(Natural News) Nearly 26,500 cases of cryptocurrency scams were reported to the government last year, resulting in a loss of $419 million. This year, the number of cases is on pace to exceed those numbers.
Glenn Titus of Salem, Oregon was among those who got scammed recently. Titus was hit by what’s known in the world of cryptocurrency as a “rug pull” after investing in a sketchy digital token called Safe Heaven. He’d been gambling $50 here, $100 there on what are known as “Shit Coins.”
One moment, Safe Heaven was flying. The next, it was crashing. Some hustler apparently created Safe Heaven, hyped it and promptly cashed out. Telegram, a popular instant messaging app that has become a major crypto boiler room, immediately fell silent. The Safe Heaven Telegram group was deleted. The Safe Heaven Twitter account hasn’t been updated since May 28.
“Everybody I know has gotten rug-pulled,” said Titus. “You know, you win some, you lose some. Hopefully, win more than lose.”
Social media used as tool by crypto scammers
The Motley Fool surveyed American adults who had been targeted by an investment or cryptocurrency scam and looked into data gathered by the Federal Trade Commission (FTC). It found that the use of cryptocurrency and social media by scammers has skyrocketed, many people don’t report when they’re targeted by a scam and almost 75 percent of people targeted by a scam are less likely to invest in the future.
Those aged 30-39 like Titus are most likely to be targeted by scammers. The 20-29 age group reported the second most number of cases, but those aged 40-69 reported higher losses from fewer cases, according to the survey.
The survey also found that only 62 percent of those targeted by an investment or cryptocurrency scam filed a report. Of those that didn’t file a report, 37 percent said they didn’t know they could. There were 14,079 investment scams reported to the FTC in the first quarter of 2021 alone, with the victims losing $215 million.
Website tracks crypto scams
The website Tokensniffer.com has been running a tracker of crypto scams. The website was developed in October 2020 by a software-engineer-cum-crypto-trader who, like many players in crypto, prefers to remain anonymous. According to him, Tokensniffer has tracked 42,071 tokens and 2,250 scams or hacks as of June 16.
The idea for Tokensniffer came to him after he fell victim to rug pulls himself. His website scrapes data about new meme tokens from popular social media channels and scans the source code. Sometimes users also flag tokens that aren’t in the system.
Tokensniffer functions a bit like a virus scanner looking for malicious code patterns. A “smell test” program searches for vulnerabilities. Clones of existing meme tokens are often a red flag.
People around the world losing billions to crypto scammers
People all over the world are getting scammed in growing numbers. So far this year, over $2.6 billion has been grabbed, according to Chainalysis, a New York-based blockchain researcher. That figure does not include a massive fraud in South Africa that hauled in billions worth of bitcoin.
Crypto scammers had their most productive year in 2019 when they walked away with an estimated $9 billion. (Related: Cryptocurrency scam hits hundreds of small investors.)
Most crypto scams seem to be getting smaller, but more people are getting stung. From 2019 to 2020, the number of victims has jumped 48 percent to an estimated 7.3 million. Between the last three months of 2020 and the first three months of 2021, the number of unique scams rose nearly 18 percent to 1,335, according to Chainalysis.
Regulators struggling to police cryptocurrencies
Regulators are still grappling with how to police cryptocurrencies when the whole point is that they operate without governments or central banks. Authorities tend to ignore individual scams that are small. Cases involving less than $100,000 normally get a pass and buyers have little incentive to chase after fraudsters on their own.
Most swindlers simply disappear. Some crypto wolves work alone, others in packs and almost all use online aliases. Even people who are in on the same scam don’t necessarily know the true identities of their accomplices.
“You can’t draw blood from a stone,” said Paul Sibenik, lead case manager at CipherBlade, a blockchain investigation company. “If there’s nothing left, or if the loss wasn’t that high, nailing down the people behind these scams vary case-by-case.”
Biggest crypto heist
The biggest crypto heist on record came to light only recently and it looked like an old-fashioned Ponzi scheme.
In April, two brothers in South Africa first claim their crypto investment platform had been hacked. They then vanished – along with an estimated $3.6 billion worth of bitcoin. Lawyers who’d been working for the men, Raees and Ameer Cajee, said on June 29 that they were no longer representing them and didn’t know where they were.
Chinese crypto wallet and exchange PlusToken held the previous record, stealing $2 billion from its users. In November last year, the scheme’s ringleaders were sentenced to between two to 11 years in prison.
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