Cryptocurrency has always been the currency of choice for cybercriminals when demanding ransomware payments from businesses, but it is also fast becoming the payment method of choice for scammers targeting ordinary citizens.
According to a recent analysis by the Federal Trade Commission, more than 46,000 people reported losing a combined $1 billion in cryptocurrency to scams between January 2021 and March 2022. Cryptocurrency accounted for a quarter of all dollars reported as lost, more than any other type of payment method demanded by scammers.
Since 2021, more than $575 million of all reported cryptocurrency fraud losses were due to bogus investment opportunities where scammers promise huge returns on initial cryptocurrency investments.
Government and commercial phishing scams accounted for $133 million in stolen crypto funds. Romance scams caused at least $185 million in losses.
Steve Belcher was caught in a crypto scam through a dating app. He says he lost $1.6 million, his life savings.
“It was so well organized,” Belcher said. “It’s devastating. I mean, emotionally, physically, there were days where I didn’t want to get out of bed.”
Victims, including those who don’t understand how crypto works, will often be instructed to send a payment directly to a scammer’s wallet, where it cannot be easily retrieved or returned by law enforcement agencies.
“When it comes to cryptocurrencies, the rule is this: if you’re in possession of the actual chain, if you’re in possession of the actual code, if you’re in possession of the actual token, you own it, period,” said Chris Pierson, CEO and founder of BlackCloak. “So people, when they have these scams, they hit them because they’re interested in cryptocurrency, which is happening: They go and cry for government help, government support. But that’s the exact opposite of why people are doing crypto. They don’t want the government involved, and they’re not, so they’re out of luck.”
“I know that some really talented law enforcement agencies and intelligence groups have been able to recover especially large ransomware payments and some fraud cases,” said Sherrod DeGrippo, senior director of threat detection and research at Proofpoint, Inc. “That It’s not trivial, and you’re not going to put that much effort into crimeware. They just can’t get every piece of bitcoin back.”
According to the FTC, nearly half of people who lost cryptocurrency in a scam said it started with a social media post. In about 60% of those cases, the scam originated from Meta’s Facebook or Instagram.
“These are all places where they take advantage of people’s knowledge of something going on with crypto,” Piersons said.
Although cryptocurrency prices are at some of their lowest points in years, experts told Newsy they don’t expect these scams to go away. They say that if he finds out about a crypto scam online and thinks it’s too good to be true, it probably is.
“This is the perfect means by which cybercriminals can be paid,” Pierson said. “We’re not going to see any decrease in that at all.”
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