Scammers are continually finding new ways to separate people from their money. Lately, they’ve turned their attention to cryptocurrencies for one simple reason: payments made in cryptocurrency are difficult to trace.
What are Cryptocurrencies?
Cryptocurrency is any digital currency and alternative form of payment in which transactions are managed by a decentralized online system. No central authority manages or maintains the value of a cryptocurrency, and there is no use of money or coins.
Although cryptocurrencies can be used to buy regular goods and services online, many people invest in them as they would in other assets, like stocks or precious metals. Scammers rely on the fact that cryptocurrencies are relatively new and difficult to understand. They prey on the fact that individuals may not fully understand how this currency functions and will make up false information to confuse people.
How are Cryptocurrencies used in Scams?
As a Requested Method of Payment
While the type of scam may vary, such as a Social Security scam, a tech support scam, a romance scam, etc., the fraudster requests an untraceable type of payment such as cryptocurrency or gift cards. Once the funds have been sent, they are nearly impossible to get back.
Investment Scams
This scam uses the price speculations of cryptocurrencies to create a false investment opportunity. You receive a text, email, or call about a cryptocurrency investment opportunity and receive a link to a fraudulent website which looks legitimate. The scammer convinces you to open cryptocurrency trading account to which they have secret access, and they make it look like your investment is growing. After a few of these “trades” the fraudster withdraws all your investments, the “account” is gone, and the funds untraceable.
Red Flags of a Cryptocurrency Scam
- If you are instructed to not trust Bank-Fund Staff Federal Credit Union (BankFund) or to respond to questions in untruthful ways, STOP this is a scam. Anyone who advises you to not trust your credit union or bank is a scammer.
- If anyone requests you withdraw cash and deposit it to a Bitcoin ATM, or to send money to a Cryptocurrency account, STOP it’s a scam. Scammers will send you the QR code associated with the account the money should be deposited to. Once the cash has been deposited to the account or in the ATM, there is no way to get your money back.
- Investment related cryptocurrency scams are often facilitated through social media websites, applications, and online dating websites. After gaining your trust and developing a bond, your love interest may present an exciting opportunity if you send them money. This is a scam; never send money to anyone you don’t know or have not met in person.
- Legitimate law enforcement agencies (such as local police, the FBI, Secret Service, etc.) and government agencies (like the IRS or Social Security Administration) will NEVER ask you to send cryptocurrency as payment for anything.
- Like Gift Cards, any stranger requesting for a payment to be made with cryptocurrencies is very likely to be a scam.