Bitcoin Blackmailing Scams Targeting "Unfaithful" Men Reported By US Federal Trade Commission (FTC)

  • A new blackmailing bitcoin scam targeting "unfaithful" men has surfaced, the US Federal Trade Commission (FTC) reported.
  • The fraudsters claim they "know about the secret you are keeping from your wife" and threaten to tell everyone if the victim does not pay them a "$8600 confidentiality fee."

The US Federal Trade Commission (FTC), an independent government agency that focuses on consumer protection, recently issued a warning against “bitcoin blackmailing scams.” The FTC’s Division of Consumer and Business Education reported on August 21st that they’ve discovered a new bitcoin scam that targets men.

The consumer protection notice explained that scammers are sending threatening letters to men in which they demand payments in Bitcoin (BTC) “in exchange for keeping quiet about alleged affairs.” In their intimidating messages, the scammers also tell their victims how to make payments in the pseudonymous cryptocurrency.

$8,600 Confidentiality Fee

According to the FTC, many users have become the target of these exploitative letters and it considers them to be a “criminal extortion attempt to separate people from from their money.” The consumer protection agency also shared what appears to be an excerpt from a bitcoin blackmailing scam letter, which threatens its recipients:

“I know about the secret you are keeping from your wife and everyone else. You can ignore this letter, or pay me a $8600 confidentiality fee in Bitcoin”.

Bitcoin Scam Email

"Criminal Extortion", "Classical Signs Of A Scam"

These types of messages are “classical signs of scam”, according to the FTC, as they use “threats, intimidation, and high-pressure tactics.” The agency has also instructed people who receive such messages, or know someone who has, to immediately report it to the Federal Bureau of Investigations (FBI) and their police department.

Notably, a similar scam was reported in the US state of Hawaii in which scammers pose as customer service representatives from local utility and energy companies such as Hawaii Electric Light and Maui Electric. The fraudsters then claim that the user has not paid their outstanding electricity bill and their power will be cut off if the overdue charges are not paid immediately using bitcoin.

This crypto scam also uses the same high-pressure tactics in which the scammer demands that the money be paid “right away” or promptly. They also threaten their victims in many cases by telling them that they will be arrested if they don’t make the payment. Per the FTC, government agencies and debt collectors are not allowed to threaten anyone.

Hundreds Of Fraudulent And Threatening Calls, Emails

Despite clear warnings from authorities, it appears that many people have still become victims of these malicious scams. Hawaii’s local television network Khon 2 reported that hundreds of fraudulent calls had been made during the last month and that three businesses even paid hundreds of dollars to the scammers using Bitcoin ATM machines.

Shannon Tangonan, communications director at Hawaiian Electric, revealed that,

“They [electricity bills] weren’t even overdue, but the scammers sounded so convincing that these business owners were willing to pay. They actually went to a bitcoin machine as directed by these scammers and fed cash into the machines.”

Shannon Tangonan

As CryptoGlobe reported in July, a blackmailing scam targeting porn viewers had surfaced. The scammers had been attempting to extort $1,900 in bitcoin from their victims by telling them that they would share footage of them watching porn with everyone in the their contacts list if they did not pay up.

These bad actors claimed in their emails to users that they had gained access to the their private information and had recorded them viewing porn by using malware. However, Cornell professor Emin Gün Sirer said it was a “bluff” and told everyone targeted by the scam to “be careful out there, never pay, never negotiate.”

Israeli Courts: Bitcoin Is a Taxable Financial Asset, Not a Currency

A central district court in Israel has reportedly ruled in favor of the nation’s tax collection department, which has categorized bitcoin (BTC) as a financial asset - but not a medium of exchange (MoE).

According to the court’s ruling, the Israeli tax department may impose and collect taxes on transactions involving bitcoin, the world’s most dominant cryptocurrency. The court’s decision on the matter was announced on Monday (May 20, 2019).

Bitcoin Is a Taxable Financial Asset

As confirmed by Israel’s central district court, bitcoin-related transactions are subject to a capital gains tax as the pseudonymous cryptocurrency is considered a financial asset by the country’s central bank.

Notably, the matter was brought before court Judge Shmuel Bornstein by the founder of a crypto startup that argued bitcoin should be treated as a currency, or medium of exchange. The entrepreneur said that transactions involving the cryptocurrency should not be taxed because it’s a currency, not a financial asset.

Bitcoin's Status Hasn't Yet Been Established

As noted by local news outlet Globes: 

The Central District Court in Lod accepted the tax authority’s interpretation, and held that bitcoin is an asset and not a currency, and that the transaction in question is therefore taxable.

Going on to mention that Israeli financial regulators have not yet established a comprehensive regulatory framework for cryptoassets, Judge Bornstein said that it was “hard to envisage a result whereby Bitcoin would be considered a currency for tax purposes in particular.”

According to Globes, the case involving bitcoin-related transactions could reach Israel’s Supreme Court.

Commenting on the status of Bitcoin, Itay Bracha, Managing Partner at Israel-based law firm Bracha & Co., remarked:

The ruling is a signal to all those who have yet to report cryptocurrency-related [capital gains] or based their actions on differing legal advice.

Building Decentralized Infrastructure for the Transportation Sector

Per the legal specialist, the recent ruling is “unequivocal” and that it is only a “judicial interpretation”, not a “new legalization.” Therefore, the current ruling on the status of bitcoin would only “apply retroactively.”

As noted by local sources, the latest BTC-related case involves Noam Copel, the founder of blockchain startup DAV. As stated on the crypto firm’s official website:

We’re building a decentralized infrastructure to revolutionize the transportation industry on the blockchain.

In 2011, Copel reportedly purchased BTC and sold it in 2013 for a profit of around $2.3 million. Arguing that his profits, or capital gains, were not taxable, the crypto entrepreneur stated (in court):

Bitcoin should be classified as a foreign currency, and that his profits should be seen as exchange rate differences received by an individual not in the course of a business, and therefore should not be taxed.

As explained, the Israeli courts ruled in favor of the nation’s central financial institution by categorizing Bitcoin as a financial asset - which is subject to taxes.