Tips for Recognizing Cryptocurrency Fraud

This morning on KCAL News I discussed the growing issue of cryptocurrency scams and how education is key to preventing consumer fraud. It’s often awareness of simple red flags that can prevent someone from falling victim. In the segment, I highlighted findings from the FBI's Cryptocurrency Fraud Report, explaining what’s behind the surge in these crimes: - Growing Popularity: More users, especially those inexperienced, make crypto appealing to scammers. - Anonymity: Crypto transactions are hard to trace and irreversible, making recovery difficult. - Lack of Regulation: Many countries still don’t have firm regulations in place, making enforcement harder. - Social Engineering: Scammers manipulate victims, building trust through social media or dating platforms. Who’s at risk: - Older Adults (60+), with $1.65 billion lost, are heavily targeted due to unfamiliarity with crypto and trust in scammers. - Young Adults (20-39) often fall for “FOMO” investment schemes. - Previous Scam Victims, Job Seekers, and Emotionally Vulnerable Individuals are frequently targeted. Key Red Flags: - Unrealistic promises, pressure to act quickly, unsolicited communications, and requests for payments via cryptocurrency kiosks. How to Protect Yourself: - Strengthen online security (MFA, strong passwords), verify platforms and job offers, and never send money to someone you haven’t met. Report suspicious activity to IC3.gov.

The new Dept of the Treasury/Financial Crimes Enforcement Network (FinCEN) guidance on Cryptocurrency Investment Scams is excellent, like so much of what they do! 15 Red Flags are identified that should become the new standard for everything we do around protecting victims here. The language is heavily slanted towards banker-speak, but still valuable concepts. VASPs (We would call them Crypto Exchanges, but VASP is "Virtual Asset Service Providers" which was language adopted by the international anti-money laundering community's primary organization, FATF, back when we were still pretending NFTs weren't a universal scam.) These are my simplifications of the Red Flags to convince you to download and make posters of the actual red flag content in the attached report and hang them prominently about your bank. Behavioral Red Flags: 1. first time crypto user tries to initiate a high-value transfer to a VASP. 2. customer mentions significant returns from crypto investments they learned about from an online only acquaintance. 3. customer mentions being guided to a kiosk or ATM to deposit crypto to an address the individual provided 4. customer seems distressed or anxious to access funds to meet an investment opportunity deadline Financial Red Flags 5. liquidating savings prior to maturation and attempting to wire to a VASP 6. taking out a HELOC or second mortgage and sending the money to VASP 7. depositing to fiat from crypto at a slightly larger amount than previously sent to crypto. This deposit is then followed by substantially larger fiat-to-crypto movement. 8. Inactive or limited activity high balance account starts showing uncharacteristic, sudden, abnormally frequent, or significant withdrawals of funds to VASP 9. Multiple EFTs or wires to VASP, espeically if noted as being "taxes," "fees," or "penalties." 10. A customer with a short history of small-value EFTs to a VASP begins sending high-value wires to holding companies, LLCs, or individuals with no prior transaction history Technical Red Flags 11. Accounts accessed by unique IPs, unique devices, or inconsistent geographies. 12. Crypto interactions with a poorly designed or amateurish website. 13. Crypto transactions to websites with newly registered domains, no physical street address, and international or chat/email-only contact details. 14. Downloading an app directly from a third-party website rather than a well known app store. 15. Crypto converted to a currency with a lower transaction fee, such as TRX, and then abruptly sent out from exchange. #FinCEN #CryptoRedFlags #CryptoInvestmentScams #CryptoScams #PigButchering

🚨 Wake-Up Call: The Alarming Rise of Sophisticated Cryptocurrency Scams 🚨 I just got off the phone with another victim who fell for a classic #pigbutchering scam. This one hurt—a six-figure loss that left the victim devastated. But what really got my attention? The level of sophistication these cybercriminals are now operating with. Here’s how they did it: 🪜 The Setup: They roped the victim in with a seemingly legitimate training class, building trust and setting the stage for the scam. 💬 Transition to Private Messaging: Next, they moved the conversation to WhatsApp and Telegram—away from prying eyes and into their carefully controlled environment. 📱 The Fake Trading App: The victim was then instructed to download a fake trading app. This app made it look like the victim was making money hand over fist, all while the scammers had full control. 💰 The Money Transfer: Here’s the kicker. When the victim went to the bank to wire the money, they were told not to mention that it was for a cryptocurrency investment. The scammers spun a tale about how it would negatively impact the bank’s deposits and tax implications. This is where the bad guys are really stepping up their game. Take a look at the photo I attached—they’re getting better at this. 💔 The Loss: After the wire transfer, the victim was left with nothing but a fake app and a huge financial loss. The money was gone, and the scammers had vanished. This isn’t just a story—it’s a wake-up call. These criminals are getting smarter, but so can we. Here are 5 Tips to Avoid Falling Victim: 🔒 1. Beware of Unsolicited Investment Offers: If someone promises you guaranteed returns out of the blue, run the other way. Scams like these prey on hope and desperation. 🔒 2. Verify Before Trusting: Always do your homework. Research the platform, check reviews, and if something feels off, trust your gut. A quick check can save you from a world of pain. 🔒 3. Be Transparent with Your Bank: If you’re being told to keep secrets from your bank, that’s a giant red flag. Transparency with your financial institution is your best defense. 🔒 4. Resist High-Pressure Tactics: Scammers love to rush you. They’ll create a false sense of urgency to get you to act without thinking. Slow down, take your time, and make informed decisions. 🔒 5. Stay Informed and Educated: The more you know, the harder you are to scam. Keep yourself updated on the latest fraud tactics and share that knowledge with others. #Cybercriminals are evolving, but by adopting a @CyberSecure Mindset, you can stay one step ahead. Protect your hard-earned money and your peace of mind. For more on how to develop a #CyberSecure Mindset, visit www.cybersecuremindset.com. #CyberSecurity #CryptocurrencyScams #CyberSecureMindset #OnlineSafety #ScamAwareness #StayVigilant #DigitalDefense

#OSINT Tip - Cryptocurrency Wallet Labeling Tools Using wallet labeling tools you can retrieve a variety of useful information on cryptocurrency wallets. Of course, we have been compiling a list of these tools/sources at Farnsworth Intelligence as part of our knowledge base. Today I am releasing a part of that list for free: https://lnkd.in/gHNBz4RA - [https://www[.]verifiwallet[.]com/] VerifiWallet - User-friendly tool to check if a wallet is at risk before sending money to it. Gets data from law enforcement, financial institutions, investigators, regulatory data, open source, and reports submitted to the website. Created by a Secret Service agent, but not affiliated with the Secret Service. Free to check a wallet address against their data, no account is required. https://lnkd.in/gbNNc47d - [https://www[.]chainabuse[.]com/] ChainAbuse - ChainAbuse is the single largest source of labeling due to their partnerships with law enforcement, entities like OperationShamrock, etc to get reports submitted to them. These submitted reports on addresses then give them data that is exclusive to their platform. You can check a crypto address against the non-law enforcement API for free up to 10 times per month. Each call returns a maximum of 50 reports on that address. https://lnkd.in/gZYPUsNf - [https://www[.]bitcoinwhoswho[.]com/] Bitcoin WhosWho - Reports of scams contain the following fields: Scam Name, URL, Image, Date. Reports are provided by users of the site and can be inaccurate, but can also contain evidence the victim provided. https://lnkd.in/gZEs27hw - [https://www[.]walletlabels[.]xyz/] WalletLabels - Has a number of APIs you can search by address or label, has a free tier to search their data with: Blacklist API - Retrieve a curated list of blacklisted addresses from authoritative sources. This dataset includes addresses from USDC and USDT blacklists, OFAC-sanctioned addresses, EtherScamDB-confirmed phishing entities, and Uniswap-banned addresses (TRM Labs). Account Labels API per Chain API - Retrieve user-friendly labels for Base EOAs (Externally Owned Accounts) and Smart Contracts. Labels can be incredibly useful for categorizing your Base interactions. https://lnkd.in/gxVXctV8 - [https://www[.]walletexplorer[.]com/] WalletExplorer - Uses algorithms to generate labels identifying what the wallet belongs to such as marketplaces, mining pools, exchanges, etc; https://scamsearch.io/ - [https://scamsearch[.]io/] ScamSearch - Crowd-sourced reports of scams, searchable by address, email, and more; reports contain: Date, Scam Type, BTC Address, Scammer Username/Email/Phone Number, Scam Description, Scammer Website You'll be able to access the full list of blockchain-related resources when our OSINT Knowledge Base comes out, a resource exclusively available to subscribers of our new newsletter, OSINT Insider: https://lnkd.in/g24vHFcs

🗽 Late last week, Brooklyn District Attorney Eric Gonzalez announced that his Virtual Currency Unit - led by the incomparable Alona Katz - successfully disrupted a cryptocurrency scam that targeted members of Brooklyn’s Russian community. The investigation identified over 20 Brooklyn investors who lost over $1 million and additional victims from across the United States who lost an additional $4 million combined. 70 linked scam domains have now been taken offline. The investigation identified a shared narrative under which victims were lured into the scam by clicking on a Facebook advertisement promising impressive returns. Many of the ads they described featured a “deepfake” video of Elon Musk, encouraging people to invest in cryptocurrency (see attached image). Victims then received a follow up call from an “investment advisor” who spoke to them in Russian and coached them into creating an account on an investment website. With the help of the “advisor,” victims purchased cryptocurrency and transferred it to addresses linked websites. After “investing” for several weeks or months, the victims attempted to make a withdrawal but were locked out of their account or told they had to pay additional fees and taxes. This type of scam is commonly known as “Pig Butchering.” This week, the Virtual Currency Unit, pursuant to a court order, seized a network of 70 linked scam domains, all associated with the investment scam targeting Russian victims in Brooklyn and elsewhere. Something I love about the press releases from the Brooklyn DA is the way the office educates the community by adding warning signs of someone trying to lure a victim into a cryptocurrency scam. 🚩 You get a “wrong message” text from a stranger who attempts to start a friendship and talks about how much money they’ve made by investing in cryptocurrency. 🚩 You are added to a group chat on WhatsApp or Telegram that offers advice on how to invest in cryptocurrency with promises of getting rich quickly. 🚩 Someone on Facebook brags about how much money they have made in cryptocurrency and tells you they can help you get rich. 🚩 Someone you’ve never met in-person starts giving you cryptocurrency investment advice and promises returns on investments that seem too good to be true. 🚩 You are directed to download an app to track your investments from a cryptocurrency website for a company you’ve never heard of before, not from an official mobile app store. 🚩 The financial advisor or customer support for a cryptocurrency website communicates with you through Telegram or WhatsApp. 🚩 You are asked to make cryptocurrency investments by giving large amounts of cash to couriers and company representatives in-person. 🚩 You can make small withdrawals at the start but can’t withdraw any large amounts without having to pay a tax or additional fee. Read the full release in the comments 👇 Great work Brooklyn! 🗽

☘️Operation Shamrock Survivor Series: The Job Offer That Wasn't ☘️ In September 2024, the victim received a promising message on LinkedIn. The sender praised his tech sales background and invited him to interview for a Sales Director role at a crypto company expanding operations in Los Angeles and Singapore. The process felt professional. He even had a video call with a poised woman who claimed to be running international operations. Soon, “training” began—daily video calls with this woman walking him through cryptocurrency trading platforms. She described a company full of analysts making data-driven predictions. One forecast in particular stood out: with the U.S. presidential election approaching and Donald Trump the predicted favorite, crypto prices were expected to surge. Everything she said sounded plausible—because it was rooted in current events. She encouraged him to begin trading with real money. When he hesitated, she offered to lend him $40K if he contributed $10K of his savings. That $50K “investment” quickly ballooned to over $500K on the platform. He was even able to withdraw $700—just enough to convince him it was legitimate. But when he tried to withdraw the full balance? The platform demanded a 10% “advance commission fee”—$50,000. That’s when everything unraveled. What should banks and credit unions take away from this? ➡️ Job scams are evolving. This wasn't a phishing email—it was a video interview, a tailored proposal, and a staged onboarding process. ➡️ Emotional manipulation is intentional. Daily rapport. Market predictions. A fabricated sense of credibility and urgency. ➡️ Crypto transactions looked legitimate. The victim used regulated exchanges like OKX and Coinbase before transferring funds to the fake platform—making detection difficult. Bankers—ask the context behind the transaction. ❔Who introduced you to this investment? ❔Do you know them in real life? ❔Are they asking you to fund a company or platform as part of a job? ❔Have you confirmed the company through another channel? The victim—a computer engineer—shared: “We can’t imagine what they are capable of. But I’m grateful to be alive and to know I’m not alone.” 👏 Thank you to this survivor for sharing his story. And to every financial institution: Be curious. Be cautious. Be the voice that helps someone pause before it’s too late. #SurvivorSeries #OperationShamrock #PigButchering #CryptoScam #FraudPrevention #JobScams #LinkedInScam #CUFightFraud #FinancialCrimeAwareness #FraudFighter Michele Ilich-Daubas, CAMS, CRC ☘️ Andrew Reid Erin West