Crypto Scams: Recent DOJ Actions and What You Need to Know

Cryptocurrency might just be the future of finances. Back in the day, people mined for coal. Today, we mine for digital or virtual coins. Sadly, scammers like to take advantage of trends to scam people.

Crypto scams involve celebrity imposters promoting fraudulent exchanges, fake investment managers, fake lovers, government impersonators, and fake crypto jobs. To avoid these scams, always verify before investing in crypto.

According to the FBI, people lost $5.6 billion to crypto scams in 2023. Most victims were older people, accounting for 16,000 complaints and $1.6 billion of losses.

Essentially, crypto schemes involve scammers who steal digital assets using tricks such as impersonation, investment opportunities, and phishing.

Crypto scams can lead to:

• Financial Loss: Victims can lose a lot of money, with some losing their entire life savings and retirement funds.
  
• Identity Theft: If scammers tricked you into providing your personal information, you could suffer from identity theft.
  
• Emotional Distress: Victims of crypto scams often experience strong feelings of embarrassment, stress, and anxiety.
  
• Wrongful Legal Consequences: If you unknowingly helped scammers in their illegal activities, you could face legal consequences.

In a recent victory against crypto scams, the Department of Justice recovered $7 million from a major scam operation.

Scammers lured victims into fake crypto investments by gaining their trust and directing them to websites mimicking real platforms.

These platforms displayed fake profits to lure users in, all while secretly moving money through a web of bank accounts tied to shell companies.

When victims tried to withdraw their earnings, scammers claimed they needed to make more payments under the pretense of tax obligations.

In June 2023, Secret Service agents seized part of the stolen funds from a foreign bank account.

The government then pursued a civil forfeiture case, resulting in a settlement that allowed $7 million to be forfeited.

Now, officials are reaching out to victims, letting them know they can seek compensation through legal proceedings.

Crypto scams come in various forms. Here are some of them:

• Celebrity Imposter: This is where scammers pose as celebrities (e.g. Elon Musk, and Vitalik Buterin), promising free crypto or to double your investment. Once you send your crypto, it’s gone—and so are they.
  
• Investment Manager: Scammers pose as expert traders who offer services in managing crypto investments, promising high returns. But really, they’re just managing to disappear with your money.
  
• Fake Lover (Romance Scam): This type of crypto scam is where scammers create fake online profiles to trick people into romantic relationships. Once they gain your trust—and maybe even your heart—they start talking about a “great” crypto investment. But once you send the money, they vanish, leaving you with empty pockets and a broken heart.
  
• Government Impersonator: Someone calls pretending to be from the IRS, FBI, or another agency, claiming you owe money—payable only in crypto. Real authorities never ask for payment this way.
  
• Crypto Job: This type involves shady companies promoting high-paying remote jobs, for positions like “blockchain developers,” “crypto analysts,” or “traders.” Before you get hired, you’ll be required to pay upfront for training or software.

To protect yourself from crypto scams, you should:

• Verify: See to it that you always do your research before you send crypto to anyone.
  
• Beware of "Too Good to Be True" Promises: Keep in mind that there are no guaranteed returns from crypto investments due to market risks and economic returns. The only guaranteed returns come from government-backed bonds, fixed deposits, and annuities from reputable insurers.
  
• Use Secure Platforms: In every transaction, stick to trusted crypto platforms or wallets.
  
• Enable Two-Factor Authentication (2FA): To ensure that scammers won’t be able to break into your crypto accounts, even if they manage to steal your credentials, you should enable 2FA.

Now, here are some things you can do when it’s already too late and you got scammed:

• Stop Sending Money: Don’t try to “win back” what you lost by investing more. It won’t work.
  
• Document Everything: Save every necessary document you’ll need for reporting the scam (e.g. messages, receipts, and transaction IDs).
  
• Secure Your Accounts: If your wallet or account was compromised, change your passwords quickly and enable extra security features.
  

Reporting Tips:

• Report to Authorities: With your documentation, file your complaint with the FTC, SEC, or DOJ.
  
• Inform Crypto Exchanges: You should also inform your crypto exchange. Some of these platforms can help protect your accounts or freeze fraudulent exchanges.
  
• Warn Others: Sharing your experience will help prevent others from falling victim.

Overall, crypto scams are everywhere.

But with awareness, you can avoid falling for these crypto scams.

Remember to always verify and stay skeptical.

If an investment sounds really good to be true… It probably is.

Stay scam-free and safe investing!

What are the risks of crypto?

Cryptocurrency is just like any investment opportunity, which means there are no guarantees that you’ll make money when you invest in crypto. It’s likely a scam if someone promises that you’ll receive high returns, even if a celebrity is endorsing it.

What are fake cryptocurrency platforms?

Some of the reported fake crypto platforms are: 1) webelon.org – impersonating Elon Musk and Tesla, 2) Capiturly.io, 3) Ceypro investments, 4) SILD group crypto, 5) YFI App, and 6) 0x layer base. To know more about fake crypto platforms and crypto-related scams, you can check DFPI’s scam tracker.