Cryptocurrency losses can be catastrophic
Cryptocurrency markets have been swooning for more than six months, and investors’ losses are now into the trillions of dollars. Headline declines in bitcoin took the price of one coin from more than $68,000 at its peak to around $20,000 per coin as I write. (And by the time you read this, it might be lower.)
Clearly, cryptocurrencies have been neither a hedge against inflation nor a store of value in market volatility. While the blockchain technology behind crypto will eventually revolutionize the global financial system, the value of individual coins is defined daily by a volatile and speculative market.
But the huge market decline isn’t the only way people have lost money in crypto. Scams abound. These “coins” trade on unregulated markets that call themselves “exchanges.” But they are not regulated by the Securities and Exchange Commission. Instead, they operate under a veil of secrecy that has contributed to massive fraud.
The Federal Trade Commission (FTC) has just reported that since the start of 2021, more than 46,000 people have reported losing over $1 billion in crypto to scams, often targeted at retirees.
It’s even more disheartening to find that some of these “exchanges” are simply algorithms gone bad in a volatile market. On May 15, the ill-fated Cryptopia exchange closed, following several hacks. In the same month, the Indian exchange, Coinome, also ceased to exist.
And among the biggest crashes ever, LUNA, the Terra native token, crashed to almost zero as a complex algorithm tied it to a “stable coin” that became worthless. That crash wiped more than $40 billion of investors’ wealth in a matter of days. There is no government watchdog for these crypto exchanges.
Once you are scammed, there is little recourse. Local police and even the FBI don’t have the resources to track or try to recover your losses. There is no official regulator with whom you can file a complaint. Your money is simply gone.
Now, one company is providing a service to small investors whose crypto was silently removed from their accounts or was taken as a result of a scam. MyChargeBack (MCB) has worked with more than 800 banks and 450 law enforcement agencies in more than 100 countries to assist consumers seeking justice. Their business model originally involved assisting people with credit card, debit card and wire transfer disputes of traditional currencies. In those instances, consumers have various legal remedies depending on the country.
As for tracking down stolen or scammed crypto, MyChargeBack CEO Aaron Lazor says: “We have experts in forensic cryptocurrency investigations, and our technology aids law enforcement agencies and banks to expedite their own investigations and reduce processing time. Banks simply don’t have the customer service resources to help.
“We also counsel individuals who have lost money in crypto investment schemes. The most important thing for individuals is to not to be embarrassed to consult with us. Law enforcement may expect you produce proof of your loss, and we have the tools to do that.”
Lazor advises people to keep all records. Screen shots of account holdings are invaluable, and any emails or digital correspondence will help build a case. How does that work?
The explanation is more complex than crypto itself. The company states that it can locate the your crypto coin using advanced software to delve deeply into the blockchain to reveal new information and map out patterns. That involves trace tracking “using OSINT, CYBINT and FININT methodologies.” So what does all this cost? The consultation is free to determine whether you even have a case.
If so, there’s an initial fee that depends on the complexity of the case and likely a portion of the recovery.
It’s tough enough to lose your money in a declining market for any investment. It’s quite another to get in over your head and be scammed out of your hard-earned dollars in a “currency” you don’t even understand. And that’s The Savage Truth.