Don’t be fooled by a crypto scammer
My experience is that new crypto investors sometimes think they’re smarter than the average person. But even smart people can get caught up in scams.
NewZealanders are losing hundreds of thousands of dollars to crypto scammers. Once a novelty, crypto has entered the mainstream and, sadly, scammers have latched on to it.
First of all, crypto scamsusemuch the samemodusoperandi as regular scams, but go after crypto, not old money.
The scammers started by demanding ransoms in Bitcoin or other crypto to unlock computers. Thatwasprobably quite difficult for Joe and Jane Bloggs, whomight have been completely bamboozled by the concept of digital currency that only exists electronically.
Nowthe scammers try to steal the cryptodirectly, and can be quite successful. Plenty of ordinary people hold crypto now, and it’s harder to trace. You’re mostly on yourown whenyour crypto is stolen.
The BankingOmbudsmanhas heard cases from individuals claiming their banks should have done a better job warning them before they transferredmoneyto crypto scammers. In one case released in July, aNewZealand bank suspended a transfer from a customer’s account to a scammer. The customer then phoned the bank as requested. She claimed the transfers were legitimate and the moneywasreleased.
The customer discovered weeks later that she’d beenscammedand complained to theOmbudsman. After listening to the recorded calls where the customer waswarned of the risks, theOmbudsmansided with the bank.
BankingOmbudsmanNicola Sladden saysmanyvictims are thoroughly convinced the crypto scammers are legitimate dealers.
Thesame happens with romance scammers, whothink they’ve met their future life partner, whojust happens to needsomemoney transferred to them.
Janine Grainger, chief executive of
NewZealand-based broker Easy Crypto, says scammerswill convince their victims not to tell the bank what they are doing with the money.
“[Victims] are coached by scammers to lie. The most recent excuse I heardwas ‘if you tell your bank about this transaction, then your bank will try to discourageyou from doing it because they want the commission and they want you to do thedealwith us’.
“To be fair, I think the banksdo a very good job of trying to stop people,” says Grainger.
It’s adifficult one because people should have agency and be the arbitrator of what they candowith theirownmoney, she says. “They should also have the education and scepticism to be making good decisions and not being caught with scams.”
Always check the legitimacy of any crypto platforms. Another case Sladden investigated involved aNew Zealanderwhotransferred funds to what appeared to be aNewZealandbased crypto trading platform. Itwas fake, a fact he could have discovered that by googling.
Myexperience is thatnewcrypto investors sometimes think they’re smarter than the average person. But even smart people can get caughtup in scams.
Grainger is often contacted by peoplewhohave been caught in scams. As with traditional scams, oncesomeone is caught, scammers have their contact details and will try again and again.
“They’ll try to trick you with every scamin the book. Oneof the really commonones thatwesee is a recovery scam, where [victims are led to believe] thiscompanyoverseas can help get it back.” The victim is told they just need $10,000 or another figure to ‘pay the tax’ to recover their money. “Victims are vulnerable and susceptible to psychological manipulation.”
Though it’scommonlythought that stolen crypto can’t be recovered, courts in Britain and the United States have recently allowedscamvictims to serve documents over the Blockchain, effectively freezing stolen crypto that had been tracked down. Those victims had lost millions and hadmoneyto pay crypto hunters to trackdownthe funds and lawyers. They have in part recovered their money. It’s unlikely the growing numberofscammedKiwi are going to be in that position any time soon.