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Over $1 Billion in Crypto Scams in 2021 Points to Social Media as the Root Cause

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According to the US Federal Trade Commission, social media and cryptocurrency are a “combustible combination for scams,” with social media platforms accounting for over half of all crypto-related scams in 2021.

The research, which was released on Friday, indicated that scammers stole up to $1 billion in cryptocurrency this year, a more than five-fold increase from 2020 and over sixty-fold increase from 2018.

The amount of cryptocurrency lost as of March 31 was already reaching half of the projection for 2021, indicating that progress isn’t slowing.

Crypto scams are more than ever

The top platforms utilized for crypto frauds, according to the FTC, were Instagram (32%), Facebook (26%), WhatsApp (9%), and Telegram (7%). Interestingly, despite being clogged with spam and scam bots pushing fraudulent coin giveaways, Twitter, the social media medium commonly used by the crypto-community, was not listed.

Investment Related Fraud was the most common type of crypto scam, accounting for $575 million of the total $1 billion in fraud reports to the FTC’s Consumer Sentinel Network.

According to the FTC, frequent investment scams involve a so-called “investment manager” contacting a client and promising to grow their money if the consumer purchases cryptocurrencies and deposits it into an online account.

Impersonating a celebrity who can multiply any cryptocurrency sent to them or promising free cash or cryptocurrency are two other tactics. Scams involving investment in false art, gems, and rare coins, phony investment seminars and advice, and other miscellaneous financial scams are also included in this category, according to the FTC.

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Over $1 Billion in Crypto Scams in 2021 Points to Social Media as the Root Cause 2

Romance Scams, with $185 million in losses, were the next highest crypto-fraud-related losses, in which a love interest tries to persuade someone into investing in a crypto scam.

People in their 20s–49s were the most likely to lose crypto to a fraudster, with those in their 30s being the heaviest hit, accounting for 35% of total reported fraud losses.

The amount of cryptocurrency lost increases with age, with the median individual recorded cryptocurrency losses for those in their 70s reaching $11,708, compared to just $1,000 for those in their 18s and 19s.

Australia’s Commonwealth Bank Falls Prey to a Crypto Scam

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Commonwealth Bank of Australia has recently come across fake news spreading on social media, including Facebook. The phony news state that the bank has partnered up with a cryptocurrency trading platform.

The news also encouraged people to invest in crypto assets which the bank completely denies and tags as false.

Australian citizens warned of the scam

The reported scam, which is in the form of articles purports as a story on the Australian Broadcasting Corporation, is generally a scam. It lures the customers to click on the link, redirecting them to the scammer’s website.

The scammers will collect the personal details and funds of the users who click on the link.

CBA has reported the issue to the relevant authorities and asked the media publications to take down the fake article.

The bank has warned the customers not to click the links on the articles as it can result in the users losing all their funds. The bank also warned that they would never ask for the customers’ personal information through email or phone calls.

They also asked the customers to be cautious before clicking any link and always navigate to the official website to stay safe and log in.

The scams can also impersonate the bank representatives and can come through phone calls pretending and can gain access to user information, funds and account.

The Commonbank has been a victim of a themed SMS phishing where the scammers spammed the customers with a phishing link pretending to be from the bank.

That’s not it; the bank has cited numerous scams and mentioned them for the customers to stay cautious.

In 2021, the Commonwealth Bank of Australia made history when it partnered with Gemini to become the first high street bank to enable customers to trade cryptocurrencies.

“We believe we can play an important role in crypto to address what’s clearly a growing customer need.”

said Matt Comyn, the bank’s chief executive

The Australian Competition and Consumer Commission (ACCC) filed a lawsuit against Meta last month, alleging that it “aided and abetted or was knowingly involved in fraudulent or misleading behavior and statements by the marketers.”

According to the Commission, Facebook failed to handle fraudulent advertising that was shown on the network. In response, a corporate spokeswoman said the company will “examine the ACCC’s latest filing and expect to fight the proceedings.”

Jake Paul Busted Over $2.2M Serial Crypto Scams by Coffeezilla

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Since the SafeMoon class-action lawsuit, Jake Paul has been beneath the radar. He joins many celebrities, including Nick Carter, Soulja Boy, and Lil Yachty, who has called for a jury trial.

Coffeezilla’s freshly unearthed proof will once again bring Jake into the limelight. According to the suit, these celebrities made fraudulent or misleading claims to investors concerning SafeMoon.

Jake’s promotions on Twitter were not labeled as ‘Sponsored,’ according to Coffeezilla. This is a blatant breach of the advertising guidelines of several sites.

Coffeezilla puts Jake Paul under the radar

Coffeezilla decided to delve deeper into Jake’s other projects in the middle of the litigation and commotion. Sacred Devils, Yummy, Milf, and STICKDIX (Jake’s personal NFT project) are among these projects.

Coffeezilla made a comprehensive video on how he conducted his investigation and gathered all the evidence.

He stated that the most challenging aspect of the inquiry was tracing Jakes’ transactions. Even though “everything on the blockchain is trackable and publicly accessible,” he stated.

At the same time, anyone may build an anonymous crypto wallet, further complicating the procedure. Creating anonymous wallets, he claims, poses a complex problem.

Fake wallets make it easier to trace inexperienced influencers. More experienced con artists, on the other hand, are better at concealing their ownership and siphoning off funds “anonymously.”
The main reason for this is that they can generate hundreds of anonymous wallets.

“Jake Paul is sort of in the middle,” Coffeezilla added. He isn’t as stupid as you think he is, but he isn’t as bright as he believes he is.”

The first step in Coffeezilla’s inquiry was to go into his public wallet, “yourmom169.” Jake was paid 39.9 ETH for his Sacred Satan advertising scheme.

Jake duped his community into purchasing sacred devil NFTs, which resulted in complete losses for the purchasers.

Jake Paul led the NFT project STICKDIX, which earned over $1.5 million. Coffeezilla pushed further to locate additional intriguing facts, even though this information is readily available to the general public.

SafeMoon assisted Coffeezilla in busting Jake by using blockchain research and detecting similar scammy practices.

He was looking for a $190,000 transaction from SafeMoon that had been transferred to Jake Paul’s wallet address. MILF and Yummy transactions were linked to the same wallet.

According to the transaction information, Jake Paul defrauded his community for nearly $2.2 million. With the rise in popularity of cryptocurrency, celebrities entice their fans to acquire dodgy tokens to push up their value before dumping them and leaving them with nothing.

SEC Charges Siblings Over $124 Million Crypto Scam

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The Securities and Exchange Commission (SEC) has accused John and JonAtina (Tina) Barksdale over an alleged crypto scam. Two unregistered securities offerings involving a digital token named “Ormeus Coin” led to more than $124 million in losses for thousands of retail investors.

According to the SEC’s lawsuit, from June 2017 until the present, the Barksdales marketed and sold Ormeus Coin to investors on crypto trading platforms.

In addition, from June 2017 to April 2018, through a multi-level marketing enterprise named Ormeus Global, the Barksdales advertised and sold subscription packages that included Ormeus Coin and an investment in a crypto trading program.

Siblings held roadshows to advertise their scam

As stated, to market the offerings, John Barksdale organized roadshows across the world. At the same time, he and his sister, Tina, directed the development of social media postings, YouTube videos, news releases, and other promotional materials.

According to the lawsuit, the Barksdales arranged for a public website to display a wallet of an unaffiliated third party to maintain the deception that Ormeus Coin was successfully mining crypto.

As of November 2021, the wallet had more than $190 million in assets. Despite the fact that the Ormeus wallets were valued at less than $500,000. According to the lawsuit, the Barksdales are also accused of manipulating Ormeus Coin’s price and misusing millions of dollars in investor monies for personal needs.

Melissa Hodgman, Associate Director in the SEC’s Division of Enforcement said, “We allege that the Barksdales acted as modern-day snake-oil salesmen, using social media, promotional websites, and in-person roadshows to mislead retail investors for their own personal benefit.”

“We will continue to vigorously pursue persons who sell securities in schemes to defraud the investing public no matter what label the promoters apply to their products.”

The lawsuit accuses the Barksdales of breaking federal securities laws and seeks injunctive relief, disgorgement plus interest, and civil penalties in the United States District Court for the Southern District of New York.

Investors should be aware of possible crypto investment scams and investing based on social media, according to the SEC’s Office of Investor Education and Advocacy. The growing popularity of cryptocurrencies acts as a breeding ground for scammers and fake projects to nourish.

Kim Kardashian sued for promoting alleged crypto scam

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Kim Kardashian and Floyd Mayweather Jr. are being sued for promoting the alleged crypto scam regarding the EthereumMax token. The promotion of the said altcoin by the reality star and the boxing legend to their millions of social media followers misled investors.

The lawsuit that was filed on 7 January 2022 in Los Angeles federal court, asserts the celebrities trumpeted tokens sold by EthereumMax (EMAX) only to get its price to rise and to earn themselves a profit “at the expense of their followers and investors.”

The lawsuit stated,

“The company’s executives, collaborating with several celebrity promoters … made false or misleading statements about EthereumMax through social media advertisements and other promotional activities.”

Floyd Mayweather and Kim Kardashian served

A class-action lawsuit was filed last Friday in the U.S District Court for the Central District of California accuses EthereumMax (naming the company specifically) and its celebrity promoters of working together to artificially hike the price of the token.

The reality star, Kim Kardashian, created a flutter on her Instagram post, in 2021, promoting the EMAX token. She wrote, “Are you guys into crypto???? This is not a financial advice but sharing what my friends just told me about the Ethereum Max token!” She mentioned a hashtag #ad in the post, implying that she was paid to promote it.

In the meantime, the boxing legend, Floyd Mayweather Jr. promoted the token in his boxing match with YouTube star Logan Paul. EMAX was accepted as a mode of payment for the tickets to the event; the lawsuit claims that this move had boosted the trading volume of the asset. Mayweather had also promoted the token at a huge Bitcoin conference in Miami, but whether he was paid to do so wasn’t disclosed by the boxing legend, according to the lawsuit.

According to the lawsuit,

“EthereumMax’s entire business model relies on using constant marketing and promotional activities, often from “trusted” celebrities, to dupe potential investors into trusting the financial opportunities available with EMAX tokens.”

Celebrity endorsements can be as glamorous as it seems, but it is always a safer way to play the game by having done one’s own research over investments.

This is how crypto scammers are duping Indian public

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Fraudsters are increasingly exploiting Indian crypto investors, taking advantage of the craze for the digital asset industry despite regulatory uncertainty. As per sources, in March 2021, Kapil Singh, a 24-year-old employee at a private firm in the country’s capital Delhi, decided to invest in Bitcoin and Ethereum, through a US-based trading firm that seemed legitimate. Months later, Singh found out the site was fake.

Singh is among several people to have been fallen victims of scammers, who are using fake cryptocurrency or apps to cheat people. As per data from the National Cybercrime Reporting Portal, more than 50 complaints were registered in the capital from January to June in 2021. Maharashtra recorded the highest with 72 cases lodged. Delhi reported the second-highest complaints of crypto scams. That being said, the unofficial number might be higher.

According to Delhi Police, several of these gangs operating fake apps, phishing websites, or call centers claiming to deal in the crypto market have been busted over the last year. In the last 12 months, Deputy Commissioner of Police [DCP] KPS Malhotra said, more than 20 individuals have been arrested in three cases and $4 million in assets was frozen by the CyPad team in Delhi. The duped money is estimated to be roughly $26 million.

How to avoid falling for such crypto scams?

Similar to the stock market, the crypto market has exchanges or brokers that act as facilitators. These trading platforms often charge a fee or commission for each transaction. Some even offer rewards for hitting a milestone, others provide a joining bonus. Police said a majority of fraudsters use the rewards scheme along with the promise of high returns to lure investors. They create fake apps and invite people using social media bulk messaging and marketing to invest.

In a note of caution, DCP Malhotra said,

“We have advised the public to invest wisely. Check websites and accounts and do their research. Most of the accused present rosy pictures and schemes that aren’t valid. One must check for valid schemes and not invest money to get instant returns. There are platforms or exchanges to invest in cryptocurrencies that have authentic websites. We also have a helpline to prevent such scams.”

Kerala police nab 4 over 100 crore INR crypto scam

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Key Takeaway

  • Law enforcement from Kerala, India went on to bust a money-laundering racket that involved cryptocurrnecy.
  • A total of four people were arrested after they raised about 100 crore Indian rupees by duping people.

Just as the value of crypto surged, scammy projects surrounding it also took off. Kerala police recently confronted something similar and uprooted the entire crypto project.

Hackers haven’t spared anyone. Now that cryptocurrencies were gaining traction in India, perpetrators who intend to pocket some easy money were onto innocent investors. Law enforcement wasn’t far behind as they have been quick in tracking down those behind these scammy projects.

Four men in Kerala, a state in India were arrested by the police for carrying out a racket that involved crores of Indian rupees.

Kerala police take down massive crypto racket

With the formation of a fake company, Long Rich Technology based in Bengaluru, Karanataka, a team raised about 100 crore in Indian rupees from their clients. The alleged scammers deceitfully professed 2 to 8% returns per day in cryptocurrency to their customers. This certainly lured in a large amount of investors who poured in their funds into the scammy project.

The Kerala police managed to arrest, Muhammed Riyas, C Shafeeque, Munavvarali as well as Muhammed Shafeeque. About 40 crore INR and 32 crore INR was transacted through two of the detained members separately.

However, the police revealed that the man behind the scam, Nishad, was still on the run. The largest amount was reportedly transferred into the account of Nishad.

While the police is still on the look out for Nishad, it was noted that he was previously arrested but managed to secure bail. Soon after garnering bail, he decided to bolt. The police succeeded in freezing his bank account where they secured 34 crore INR.

P P Sadanandan, the secior police officer of Kannur city revealed that Nishad could be hiding in the Middle-East.

The remarkable returns of the crypto market has been a huge selling point. However, the lack of education regarding the industry could hamper its growth while bringing in immense loss to many.

BitConnect promoters face a lawsuit by SEC following a $2 billion crypto scam

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The Securities and Exchange Commission [SEC] of the United States has reportedly hit five people part of the BitConnect Ponzi scheme with a lawsuit.

The crypto-verse isn’t new to scams and hacks. However, the surge in the price of all the assets paved the way to more scammy projects that further led to several losing out on investments. While officials had shot down a crypto Ponzi scheme, BitConnect back in 2018, news pertaining to the platform has once again started to surface.

BitConnect makes headlines, once again

A platform started out in 2016 and urged customers to loan their cryptocurrency to garner massive returns. While BitConnect pocketed significant gains of about $2 billion, the FBI intervened in 2019 and looked for the victims of this scam. As this case persists, the SEC went on to file a lawsuit against five people, namely, Trevon Brown, Craig Grant, Ryan Maasen, and Michael Noble for promoting the Ponzi scheme.

The aforementioned individuals had reportedly formulated YouTube videos in order to recruit more people to be a part of the sham. Since the entire scheme was a multi-referral business, these promoters went on to earn a commission for bringing in more people.

Furthermore, this lawsuit was filed by the SEC in the United States District Court for the Southern District of New York accusing all five individuals of aiding the program.

Lara Shalov Mehraban, Associate Regional Director of SEC’s New York Regional Office, addressed the same in SEC’s recent press release and stated,

“We allege that these defendants unlawfully sold unregistered digital asset securities by actively promoting the BitConnect lending program to retail investors. We will seek to hold accountable those who illegally profit by capitalizing on the public’s interest in digital assets.”

While this platform hasn’t been functioning for a while now, the SEC hopes to garner  “injunctive relief, disgorgement plus interest, and civil penalties” through its latest lawsuit.

Turkey Witnesses the Arrest of 62 People Involved in the Thodex Crypto Scam Case

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Turkey was one of the countries that decided to pull the plug on cryptocurrencies. The country went on to suggest that the country would soon ban any sort of payments in crypto. A few days after this announcement, a prominent Turkish cryptocurrency exchange, Thodex was called out by its users for looting them for over hundreds of millions of dollars. Just as this investigation was underway, the Turkish law enforcement nabbed over 78 people involved in the case.

Anadolu, a Turkish newspaper announced that the prosecutors involved in the case had bagged over 78 arrest warrants. However, only 62 were detained by the Turkish police.

Turkey Police Bag 78 Arrest Warrants

As per the report, it was noted that the Chief Public Prosecutor’s Office had issued warrants for over 78 individuals that were in contact with the Thodex. Furthermore, the Anti-Cyber ​​Crimes Branch Directorate went on to nab over 62 suspects throughout 8 provinces in Istanbul.

Along with the 62 people that were detained, the Turkey police captured several documents as well as digital materials pertaining to the case.

While the law enforcement has bagged these many suspects, the main person involved in the case, Fatih Faruk Ozer, the founder of the crypto exchange was still missing. Reports suggest that the founder had fled to Albania through a commercial flight from Istanbul. However, a complaint was filed against the CEO/founder Ozer over “aggravated fraud” by a Turkish lawyer, Abdullah Usame Ceran.

Furthermore, it was found that the cryptocurrency exchange’s website was still inactive, depriving users of the right to access their accounts and withdraw funds.

As Turkey prepares to impose a ban on crypto, the Thodex incident seems to have stirred up the country. However, Cemil Ertem, the senior economic adviser to the President of Turkey said,

“Turkey will undoubtedly carry out a regulation that’s in line with its economy but also by following global developments.”

MoneySense launches Campaign to raise public awareness on the perils Of Crypto Scams and online trading

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There’s no rose without a thorn, similarly, despite being immensely valuable, the crypto industry deals with scams and hacks. Singaporeans have been urged to stay safe against any possible scam with regard to crypto through a campaign.

Earlier this month, Tharman Shanmugaratnam, Chairman of the Monetary Authority of Singapore [MAS], the prominent financial regulator in the region, warned about the risks of trading cryptocurrencies. While the Chairman affirmed that MAS was keeping a close watch on the industry, he also urged Singaporeans to stay alert.

More recently, it was revealed that a campaign had been launched by the Singaporean national financial education programme, MoneySense to raise awareness with regard to the use of crypto.

Singaporeans To Use MoneySense’s Campaign To Stay Alert

The Straits Times reported that MoneySense had rolled out a campaign in light of the ongoing surge in the popularity of crypto. This initiative reportedly encourages users to steer clear of any potential scams pertaining to crypto and online trading. Users of digital assets are reminded to “always ask, check and confirm the legitimacy of the entity marketing the product before making any investment.”

The MoneySense web page talks about ways to identify investment scams, including red flags, fictitious track records, and many more.

MAS’s Shanmugaratnam had previously pointed out the volatile nature of crypto. He had further stated,

“The crypto assets space is constantly evolving. MAS has been closely monitoring developments and will continue to adapt its rules as needed to ensure that regulation remains effective and commensurate with the risks posed. Investors, on their part, should exercise extreme caution when trading cryptocurrencies.”

Furthermore, Lee Hsien Loong, the Singaporean Prime Minister had to encounter a scam that involved the sale of fake tokens, at the beginning of the month. Perpetrators gathered information from the Prime Minister’s social media accounts, prompting them to open a BitClout account without the Prime Minister’s permission. This caused quite a stir in Singapore at the time. Hence the latest campaign would be beneficial for the region.