The FBI Is Investigating
James Barnacke, the deputy assistant director for the criminal investigation division of the Federal Bureau of Investigation (FBI) is warning people of these advanced scams.
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In the last few years, digital coins have become increasingly common. And in many cases, there is no way to assure the legitimacy of the currency.
What Is Cryptocurrency?
Cryptocurrency is a type of digital money that can be used for transitions through a decentralized system. No government or bank oversees the use of crypto, which means that its value is dependent on its popularity and that it’s incredibly unstable.
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The most common digital currency is BitCoin, a form of currency that went from costing just a few American cents to roughly $70 thousand for just one coin. It’s success and popularity spurred an avalanche of other currencies on the market.
What Are Some Common Crypto Scams?
One of the most common cryptocurrency scams is “pump-and-dump schemes.”
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In this case, a scammer would leverage various tactics to artificially inflate (or pump) the price of a digital asset or currency. Then, when the price shoots up, the scammer immediately sells all of their stock or coins (dumps) into the market before watching the price drop. In this case, only the scammer makes money, and everyone who invests in it loses their funds.
Barnacle Warns Victims
Barnacle sat down with ABC News to discuss the issue: he says, “Over time, the victim is being cultivated, and the fraudsters are building confidence in the victim.”
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“They’re friends. They met on the internet, or they met on social media. They’ve met on text message. They develop a friendship, then the fraudster will offer an investment opportunity, and the pitch is something along the lines of like, ‘Hey, I’m in a group that does investments or I know someone that does investments in cryptocurrency.'”
The Effects Are Devastating
Barnacle says that people are often swayed by tales of people who made millions off early cryptocurrencies and hope to recreate the success.
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“Everyone reads about all these crypto millionaires, so people are looking for the next big investment opportunities and fraudsters take advantage of that,” he said. In Barnacle’s example, he says that victims are told to place their money into a completely fake web app. The money is then sent overseas, where the victim cannot access it or get the money back.
People Have Had Their Lives Ruined
“Some people take mortgages, or third mortgages or equity lines of credit. People withdraw or liquidate from their 401(k) or their IRA, and they’ll put money into these investment schemes, keep putting in more and more and more,” he said. “We’re seeing people lose $4 million, $5 million, $6 million. We’re seeing people that are complaining and reaching out to us for $2,000 … it’s a huge impact to the victim.”
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The report from the FBI notes that people over 60 lost nearly $1.6 billion in 2023 alone.
The Elderly Are Easy Victims
Unfortunately, the elderly are often easy targets for online scammers. They know the least about technology and can often be duped by sophisticated liars to hand over their hard-earned money.
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“Elderly have generally a lot more free time,” Barnacle explained. “They’re at home, they’re in an assisted living facility, and so they’re pretty easy to target, in that sense, just their availability is higher than someone who’s not at home all day. And the fraudsters are really good at building that rapport.”
Fraudsters Walk the Elderly Through the Scam
Once the fraudster has someone on the hook, they walk them through the specific steps of going to a cryptocurrency kiosk to deposit cash and send it to the scammer’s cryptocurrency wallet.
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“You wouldn’t think your 89-year-old grandmother would go to a kiosk, but we’re seeing it all day long,” Barnacle said. He also noted that the ability to get the money back is extremely slim.
Law Enforcement Needs More Training
Unfortunately, online crimes are still very difficult to prosecute. Once someone deletes their accounts or correspondence with the victim, it can be almost impossible to find them.
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Barnacle claims that one way to fix the problem is to warn customers of banks and train local law enforcement to better see the warning signs of crypto scams in their community.
Many Aren't Aware of the Fraud
Since the beginning of the year, the FBI has notified 3,000 people that they were the victims of fraud. However, many didn’t even know that their money was long gone.
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“The 3,000 people we’ve notified this year, 75% had no idea they were victims of fraud,” Barnacle said.
Inform Your Relatives
One of the best ways that you can protect yourself and your loved ones is to remain aware of the common ways that scammers try to get access to your bank account or your cash.
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Sit down with your elderly family members and teach them how crypto or online currency works. The more they know, the harder it will be for them to be taken advantage of.