The RCIPS Financial Crime Investigation Unit is aware of a recent increase in scams involving purported cryptocurrency investments, and is providing information on some of these for public awareness.
The most common scams that have been reported include those involving romance/dating websites and direct investment schemes.
Types of Scams:
Romance/Dating websites - Scammers will use these websites to forge relationships and then introduce the victim to an “investment opportunity” in cryptocurrency.
Bogus/Imposter websites – Scammers will create phony websites with numerous fake testimonials and large amounts of crypto jargon. These websites will promise huge, guaranteed returns, as long as you keep investing.
"Celebrity" endorsements - Scammers will pose online as billionaires or other big names, and promise to multiply your investment in a virtual currency, but will instead keep the funds that you send. Messaging apps or chat rooms are also used to plant rumors that a famous business mogul is backing a certain cryptocurrency. Once they have lured investors to buy, and thus driven up the price, the scammers sell their stake and the currency plummets in value.
Virtual Ponzi schemes - Some cryptocurrency scammers will peddle nonexistent opportunities to invest in digital currencies and create the illusion of big returns by paying off old investors with new investors’ money.
Scammers Posing as Investment Managers/Traders – Scammers may pose as legitimate virtual currency traders or set up phony exchanges to lure people into giving them money.
Victims of the investment schemes type scams are deprived of additional funds when they attempt to withdraw their ‘returns.’ They are then informed that they have to pay ‘taxes’ before the returns can be withdrawn, and the victims often comply to their detriment.
In order to ensure that you do not fall victim to these scams, it is important to be aware of the types of scams described above, and to keep in mind the below warning signs:
Someone you don’t know sends you a message out of the blue about a virtual currency investment opportunity.
The pitch claims that a virtual currency investment involves no risk and surefire profits.
If either of these are the case, it is best to be extremely wary and to avoid investing any money. It is also advisable not to remain in contact with the person promoting the “opportunity.”
Do’s & Don’ts:
Cryptocurrency investments can be legitimate, however, and below are some further general tips to keep in mind when dealing with any potential cryptocurrency investment:
-Do understand the risk. Even if you’re not being scammed, the virtual currency trade is speculative and volatile. An investment that may be worth thousands of dollars on Tuesday may only be worth hundreds on Wednesday.
-Do resist pressure to buy right now. Scammers often try to create a false sense of urgency around a supposedly red-hot cryptocurrency.
-Do check out any dealer in virtual currency options or futures contracts before you buy.
-Do thoroughly research any virtual currency platform or digital wallet provider before providing any credit card information, wiring money or disclosing sensitive personal data.
-Do carefully read any agreement with a digital wallet provider. Unlike banks and credit card companies, they might not accept responsibility for replacing your money if it is stolen.
-Don’t put money in a virtual currency investment if you don’t really understand how it works.
-Don’t speculate in cryptocurrencies with money that you can’t afford to lose.
-Don’t buy virtual currencies based on anonymous tips that you picked up from chat rooms or social media.
-Don't believe social media posts promoting celebrity cryptocurrency giveaways.
-Don’t share your “private keys” — the long letter-and-number codes that enable you to access your virtual currency — with anyone. Keep them in a secure place.