Cryptocurrency Scams during Covid-19

Cryptocurrency Scams during Covid-19

The Covid-19 pandemic has made people jumpy. Businesses and companies have closed down or operate partially. It has been predicted that the global economy would take anunprecedented nosedive, and these predictions are currently being confirmed. Worse, no one is certain about the end of the pandemic. The ultimate result of these is that many are left vulnerable as they search for any source of hope, especially regarding their finances. Money scams are usually on the increase in times of economic crisis. Scammers exploit the desperation of many to present money-making schemes and fake investment opportunities. These days, scammers are using cryptocurrency as a tool to facilitate their activities.

One of the benefits of cryoptocurrency is its boundlessness. Users can make transactions anywhere without going to a bank or store. Thus, in these times of social distancing and stay-at-home orders, businesses and individuals are looking to adopt cryptocurrencies, especially Bitcoin, as a legal tender.

People are also turning to cryptocurrency as a substitute for other forms of investments such as forex trading, stocks, options, bonds, mutual funds and exchange traded funds. But as businesses and individuals are looking to do these, scammers are also working to leverage the boundlessness of cryptocurrency,the uncertainty in these times, and the ignorance of unsuspecting individuals to create fraudulent schemes. These crypto scams target two groups of people: those who have been on the crypto space, and those who are looking to get into the crypto space.

The Federal Bureau of Investigation (FBI) has warned that crypto scams would increase in this reported that the Manchester City Council stated that Covid-19 related scams rose by 400% in March. They further reported that between February 1 and March 18, Action Fraud received 105 reports from victims of these scams, and the losses recorded totaled about ₤970,000. These scams take various forms such as fake charities to fight Covid-19, investment scams and Ponzi schemes, payments for treatments or equipment, work from home scams, and blackmails.

1. Fake Charities to Fight Covid-19

The coronavirus pandemic took the world by surprise. Countries were not ready. And the pandemic shook — and still shakes — health systems around the world. The incidence rate of the disease has overwhelmed the facilities available — from testing kits to hospital beds to ventilators. As a result, governments have to seek assistance from organizations and individuals to help curb the scourge of the virus. Also, many families need palliatives in the form of cash or food to help cushion the financial distress associated with the crisis.

Unfortunately, unscrupulous individuals pose as charity organizations requesting donations in cryptocurrency to either help fight the spread of the virus and/or offer palliatives to families. For instance, there have been reports of scammers who masquerade as the World Health Organization (WHO) and Center for Disease Control (CDC), and send emails to people asking them to click links to donate Bitcoin as contribution towards fighting the disease. They may contact people through emails, social media accounts, text messages, or phone calls; playingon the emotions and vulnerability of individuals who are driven by the desire to assist the world get back to what it was in any way they can. This activity gets more sinister because of the autonomy and confidentiality of cryptocurrency transactions, which ensures that these frauds cannot be traced.

However, the good thing is that there are telltale signs that can help an individual spot these scams. Scammers often have no valid form of identification and may use phishing websites quite identical to legitimate sites. Also, they are often desperate — trying to guilt-trip the individual into donating.

Therefore, individuals should be cautious in these times. There are legitimate charities that are committed to ending this pandemic. It is safer for well-meaning individuals to reach out to these organizations and make their donations directly through approved payment channels.

2.  Investment Scams and Ponzi Schemes

The Covid-19 pandemic is an eye-opener. People have learnt not to rely solely on their jobs. Many have seen the need for making investments and having alternate sources of income. These individuals are not looking at just any kind of investment, they are looking for investments that can fetch them money consistently even if they do not work. Since cryptocurrencies like Bitcoin and Ethereum have recorded tremendous success, with early investors in these currencies becoming millionaires and billionaires, many individuals have become awash withfear of missing out — a fear crypto scammers capitalize on.

Crypto scammers exploit this fear — and ignorance — to present a new coin to individuals which they claim would compete favorably with existing coins in the long run. They use a two-pronged strategy to bait their victims: (1) they instill the idea that it is too late to invest in top coins like Bitcoin and Ethereum; (2) then they “advise” people not to miss the opportunity of being early investors in a new coin that would perform excellently in the future. Individuals may even go on to participate in an initial coin offering (ICO) and part with sizable amounts of cash. These funds arethen diverted into the personal accounts of these scammers.

Furthermore, there is the issue of Ponzi schemes. Ponzi or pyramid schemes have always posed as “messianic” investment ventures poised to liberate masses from financial hardships by offering them a platform to invest little and profit much. These schemes often pose as a community of people who render financial help to one another by taking money from new investors to pay old ones. And since the world is currently united in economic hardship birthed by the spread of the coronavirus, there is no better time for Ponzi schemes to thrive.

Seeking investment opportunities is a good venture, however, individuals must ensure that they carry out research and due diligence before making investments. Also, individuals can play safe by investing in existing coins that have been in the crypto market for a long time and have a clear roadmap.

3. Payments for Treatments or Equipment

At present, the world is steeped in fear and uncertainty. All over the world, people are ready to do anything that would shield them from the virus. This involves religiously adhering to governmental orders like total lockdown and wearing face masks, to seeking out therapies or equipment with unsubstantiated claims of preventing or curing the virus. Most of the time, these therapies or equipment are inexistent.

Crypto scammers front as health practitioners or stores and attempt to sell treatments for the virus. They display these products on their websites or social media handles where they request payments in cryptocurrency. After payment is made, these products are never delivered.

It is disheartening that individuals fall prey to this avoidable scam. When it comes to Covid-19, individuals should only heed to the medical advice of approved health personnel and organizations. There is no need for an individual to seek preventive or curative therapies all by themselves. It is not only risky to their health, but also to their finances. The preventive instructions are clear and are repeated as often as possible. And when an individual becomes infected, the best and only option is to go to the hospital for treatment.

4. Work from home scams

The Covid-19 pandemic has heightened the need for remote work. Corporate organizations no longer see the need for their staff to work in an office space when they can work from home and cut costs for the company. Also, individuals are turning to remote jobs since they cannot leave their homes. Based on this development, scammers pose as employers and ask individuals to accept funds on their behalf through their bank accounts, and request that these funds be deposited in a specified crypto address. These funds are mostly stolen cash. By doing this, the scammers shift the searchlight of law enforcement agents from themselves and focus it on unsuspecting victims who do not know that they have aided money laundering.

Therefore, it is expedient that individuals receive and transfer money only from and to trusted parties. If a so-called employer asks an individual to facilitate a financial transaction, the individual should call the employer to verify. Sometimes, scammers hack the phone numbers, emails, or social media accounts of people and use these mediums to perpetrate fraudulent transactions. So putting a call through can help raise an alarm.

5. Blackmails

For a long time, blackmailers have used threats to fund their Bitcoin wallets. They tell their victims to send Bitcoin to them or risk having their private data (e.g. nude photos, transaction records, phone calls,and social media chats) going public. With this pandemic, these fraudsters have added the coronavirus to their repository of threats. They threaten to leak the health information of their victims and/or infect them and their families with the virus unless the victim makes a payment in Bitcoin.

The FBI has advised individuals to contact law enforcement agents if they are being blackmailed. Blackmailers never relent: one payment leads to another then another, and a vicious cycle is created.

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