A Camanche woman reported the loss of several hundred dollars stolen from her bank account in a cryptocurrency scam this week. This started when the woman wanted to get hold of Paypal to discuss a refund. She found a phone number online for Paypal Customer Service and called it. But she actually reached a faked phone number, and unwittingly connected herself to a group of scammers. Soon enough, they convinced her to allow remote access to her online banking, and used her money to buy Ethereum, a popular cryptocurrency. Along the way, they coaxed her into giving away her social security number, and photographing her driver’s license, and sending the photo to the crooks.
She doesn’t understand how this happened, and the details are complicated and convoluted. But her experience does give me a lead-in to educate my readers more on cryptocurrency. The FBI tells us cryptocurrency is at or near the top of the list as the mechanism or method of loss in fraud in the United States. Yet very few of us even know anything about “crypto”.
What is crypto? Cryptocurrency is a type of digital currency generally existing only electronically. Buyers use their phone, computer, or a cryptocurrency ATM to buy cryptocurrency. Bitcoin and Ether are the top two cryptocurrencies, but there are many different cryptocurrencies, over 27,000 at last count, with more appearing daily.
You store crypto in a digital wallet, online, on your computer, or on an external hard drive. A digital wallet has a wallet address, a very very long string of numbers and letters. If something happens to your wallet or your cryptocurrency funds — like your online exchange platform goes out of business, you send crypto to the wrong person, you lose the password, to your digital wallet, or your digital wallet is stolen or compromised — no one can step in to help you recover your funds.
That’s a major difference between crypto and US dollars. Funds held in US banks and credit unions are insured by the FDIC. If something happens to your crypto account, like the company that provides storage for your wallet goes out of business or is hacked (happens often) you’re on your own. Another huge difference — cryptocurrency values change constantly, by the minute and hour. The value of a cryptocurrency can change rapidly, and significantly, even changing by the hour. A dollar is always worth a dollar, although its purchasing power can change over time.
And there’s more differences. Crypto transactions are not reversible. No mechanism exists to dispute a crypto transaction, such as we use with credit and debit cards when something goes haywire with a purchase made with cards.
Many people who use crypto like it because they perceive it as anonymous. It’s not that simple. Crypto transactions get recorded on a public ledger, or a “blockchain.” That’s a public list of every cryptocurrency transaction — both on the payment and receipt sides. Depending on the blockchain, the information added to the blockchain can include details like the transaction amount, as well as the sender’s and recipient’s wallet addresses. It’s possible to use transaction and wallet information to identify the people involved in a specific transaction. Not exactly anonymous.
Criminals are working hard to create more clever methods to steal your money using cryptocurrency. Here are some things to know about crypto scams:
• Only scammers demand payment in cryptocurrency. Nobody else will demand you send cryptocurrency in advance — not to buy something, and not to protect your money. That’s ALWAYS a scam.
• Only scammers guarantee profits or big returns. You can’t trust people who promise you can quickly and easily make money in the crypto markets. Social media feeds are full of ads promoting these get rich quick schemes.
• Never mix online dating and investment advice. Anyone you meet on a dating site or app, who wants to show you how to invest in crypto, or asks you to send them crypto, is a criminal. ALWAYS.
CONTACT SENIORS VS. CRIME: Let me know about scams, fraud, or other crookedness you run across. Most of what I learn, I learn from you. Contact me at Seniors vs. Crime, Clinton County Sheriff’s Office, 563-242-9211 extension 4433, or email me at randymeier@gapa911.us.