Lessons From a Real-Life Cryptocurrency Scam

In this article, we share the true story of a fraud victim. Their name has been changed to protect their anonymity.

Mary began attending an online worship group during the pandemic after most clubs and meetings transitioned online. During her time as a member, Mary met a lot of interesting people and was happy to be a part of a group where she felt she belonged. The group’s meetings had also become a welcome change to her routine during the pandemic. As time passed, Mary began to foster relationships with some of her peers outside of the standard meetings through discussion groups and private messages.

It was in one of these private messages that she first encountered a scammer.

Of course, Mary had no reason to believe that she was speaking to a scammer. She knew from their initial introduction and the scammer’s bio on their profile page that this was a person who worked for some kind of investment firm and specialized in cryptocurrency. Mary had heard of crypto before, but she didn’t know much about it.

Upon hearing that Mary didn’t know a lot about cryptocurrency, the scammer reassured her that crypto could be confusing, risky, and difficult to get into, but as long as she worked with an expert, she would be fine. The scammer then explained how they themselves were an expert and shared what their investment business could do. The scammer went into detail explaining their proprietary trading system, which was faster than anything else on the market, and how they were able to conduct cryptocurrency trades instantaneously, allowing them to react to any tiny fluctuations in price. The scammer promised they would use this system to sell the moment the price dropped even a fraction of a percent and explained how Mary could buy again the moment the price started to go back up. Mary was told the system was 100% effective, and most importantly: there was no downside risk. Unlike regular trading, Mary’s investments could only go up, or so she was told.

At first, Mary was apprehensive. But two things finally convinced her: since crypto was unfamiliar, she couldn’t say with certainty whether a system like this could work, and the person making this pitch was someone she had come to trust. Mary had been chatting with this individual every day. They showed interest in Mary, and she had initially met them through her trusted worship group where Mary had found a genuine community.

After hearing the scammer’s reasoning, Mary agreed to invest. She was finally convinced when the scammer mentioned that they could only keep the offer open for a limited time, since the company was about to become wildly successful and they’d only be working with larger investors soon. Since Mary was a friend, they could get her in now as a favor. After following the scammer’s instructions, Mary began sending money.

Fortunately, Mary’s local credit union was able to stop her from sending out the funds she had intended to wire. The credit union flagged the circumstances as suspicious, but not all scenarios like Mary’s get flagged or caught in time.

Cryptocurrency is a favored formula for many scammers because of its anonymity and unfamiliarity. In any transaction related to cryptocurrency, it’s always best to exercise extreme caution. Fortunately, you don’t need to be an expert to spot a scam. Here are some red flags to watch out for so you can avoid getting caught in a cryptocurrency scam:

• Investment guarantees: if you’re being pitched a cryptocurrency investment opportunity that promises high returns or claims to protect you from any potential losses, it’s almost certainly a scam. Cryptocurrency is extremely volatile, and while shrewd investors can find profit, nobody is truly protected from risk.
• Platform choices: There are numerous well-established platforms for buying, selling, and interacting with cryptocurrency. If you’re being directed to a lesser-used website or app, it’s worth doing some research to see if it is reputable. Many scammers will use sites that exist purely to transfer money from the victim to the scammer.
• Access to the money: Ask yourself this when dealing with cryptocurrency: how will you be able to access the funds? In reputable investment circumstances, you will have an account that you can log in to at your leisure, and you’ll be able to add or withdraw funds as you see fit. Scammers often ask for the funds to be wired to them so they can invest for you, and this should raise a major red flag. There are also scams in which the scammer helps the target set up their account on a trading platform so that they have access to the funds as well. This is equally concerning, as it allows the scammer to remove the funds themselves.
• Investment advising: if you are approached by someone pitching a cryptocurrency investment opportunity, the first thing you should ask yourself is why. What does this person stand to gain from having you invest? If this opportunity is so good, why would they reach out and share it with other people? Most people that engage with cryptocurrency do so independently, so anyone reaching out with an opportunity should be viewed with suspicion.

While cryptocurrency is not inherently a scam, it’s certainly full of risk because of potential scammers and the market’s volatility. If you choose to invest, be thorough in your research of any opportunity, especially ones that are brought to your attention by an individual. Keep an eye out for the red flags listed above and remember: if it sounds too good to be true, it probably is.