FBI Warns Against the Steep Rise in COVID-19 Crypto Scams


The FBI has warned Monday that fraudsters are about to unleash a surge of COVID-19 crypto scams as more people start using cryptocurrencies. 

April 14, 2020 | AtoZ Markets – The Federal Bureau of Investigation (FBI) has issued an official warning regarding the increasing number of COVID-19 scams involving cryptocurrencies. The agency outlined various fraudulent activities, including blackmail attempts, work from home fake ads, and investment scams.

FBI: Beware crypto and COVID-19 scams

The sudden COVID-19 outbreak caused numerous disruptions in regular day-to-day life. Millions of confirmed cases worldwide, entire nations under lockdown led to people losing jobs and heading towards desperation.

Unfortunately, scammers have become exceedingly active in this period and are now trying to exploit this despair for their own benefit. In some fraudulent attempts, they insist victims to pay via cryptocurrencies, and the FBI recently published a statement on the matter.

It reads that “fraudsters are leveraging increased fear and uncertainty during the COVID-19 pandemic to steal your money and launder it through the complex cryptocurrency ecosystem.”

The agency also outlines that digital asset usage in different sectors has increased in the past few years. As a result,  criminals have started adopting them as well.

Crypto scams in 4 categories

Those fraudulent operations fall under four main categories. For starters, traditional blackmailing emails or letters work together with the COVID-19 peril. Instead of simply threatening to leak personal information of the victims, the scammers add a new twist; they supposedly have coronavirus and will infect the families of the victims, unless they send a Bitcoin payment.

Secondly, scammers pose as employers and provide a “once-in-a-lifetime” work from home opportunity. This is particularly tempting with the current lockdowns. It gets even more compelling when they offer the victims to accept a “donation” of funds into their bank accounts and to deposit them into a cryptocurrency wallet. This “donation,” however, is most probably money stolen from others. Thus, the victims are transferring stolen money, which is an illegal money mule activity.

Thirdly, scammers lure potential customers to purchase products from trusted e-commerce sites that claim to prevent or cure the COVID-19. However, once the victims click on those sites, they are automatically transferred to unrelated and unregulated ones. Once there, the payment occurs in some sort of virtual currency.

Fourth, investment scams posing as the next groundbreaking cryptocurrency opportunity, such as an Initial Coin Offering (ICO). The FBI warns that these scenarios are typically too good to be true. They offer significant returns in just a few days or weeks, and they require only a “small investment.”

How to protect yourself from coronavirus cryptocurrency scams?

The agency admits the existence of legitimate charities, investment platforms, and e-commerce sites that accept payments in digital assets. However, the statement warns that when a person sees the pressure to use primarily cryptocurrencies, he should approach it with more caution.

Additionally, people need to entirely verify the legitimacy of any vendor, charity, or investment opportunity before sending funds. In case of a blackmail or extortion attempt, the victims should contact law enforcement before deciding to pay the demanded amount.

People must be extremely vigilant when someone requests their bank account information. Those are generally the most significant red flags in terms of potential scams.

It’s worth noting, though, that a recent analysis pointed out a more positive development on the matter. Cryptocurrencies lost to COVID-19 scams had peaked in mid-March but since then are gradually decreasing.

Regulators remain alert against rising scams

Apart from the investigation agency, many financial regulators are also warning about crypto-related financial scams which became rampant with the COVID-19 pandemic.

The Commodity Futures Trading Commission (CFTC) earlier warned investors against fake investment opportunities on stocks related to the coronavirus cure. Multiple UK counties along with several European regulators also warned locals against rising scams using COVID-19 fear.

Have you fallen victim to a crypto COVID-19 scam? Share your experience with us in the comment section below.

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