Cryptocurrencies: The New Hunting Ground for Scammers

Examining the realm of cryptocurrencies reveals a burgeoning landscape of deceitful tactics employed by online scammers. They exploit diverse avenues, ranging from identity theft and fraudulent websites to tempting schemes of immediate gains and counterfeit currencies. This emerging Eldorado for scammers demands a thorough exploration of their evolving ploys. Let’s delve deeper into these novel scams.

The Rise of Scams in the Cryptocurrency World

Cryptocurrencies, NFTs, and other forms of digital assets have given rise to a new wave of scams, even though online scams are not a new phenomenon. This unfamiliar territory for many individuals provides an opportunity for malicious scammers to take advantage of the credulity and lack of knowledge of certain individuals.

To combat these fraudulent activities, the government has recently released a prevention guide to educate and warn the (young) population about these new challenges associated with the use of these virtual assets.

The Rise of “Pig Butchering” or Social Media Phishing Scams in Cryptocurrencies

An appropriate figurative definition would be to fatten the pig for a better taste. In the context of financial scams based on digital assets, it means manipulating the target after a lengthy process of approach, where the scammer engages with their victim on social media or dating websites.

During this period, the victim places trust in the scammer and may provide funds under the pretext of a lucrative investment. Establishing a sense of complicity between the manipulator and the manipulated is the key. As trust increases, so do the sums of money given. Once the objective is achieved, the manipulator disappears, leaving the victim helpless, akin to a pig carcass, hence the term “pig butchering.”

A crypto-influencer scams his subscribers and absconds with €4 million

In July 2022, the Paris public prosecutor’s office opened an investigation into the YouTube channel Crypto Gouv, with around 40 complaints being lodged against the Youtuber, whose identity is still unknown. He has succeeded in creating a community of 4,000 subscribers around topics related to cryptocurrencies and Web3. On private Discord and Telegram groups, the thief gave investment advice and market analyses to his subscribers free of charge.

The Crypto Gouv affair is sounding the alarm: it is now vital to be careful before investing your savings in cryptocurrencies. Scams are multiplying to the point of mobilising even the FBI. According to a report by the US Federal Trade Commission (FTC) published last June, scams on social networks have netted up to €700 million. It’s also reminiscent of the scammers who managed to attract large numbers of Internet users with a digital currency called “SQUID”, inspired by the reference series Squid Game. The people behind this scam managed to raise the price of this 0 currency to around 2,800 dollars, before seeing it plummet to zero on 1 November.

Glamorizing the Cryptocurrency World

Promising significant and instant gains is a common tactic in financial scams. Once a connection is established, whether through email or social media, individuals posing as “salespeople” usually request your personal information. They will contact you to encourage an initial deposit, promising a quick return on investment. They will then persuade you to make a second deposit, often a higher amount, and so on.

Investors should not let their guard down, even if the person appears friendly and attentive. Gaining your trust is part of the scamming process. Some scammers may claim the need for quick action to avoid missing out on an opportunity for profit.

It’s important to note that it’s crucial to be very careful on social networks. Sometimes, fake accounts modelled on well-known influencers in the crypto world will have the good idea of adding you on Instagram and talking to you in private messages to offer you substantial returns on your investment. It’s also important to bear in mind that your cryptocurrencies no longer belong to you once they leave your wallet and that 100% returns are impossible to achieve.

NOTICE : This article does not constitute investment advice, financial advice or similar. Nothing in this article or on Digital GEMs constitutes professional and/or financial advice, nor does any information in this article or on Digital GEMs constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. Please seek professional advice in relation to any financial or investment decisions.

About this article

This article has been written by a student on the Grenoble Ecole de Management’s Advanced Masters in Digital Strategy Management. As part of a content creation assignment, students are given the task of writing articles based on their digital interests and disseminating the articles online. Articles are marked but we make minimal changes to the content. Thanks for reading! James Barisic, Programme Director, MS DSM.