Cryptocurrency is having a moment.
On the campaign trail, Trump vowed to make the US “the crypto capital of the planet.” After the election, Bitcoin stock catapulted to $90,000, a 40% rise compared to six months ago. This month its stock price reached $107,000.
But crypto is also one of the most popular ways to scam people.
Scammers lure people into investing in crypto with ‘make money fast’ promises and encourage them to pay via crypto, where payments are irreversible. This makes cryptocurrencies the ideal route for scammers. Middle-aged men who are at the peak of their careers and older adults on social media are among those most vulnerable to crypto scams.
“In the crypto space, turns out there’s a humongous amount of crime,” said Ogle founder of Glue blockchain and cybersecurity expert, who goes by only one name.
In 2023, there were 69,000 complaints from fraud involving cryptocurrency with losses totalling $5.6 billion, according to the Internet Crime Complaint Center IC3. Crypto-related fraud increased by 45% in 2023 compared to the year prior, said the Federal Bureau of Investigation this year.
One of the most common types of scams are called “pig butchering” scams. Scammers who are typically based in Asia, attempt to establish a relationship with the victim on social media and increasingly on dating apps, said Ogle. Once they build trust, scammers ask people to invest in crypto or other foreign exchange schemes that promise to make the consumer ‘big money.’ The consumer is then sent falsified statements where investments appear to be growing.
The process continues until the gig is up or the money runs out.
Scammers often try to go for where the biggest money is, usually rich middle aged men, said Ogle. Dating apps like Seeking Arrangement create the perfect opportunity for a crypto trap because they tend to attract middle-aged men who might be at the peak of their careers.
“If you’re going to do a dating scam, why would you spend your time hitting up like 24 year-old guys when you can hit up 44 year-old rich guys, and make a thousand times more money,” said Ogle.
Unlike banks, crypto does not require person-to-person contact to make a transaction, which makes it a prime tool for scammers. The consumer may be asked to scan a QR code at a Bitcoin ATM or purchase crypto via Coinbase, and as soon as they do, the money is deposited into the scammer’s account. The transaction is irreversible.
Adults above 60 are also among the most targeted. This age group had the most number of complaints referencing crypto and reported the most amount of losses at $1.6 billion in 2023, according to the IC3.
Older adults are presumed to be retired or working limited hours, which lead scammers to believe they have more spare time and accumulated wealth on their hands, said Rodnee Warr, executive director of the elder clients initiative at Wells Fargo who works in the fraud department, which makes them more susceptible to crypto scams.
Older adults are similarly lured by ‘get rich quick’ messages online or on social media that instill a sense of urgency, said Warr. They begin to build relationships with scammers who glean personal information, and then they tell them to send the money.
This might mean buying crypto at a gas station ATM. Some people walk into a gas station with $30,000 in cash in their purses to deposit in Bitcoin ATMs, said Warr. According to the Federal Trade Commission, the majority of Bitcoin ATM scams come from government or business impersonation or tech support scams. Other payment options common among scammers are cash mail, gift cards, and perhaps the most surprising — gold couriers that pick up pieces of gold at the person’s doorstep, said Warr.
Scammers tailor to the market’s current needs. If there is a tornado, they will set up a falsified charity for example, and ask for donations.
“Oh yeah, these are not dummies,” said Warr, “these are PhDs.”
According to Warr, the ultimate goal of the scammer is identity theft.
“That’s where the big money is,” said Warr, because they can take out loans or credit cards in the consumer’s name and falsify tax documents.
The current chatter around crypto this election has turned crypto into a buzzword. But experts urge caution. They suggest researching a company on the Better Business Bureau site before completing a transaction and creating protective barriers around personal information such as two factor authentication (2FA) and not saving passwords on computers, which can be accessed by malware.
“This election there’s been a lot of talk about cryptocurrency,” said Winnie Sun, MyTeleWealth founder and managing partner at Sun Group Wealth Partners. “And I think it’s just going to get bigger.”
Social media’s open communications platform coupled with the decentralized nature of crypto, leaves people at greater risk of financial fraud. Sun believes there should be more accountability.
“What are we doing to make sure that someone doesn’t take your retirement money and put it in crypto, or put their kids’ education fund into crypto?” said Sun.