Crypto scams are on the rise, and the last few years saw billions in funds lost to these criminals. A recent report from cryptocurrency tracker Whale alert noted that scammers managed to garner $24 million in bitcoin in the first half of 2020, and the number goes up if other digital assets are included.
The new crypto-crime tracking tool dubbed Scam Alert revealed that almost $38 million in bitcoin were stolen by scammers in the last four years and this doesn’t take into consideration the funds lost in Ponzi schemes. The report estimates that scammers will have generated $50 million in annual revenue by the end of 2020.
Scam in China
Throughout 2020, several scams have been reported. Recently, the Chinese police cracked down on a $14.31 million crypto scam in Wenzhou. The scammers were arrested and the funds were seized along with multiple luxury vehicles and villas.
Local media outlet Toutiao states that the gang has been active since 2019 and targeted victims via Telegram chat groups, one of which was even named “Huobi Global Moving Brick Arbitrage HT Chinese Group Community,” but pretended to be investors on the popular cryptocurrency exchange Huobi.
The authorities stated that the suspects created dozens of similar chat groups with over 10,000 fake accounts to make potential victims believe that the scam was a legitimate arbitrage opportunity.
The scammers defrauded victims by telling them that they had profited from an “investment scheme” and all the victims needed to do was send cryptos to a Huobi wallet address, after which they’d receive a more substantial amount in Huobi Token (HT). The scammers guaranteed 8% in returns from the scheme.
However, the Huobi wallet addresses were fakes and investors received fake HT links. Mo Li, the head of marketing at HashKey Hub, noted that the police had seized “tens of thousands” of Ether (ETH), Bitcoin (BTC), and Tether (USDT).
Almost 1300 people were reportedly scammed, and the scammers were known to frequent bars and night clubs while also spending money on villas and high-end sports cars like Ferrari and McLaren.
Whale alert’s report had concluded that “Crypto crime pays. A lot,” and the above case is the perfect example of that.
The report added that the scam market has been flourishing, and with time, the scams have become more believable. Looking at the sophisticated nature of these scams, Whale alert suggested that professionals may have been behind some of the largest scams.
The report stressed the fact that while there are different types of scams, the one thing common among them is that the criminals behind it don’t get caught.
Hence, the report concluded:
“One thing is very clear: whatever is being done right now to stop these criminals is not enough and if we don’t act as a community, the reputation of blockchain might not be able to recover in the long run.”