
apps can perfectly mimic a legitimate cryptocurrency wallet app.
Fraudsters direct their victims to download the fake app by sending a
link via text message or email.
Cryptocurrencies are attractive to fraudsters because they can be used to obscure
the source of criminal proceeds. Crypto offers criminals a combination of
anonymity, ease of use, and the ability to circumvent international borders and
regulations.
How To Protect Yourself
- Because cryptocurrency is attractive to fraudsters, it is important to exercise extreme caution when engaging in crypto transactions. If a seemingly credible person or retail establishment claims they cannot accept any form of currency other than cryptocurrency, it is likely a scam.
- If you find yourself in a situation where you are being directed to purchase and send cryptocurrency, ask yourself, “Am I being pressured into acting quickly to take advantage of a deal that seems too good to be true?” and “Why is cryptocurrency the only way that I can send money?” Sending money via a bank account or credit card may give you recourse to recover your funds, while sending bitcoin will not.
- Nobody from the government, law enforcement, utility company, or the lottery will ever tell you to pay them with cryptocurrency. If you encounter this, it is a scam.
- To avoid fraudulent cryptocurrency platforms, only download apps directly from the Google Play Store and the Apple Play Store.
If you believe that you have been involved in a cryptocurrency scam, report the fraud and other suspicious activity by contacting the FTC at ReportFraud.ftc.gov and by notifying the crypto exchange company that you used to send the funds.
Citations :
- Intelligence, I. (2022, April 20). US cryptocurrency ownership stats and trends for 2022.
Insider Intelligence. Retrieved April 2022, from
https://www.insiderintelligence.com/insights/us-adults-cryptocurrency-ownershipstats/#:~:text=By%20the%20end%20of%202022,having%20surpassed%2010%25%20la
st%20year - DeMatteo, M. (2022, April 18). Scammers stole $14 billion in crypto in 2021 – how
investors can protect their coins | nextadvisor with time. Time. Retrieved April 2022,
from https://time.com/nextadvisor/investing/cryptocurrency/common-crypto-scams/
