Mar. 9, 2023
Carson City, NV – As National Consumer Protection Week continues, Nevada Attorney General Aaron D. Ford advises Nevadans to be on alert for cryptocurrency scams. As we increasingly live our lives online, major retailers including AT&T, Overstock, Subway, and Twitch have adopted cryptocurrency – digital currency that exists virtually – for everyday transactions. Even banks, such as Bank of America, JPMorgan Chase and Ally Bank, have become crypto-friendly. Unfortunately, scammers have also adopted their tactics to capitalize on this emerging market and rapidly developing technology.
“The safety of Nevada consumers is a top priority at my office,” said AG Ford. “As technology becomes an increasingly integral part of our lives, scams involving digital currency are becoming more prevalent. We want Nevadans to know how cryptocurrency works and what they should watch out for to protect themselves and their families.”
How Cryptocurrency Works
While there are crypto-friendly banks, cryptocurrency is distinct from traditional U.S. currency in that is does not come from a centralized entity, like a bank. Traditional currency comes from two sources – the Bureau of Engraving and Printing produces paper currency, and the U.S. Mint produces coins. Cryptocurrency, however, is produced and managed online and contains its own accounting system based on the technology with which it is produced. This technology, known as blockchain technology, acts as an immutable virtual ledger, ensuring each transaction is secure. In other words, cryptocurrency is both a virtual currency and its own secure accounting system. Blockchain technology allows information to be distributed and recorded but never changed once a virtual transaction has occurred.
Cryptocurrency is often stored in a digital wallet that is maintained virtually. This digital wallet is used to store a private key – a personal alphanumeric code – which allows you to participate in transactions and confirm ownership on blockchain.
Lastly, you cannot physically withdraw cryptocurrency. However, Cryptocurrency ATMs allow you to exchange your cryptocurrency for cash you can physically withdraw. The amount of cash you ultimately withdraw is based on the current market rate for that particular cryptocurrency at the time of the withdrawal. There is not one, singular cryptocurrency, but many, such as Bitcoin, Ether and Tether. Like traditional currencies, each can have a different volatility level and exchange rate.
An Unlikely Venue for Cryptocurrency Scammers: Dating Websites
While many of the federal financial laws are being extended to better regulate cryptocurrency, the extent and breadth of regulation is evolving. With so much changing the world of cryptocurrency, scammers haven’t failed to take advantage of unsuspecting consumers even in the most personal of venues – dating websites, where cryptocurrency romance scams are on the rise.
In a cryptocurrency romance scam, a scammer often creates a fake dating profile, using pictures and providing information, such as location, interests or experiences, that are not true. Often, the pictures are of very attractive men or women, which are purposely chosen to lure as many victims in as possible. Once matched with someone, the scammer will begin chatting just like anyone else – sharing basic information that is fake. The scammer may even ask you about your likes, dislikes and friends, leading you to think a romance is blossoming.
The scammer may keep chatting with you for days or even weeks to build trust. The scammer may even seem like they are jealous of your time or attention. However, the same scammer will conveniently never initiate an in-person date or even a phone call. The scammer may even ask if your communication could move to a messaging app, such as WhatsApp or Telegram.
In one instance, the scammer asked if the victim-target had ever thought about investing in bitcoin and offered to teach her. When she declined, stating she didn’t have the money to invest, he continued to pursue the subject, adding she would only need $1,000 to begin investing. Even more, he offered to cover whatever she might lose. When she again said no, the scammer argued that she didn’t trust him and stopped talking to her.
Unfortunately, these types of cryptocurrency investment scams via dating apps are all too common, leading even the dating websites to advise its users to not provide financial information to potential dates and report those who ask. It is important that consumers are aware of these scams and arm themselves with information to protect themselves.
Here are a few tips from Attorney General’s Office concerning romance cryptocurrency scams:
- Never share your financial information with anyone on a dating website. If a potential romantic partner on a dating website asks you to invest in anything financially, know that it is a scam. Report the scammer to the dating website immediately.
- Surround yourself with friends and family that you can ask if you are unsure of someone you are talking to. Scammers on dating websites often prey on the vulnerability and, at times, loneliness of the individual they are trying to scam. Therefore, make sure you have a support network as much as possible.
- Scammers may even research your digital footprint so that it appears they know more about you - your likes and dislikes - to build trust. Know that building trust and rapport is unfortunately part of the scam. The scammer needs enough relational equity built so that you will believe him or her.
- Do your research. If you decide to invest in cryptocurrency on your own, buy cryptocurrency only from reputable exchange platforms you know are legitimate.
If you have been a victim of a cryptocurrency scam, you may file a complaint with the Federal Trade Commission, the Office of the Nevada Attorney General, or the Internet Crime Complaint Center IC3. Include as much information as possible with your complaint, including any information you have about the person or entity that contacted you.