The speed at which technology advances is often blinding. Things that have become essential to our daily lives, such as an easily accessible internet, smartphones, and online banking, have all appeared within the past 50 years. As creations and improvements follow one after another, it is inevitable that scammers and fraudsters will find new ways to steal money.
Perhaps no forum is more ripe for confidence scams and investment fraud schemes than the digital cryptocurrency arena. With anonymity available through false personas and a massive pool of potential victims just an email, social media post, or a text away, it’s not surprising that criminal organizations have made these virtual financial crimes profitable for themselves and a nightmare for their victims. Given that these cybercrimes occur in a virtual environment, what can U.S. law enforcement do to thwart cryptocurrency investment schemes?
Perhaps more than the average U.S. citizen is aware of, as shown in a filing for a warrant to seize property subject to forfeiture by an agent of the Federal Bureau of Investigation (FBI). Operation Level Up, a collaboration between the FBI and the U.S. Secret Service (USSS) that began in 2024, reflects the federal government’s attempt to adapt to a new type of organized crime by not only prosecuting for wire fraud and money laundering but also educating potential victims on how to identify, report, and avoid online cryptocurrency investment fraud (CIF) scams.
I Like Barbecue, So How Bad Can Pig Butchering Be?
Most crypto investment scams begin disguised as another activity. It might be an “accidental” text sent to the “wrong” number, a response on a dating site, or posts made on a social media site that suggest a kindred spirit. The perpetrators will attempt to form a bond with their target, either as a friend, a romantic interest, or someone sharing the same values or viewpoints. As the FBI, USSS, and the U.S. Department of Justice (DOJ) point out, the “perfect fit” of the new person is a calculated strike referred to as “pig butchering” that could be coming from a scam center based in Southeast Asia.
Once the scammer has connected with the potential victim and gained a modicum of trust, the offer to share an “amazing” financial opportunity is sure to follow. Targets will be cajoled to take advantage of this can’t-miss windfall by opening a cryptocurrency account at a legit exchange. Once the money is wired in from their bank, they’re told to convert it into a form of cryptocurrency, such as Bitcoin or Tether. The next step is to open an account on an “investment platform” provided by the scammer and to transfer the digital currency into it. What’s reported next is huge profits for the investor, but in reality, it’s the beginning of major financial losses.
The investment platforms often look impressive and professional, and victims can sometimes even withdraw their investments and “profits” early in the scheme. This is done to instill a false sense of confidence and trust in the operation, which aims to encourage the victim to deposit more cryptocurrency.
Sooner or later, the victim will attempt to withdraw some or all of their funds, only to find the account frozen and the money inaccessible. In some instances, they may be informed that they need to provide a ransom or pay taxes on their “profits” to regain access, which is merely another level of scamming. In the end, they’ll discover that their money was transferred long ago into the cryptocurrency wallets of the criminals and that they’ve been swindled.
Don’t Remember Seeing Kidnapping and Forced Labor in the Job Description
As evidenced in the FBI filing, crypto investment scams are a global issue that has compelled U.S. law enforcement agencies to refine their approaches to combating these crimes. Scam centers operating in places like Burma and Cambodia engage in human trafficking as well, luring in workers with promises of high pay. Instead of a needed career opportunity, these victims are kept in what are essentially prison camps as forced labor, working in scam centers until they’re ransomed or earn their freedom.
The federal task forces are fighting fire with digital fire, using the blockchain to attempt to trace transactions back to the scammers. Since the fraud, conspiracy, and money laundering crimes are committed through U.S. wire services like Meta and banking transactions, they are subject to the U.S. Code for civil forfeiture. By seizing terminals and cutting off access to accounts through providers like Starlink, the FBI can keep a buffer between the scammers and potential victims while also attempting to seize stolen assets. Federal law enforcement agencies also collaborate with international organizations, such as INTERPOL, to identify and apprehend scammers.
How To Avoid Becoming a Crypto Investment Scam Victim
Nobody plans on getting scammed, but some con artists who prey on their victims are very smooth, polished, and skilled at what they do. The idea of getting a big return on your money is extremely tempting, and they use the promise of financial success to their advantage. Once the money has been converted to crypto and delivered to their fake platforms, it may be too late to claw it back.
The best way to avoid losing money in a crypto scam is to learn how to see one coming. The FBI Internet Crime Complaint Center (IC3.gov) allows citizens to report possible scam sites and posts updates on the latest scams and tricks criminals are employing.
The site also offers some common-sense tips to help spot crypto scams. Be wary of someone you met online who suddenly begins pitching investment opportunities. Being asked to move your conversations to an encrypted messaging app is often a big red flag, as is any sort of pressure being applied to cajole you into sending money quickly. When it comes to your personal information, be both reluctant and selective to share it online. Err on the side of caution. If something feels off, trust your instincts.
Keep in mind that scammers will do whatever is necessary to separate you from your money. This can include impersonating bank officials or law enforcement. If you’re uneasy about someone claiming to be an FBI agent, ask them to verify their status or check with the local FBI field office. The old adage still holds true: if something sounds too good to be true, it probably is.
Related Resources
- Jury Deadlocked on Alleged Cryptocurrency Heist by MIT-Educated Brothers (FindLaw’s Courtside)
- Colorado Pastor and Wife Who Claim God Told Them To Fleece Their Flock With Bogus Crypto Indicted on 40 Counts (FindLaw’s Courtside)
- Cryptocurrency Theft (FindLaw’s Criminal Charges)
