UK: Crypto-Related Fraud Leads to $2.55 Million Losses in Two Months

Francisco Memoria
  • British authorities have recently issued a warning against fraudulent cryptocurrency-related investment schemes.
  • These schemes reportedly cost Britons over $2.55 million in two months.

British authorities have recently issued a warning against cryptocurrency-related fraud, as victims reportedly lost over £2 million ($2.55 million) between June and July of this year, leading to an average loss of £10,085 ($12,000) per person.

The warning cites statistics prepared by the Action Fraud, the UK’s national fraud reporting service, which revealed how cybercriminals are tricking their victims into investing in fraudulent cryptocurrency investment schemes.

Per Action Fraud, fraudsters are cold calling victims and leveraging social media to trick victims into investing in “get rich quick” investments that are supposedly related to cryptocurrency mining and trading.

Using these techniques, fraudsters get victims to sign up to cryptocurrency investment websites and reveal their personal details, including credit card information, to open a “trading” account. After the victims make an initial deposit, fraudsters call them again to get them to invest again, citing greater profit potential.

In some cases, according to Action Fraud, victims only realized they have been scammed after the websites they were tricked into registering in no longer work, and the individuals who contacted them are unreachable.

Commenting on the fraudsters’ success, Action Fraud Director Pauline Smith stated:

It’s vital for anyone who invests or is thinking of investing in cryptocurrencies to thoroughly research the company they are choosing to invest with. The statistics show that opportunistic fraudsters are taking advantage of this market, offering investments in cryptocurrencies and using every trick in the book to defraud unsuspecting victims.

Pauline Smith

In response to an increase in cryptocurrency-related fraud, the City of London Police’s Economic Crime Academy (ECA) has reportedly created a new one-day course on cryptocurrencies called “Cryptocurrencies for Investigations,” to train officers to “recognize and manage cryptocurrencies in their investigations.”

Staying Safe

In the warning, Action Fraud added that victims shouldn’t assume these investment schemes are genuine, even if their websites look professional and the criminals use the names of well-known brands or individuals.

The fraud reporting service added that no one should be rushed into making a decision, as a legitimate bank or financial organization won’t attempt to force people to part from their money on the spot.

Action Fraud further urged those who have been victims of this type of fraud to contact it, and advised people to thoroughly research companies before putting in their money.

Bitcoin From the 2016 Bitfinex Hack Mysteriously on the Move Again

Little over 30 bitcoins stolen from the prominent cryptocurrency exchange Bitfinex back in 2016 have mysteriously started moving once again, even after the arrest of two individuals allegedly involved in the exchange’s security breach.

According to Whale Alert, a large transaction monitor, an initial transaction of 28.39 BTC was made from a wallet associated with the 2016 Bitfinex hack before a second transaction of 2.27 BTC was made. Both went to unknown wallets, with the total amount being transferred coming close to $300,000.

The hackers often move their funds around, presumably in an attempt to launder them so they can cash out. In June 2019, they moved over 172 BTC over a total of five transactions to unknown addresses. In August, around 30.6 BTC, then worth over $350,000, were moved as well.

In total, the hackers stole nearly 120,000 bitcoins from the popular cryptocurrency exchange in 2016. At the time, one bitcoin was trading for around $600, which means they stole roughly $72 million. As the price of the flagship cryptocurrency skyrocketed since then, the 120,000 BTC are now worth over $1 billion.

Taking this into account users on social media started predicting a price cash, as if the hackers were able to cash all of their funds out the price of BTC would certainly drop significantly. To cash out, however, they have to find a way to launder the funds – a challenge at a time in which every liquid cryptocurrency exchange enforces know-your-customer (KYC) checks.

Bitcoin from the 2016 Bitfinex hack moving may be surprising, as Israeli police last year arrested two brothers allegedly involved in the security breach. It’s worth pointing out, however, in the UNUS SED LEO token whitepaper the exchange appeared to give the hackers a chance to return their funds and keep a specific percentage “as a reward for collaborating in finally resolving” the issue.

Referring to past transactions Anneka Dew, Bitfinex’s marketing director, noted they weren’t related to the procedure outlined in the token’s whitepaper.

Featured image via Pixabay.