Crypto Scam

Australian crypto scams increased by over 162% with nearly $150M lost

While the total figures are “alarming,” crypto scams accounted for 7.1% of the total $2.08 billion stolen from Australians in 2022.

Australians lost 221.3 million Australian dollars ($148.3 million) from investment scams where cryptocurrency was used as the payment method in 2022 — a 162.4% increase from 2021.

According to an April 17 scam activity report from the country’s consumer regulator, the Australian Competition and Consumer Commission (ACCC), 3,910 crypto scam incident reports were made in total, and the average Australian victim was stripped of AU$56,600 ($37,900).

The $148.3 million figure represents 7.1% of the total AU$3.1 billion ($2.08 billion) worth of scams reported in Australia for 2022.

Bank transfers remained the largest scam payment method with nearly 13,100 reports totaling $141 million — $7.3 million less than crypto payments.

Bank transfer payment scams averaged out at around AU$16,000 ($10,700) per incident, meaning that crypto scammers were able to swindle 250% more value from each victim.

Data showed that crypto scammers mostly contacted victims through social media and networking apps, while bank payment scammers more often reached out via phone and email.

In an April 17 statement, ACCC Deputy Chair Catriona Lowe partially attributed the spike in scams to new technologies making it easier to “lure and deceive victims” with increasingly “sophisticated” tactics:

“We have seen alarming new tactics emerge which make scams incredibly difficult to detect. This includes everything from impersonating official phone numbers, email addresses and websites of legitimate organizations to scam texts that appear in the same conversation thread as genuine messages.”

“This means now more than ever, anyone can fall victim to a scam,” she added.

While the figures are “alarming,” Lowe emphasized that the “true cost” of the damage still isn’t priced in:

“Australians lost more money to scams than ever before in 2022, but the true cost of scams is much more than a dollar figure as they also cause emotional distress to victims, their families and businesses.”

Lowe explained that the Australian government, law enforcement and the private sector need to strengthen ties to “combat” the scams more effectively and bring the numbers down.

Related: Aussies revealed as prime targets of Israel crypto scam syndicate

According to data from the ACCC scam database Scamwatch, the average investment scam victim in Australia is a 65-year-old man who was contacted on social media or had responded to a fraudulent advertisement.

They will likely be tied up in the swindle for “several months” before realizing they’ve been scammed.

Imposter bond offers, initial public offerings (IPO), relationship or pig butchering schemes and money recovery services are among the most common investment scams reported.

The ACCC said in its report that scam losses “are far higher” than reported, as around 30% of scam victims do not report it to anyone, while only 13% of victims report the incident to Scamwatch.

ACCC’s Scamwatch, ReportCyber, the Australian Financial Crimes Exchange (AFCX) and other agencies compiled data for the report.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Charges laid over alleged ‘crypto mining’ Ponzis that netted $8.4M

Various creators and promotors of two allegedly fraudulent crypto companies are facing a litany of charges that could land them 20 years in jail.

United States prosecutors have laid charges in two separate cases against nine people who founded or promoted a pair of cryptocurrency companies alleged to be Ponzi schemes that netted $8.4 million from investors.

On Dec. 14 the U.S. Attorney’s Office for the Southern District of New York unsealed the indictment, alleging the purported crypto mining and trading companies IcomTech and Forcount promised investors “guaranteed daily returns” that could double their investment in six months.

In reality, prosecutors say both firms were using the money from later investors to pay earlier investors, while other funds were spent on promoting the companies and buying luxury items and real estate.

“Lavish expos” were held in the U.S. and abroad, along with presentations in small communities, that lured investors in with promises of financial freedom and wealth.

Promotors would allegedly show up at events in expensive cars, wearing luxury clothing and would boast about the money they were making from investing in the company they were promoting. Investors were given access to a “portal” to monitor their returns

IcomTech and Forcount started to fall apart when users were unable to withdraw their purported returns.

Charges brought against Forcount’s creators and promotors by the Securities and Exchange Commission (SEC) allege the outfit targeted primarily Spanish speakers and gathered over $8.4 million from “hundreds” of investors selling “memberships” offering a cut of its crypto trading and mining activities.

In an attempt to spin up liquidity both companies created tokens so they could try repay investors with IcomTech and Forcount launching “Icoms” and “Mindexcoin” respectively.

Seemingly the token sales failed as by 2021 both had stopped making payments to investors.

“With these two indictments, this Office is sending a message to all cryptocurrency scammers: We are coming for you,” said U.S. Attorney Damian Williams. “Stealing is stealing, even when dressed up in the jargon of cryptocurrency.”

Related: ​​Cryptocurrency has become a playground for fraudsters

David Carmona of Queens, New York was named in the indictment as the founder of IcomTech, and was charged with conspiracy to commit wire fraud that carries a maximum penalty of 20 years prison.

Forcount’s founder was named as Francisley da Silva, from Curitiba, Brazil and faces charges of wire fraud, wire fraud conspiracy and money laundering conspiracy which carries a maximum of 60 years in prison if convicted of all charges.

The promotors for the firms face various charges relating to wire fraud, wire fraud and money laundering conspiracy and making false statements.

Sam Bankman-Fried deepfake attempts to scam investors impacted by FTX

A faked video the FTX founder created by scammers has circulated on Twitter with users poking fun at its poor production quality.

A faked video of Sam Bankman-Fried, the former CEO of cryptocurrency exchange FTX, has circulated on Twitter, attempting to scam investors affected by the exchange’s bankruptcy.

Created using programs to emulate Bankman-Fried’s likeness and voice, the poorly made “deepfake” video attempts to direct users to a malicious site under the promise of a “giveaway” that will “double your cryptocurrency.”

The video uses appears to be old interview footage of Bankman-Fried and used a voice emulator to create the illusion of him saying “as you know our F-DEX [sic] exchange is going bankrupt, but I hasten to inform all users that you should not panic.”

The fake Bankman-Fried then directs users to a website saying FTX has “prepared a giveaway for you in which you can double your cryptocurrency” in an apparent “double-your-crypto” scam, where users send crypto under the promise they’ll receive double back.

A now-suspended Twitter account with the handle S4GE_ETH is understood to have been compromised, leading to scammers posting a link to the scam website — which now appears to have been taken offline.

The crypto community has pointed to the fact that scammers were able to pay a small fee in order to get Twitter’s “blue tick” verification in order to appear authentic.

Meanwhile, the video received widespread mockery for its poor production quality, with one Twitter user ridiculing how the scam production pronounced “FTX” in the video, saying they’re “definitely using […] ‘Effed-X’ from now on.”

At the same time, it gave many the opportunity to criticize the FTX founder, one user said “fake [Bankman-Fried] at least admits FTX is bankrupt,” and YouTuber Stephen Findeisen shared the video saying he “can’t tell who lies more” between the real and fake Bankman-Fried.

Related: Crypto scammers are using black market identities to avoid detection: CertiK

Authorities in Singapore on Nov. 19 warned affected FTX users and investors to be vigilant as websites offering services promising to assist in recovering crypto stuck on the exchange are scams that mostly steal information such as account logins.

The Singapore Police Force warned of such a website which prompted FTX users to log in with their account credentials that claimed to be hosted by the United States Department of Justice.

Others have attempted to profit from the attention FTX and its former CEO are receiving. On Nov. 14, shortly after Bankman-Fried tweeted “What” without further explanation, some noticed the launch of a so-called memecoin called WHAT.

Deepfake videos have long been used by cryptocurrency scammers to try to con unwitting investors. In May, faked videos of Elon Musk promoting a crypto platform surfaced on Twitter using footage from a TED Talk the month prior.

The video caught Musk’s attention at the time, who responded: “Yikes. Def not me.”

‘Far too easy’ — Crypto researcher’s fake Ponzi raises $100K in hours

Crypto Twitter user FatManTerra explained the fake investment scheme was used to teach people a lesson about investing blindly in crypto schemes shilled by influencers.

Crypto influencer FatManTerra claims to have gathered over $100,000 worth of Bitcoin (BTC) from crypto investors in an investment scheme that was later revealed as fake. 

The crypto researcher said he created the fake investment scheme as an experiment and to teach people a lesson about blindly following the investment advice of influencers.

The account on Twitter has around 101,100 followers and is mostly known for being a former Terra proponent that now actively speaks out against the project and founder Do Kwon following its $40 billion collapse in May.

In a Monday tweet, FatManTerra told his followers he had “received access to a high-yield BTC farm” by an unnamed fund, and said that people could message him if they wanted in on the yield farming opportunity.

“I’ve maxed out what I could, so there’s some leftover allocation and I thought I’d pass it along — priority will be given to UST victims. DM for more details if interested,” he wrote.

While the post received a ton of negative responses from people calling it out as a scam, FatMan said he still managed to raise more than $100,000 worth of BTC from the initial post on Twitter and on Discord within a span of two hours.

In a Tuesday tweet, FatManTerra revealed the investment scheme was fake all along, describing it as an “awareness campaign” to show how easy it is to dupe people in crypto by using simple buzzwords and promising big investment returns:

“While I used plenty of buzzwords and put on a very convincing act on all platforms, I made sure to keep the investment details intentionally obscure — I didn’t name the fund & I didn’t describe the trade — no one knew where the yield was coming from. But people still invested.”

“I want to send a clear, strong message to everyone in the crypto world — anyone offering to hand you free money is lying. It simply doesn’t exist. Your favorite influencer selling you quick money trading coaching or offering a golden investment opportunity is scamming you,” he added.

FatManTerra claims to have now refunded all of the money and reiterated that “free lunches don’t exist.”

The notion of influencers allegedly promoting scams has been in the news of late, with YouTuber Ben Armstrong (BitBoy Crypto) taking legal action against content creator Atozy last month for accusing him of promoting dubious tokens to his audiences. However, he has since withdrawn the lawsuit.

Related: Do Kwon breaking silence triggers responses from the community

FatManTerra also stated that his fake fund post was inspired by the Lady of Crypto Twitter account, which has been accused of shilling questionable investment schemes to its 257,500 followers.

Aurora Labs exec details ‘fascinating and devious’ crypto scam he almost fell for

A sharp-eyed escrow agent and a screenshot saved Aurora Labs’ head of product Matt Henderson from losing his tokens to scammers.

Aurora Labs’ head of product, Matt Henderson, says there is a sophisticated over-the-counter (OTC) transaction scam running about that almost duped him into losing a stash of his hard-earned cryptocurrency. 

Henderson detailed his personal run-in with a scam artist known as Olai to his Twitter followers on Friday. 

Olai’s scam essentially involves tricking a victim into believing payment had been received for an OTC crypto transaction, when in fact it wasn’t.

How it worked

Henderson explained the crypto scam began when Olai contacted him on the Telegram messaging app, inquiring about purchasing AURORA tokens with USD Coin (USDC).

The pair agreed to conduct the transaction via escrow, a common strategy by which a trusted neutral third party holds assets on both sides of the transaction and releases them to the counterparty when payment conditions are met.

In this case, Henderson selected Aurora Labs’ head of security, Frank Braun, to act as the escrow agent, who he initially referred to as Steve in the Twitter thread. 

However, Henderson caught wind of something suspicious when his escrow partner shared a screenshot of him supposedly giving the go-ahead to release the full amount of AURORA tokens to the buyer. 

According to Henderson, the scammers replicated his Discord profile and directed Braun to release the AURORA balance to the scammers.  

Discord’s blocking function made sure Henderson was unaware his profile had been cloned and scammers were impersonating him. 

After successfully evading the con, Henderson later unpacked the intricacies of the scheme, warning anyone trading crypto through OTC means to take extreme caution and avoid falling victim to the sophisticated scheme.

Related: Solana-hacked crypto could be claimed as a tax loss: Experts

He also shared that the scammer named Olai may still be active in the community, as a person using a similar name and tactic has been spotted on Telegram, according to Twitter user Scott Yeager:

“How curious… I was recently approached by an Olai Olsen on Telegram attempting to initiate an OTC deal and offering USDC. Same character?”

Earlier this year, the United States Federal Trade Commission found that nearly half of all crypto-related scams originated from social media platforms in 2021. 

In a report in June, the FTC reported that as much as $1 billion in crypto has been lost to scammers throughout the year, more than a five-fold increase from 2020. 

Social media blamed for $1B in crypto scam losses in 2021

Nearly half of the consumers who reported a cryptocurrency-related scam in 2021 said it started with an ad, post or message on social media.

The United States Federal Trade Commission has labeled social media and crypto a “combustible combination for fraud,” with nearly half of all crypto-related scams originating from social media platforms in 2021. 

Published on Friday, the report found that as much as $1 billion in crypto has been lost to scammers throughout the year, which was more than a five-fold increase from 2020, and nearly sixty times up from 2018. 

As of March 31, the amount of crypto lost was already approaching half of the 2021 figure, showing that momentum doesn’t appear to be slowing.

The FTC found that Instagram (32%), Facebook (26%), WhatsApp (9%) and Telegram (7%) were the top platforms used for crypto scams.

Interestingly, Twitter, the social media platform widely adopted by the crypto-community, was not mentioned despite being littered with spam and scam bots touting fake crypto giveaways.

Based on fraud reports to FTC’s Consumer Sentinel Network, the most common type of crypto scam was Investment Related Fraud, making up $575 million of the total $1-billion figure.

“These scams often falsely promise potential investors that they can earn huge returns by investing in their cryptocurrency schemes, but people report losing all the money they ‘invest.’”

According to the FTC, common investment scams include cases in which a so-called “investment manager” contacts a consumer, promising to grow their money — but only if the consumer buys cryptocurrency and transfers it into their online account. 

Other methods include impersonating a celebrity who can multiply any cryptocurrency that a consumer sends them or promises free cash or cryptocurrency.

The FTC also lists scams that involve investment in fake art, gems and rare coins, bogus investment seminars and advice, and other miscellaneous investment scams as part of this group.

The next largest crypto-scam-related losses came from Romance Scams at $185 million, in which a love interest tries to entice someone into investing in a crypto scam.

Business and Government Impersonation Scams came in third at a total of $133 million, in which scammers target consumers, claiming that their money is at risk due to fraud or a government investigation.

“These scams can start with a text about a supposedly unauthorized Amazon purchase, or an alarming online pop-up made to look like a security alert from Microsoft. From there, people are reportedly told the fraud is extensive and their money is at risk.”

The scammers will then pretend to be a representative of the bank to secure the person’s crypto. 

In other cases, scammers have impersonated border patrol agents reportedly telling people their fiat accounts are frozen as part of a drug trafficking investigation. These scammers tell people the only way to protect their money is to put it in crypto. They’re directed to take out cash and feed it into a crypto ATM and are tricked into sending it to the scammers’ wallet address instead.

The report found that people aged 20–49 were most likely to lose crypto to a scammer, with those in their 30s the hardest hit, making up 35% of total reported fraud losses. 

Related: A life after crime: What happens to crypto seized in criminal investigations?

The amount of crypto lost rises up according to age group, with the median individual reported cryptocurrency losses for those in their 70s reaching up to $11,708, compared to just $1,000 for 18- and 19-year-olds.

An article on the FTC’s Consumer Advice website details a number of ways to avoid cryptocurrency scams: 

  • Only scammers demand payment in cryptocurrency. No legitimate business is going to demand you send cryptocurrency in advance — not to buy something and not to protect your money. That’s always a scam.
  • Only scammers will guarantee profits or big returns. Don’t trust people who promise you can quickly and easily make money in the crypto markets.
  • Never mix online dating and investment advice. If you meet someone on a dating site or app, and they want to show you how to invest in crypto or ask you to send them crypto, that’s a scam.