Brian Quarmby
The United States Federal Bureau of Investigation (FBI) Miami Field Office has warned that crypto ATMs are emerging as a popular method that scammers use to receive funds from defrauded victims.
The information was revealed as part of an Oct. 3 public warning about “pig butchering scams” where scammers pose as long-lost friends or potential romantic partners to swipe money from victims.
The scammers “fatten up” their victims by showing a supposedly genuine interest in them to win their trust, and then gradually introduce investment discussions into the relationship.
In the public service announcement in cooperation with the Internet Crime Complaint Center (IC3), the FBI warned that victims of these pig-butchering crypto scams generally have no chance of getting their funds back.
However, the FBI noted that they’ve noticed scammers have been increasingly directing their victims to transfer funds via crypto ATMs, alongside more well-known methods such as wire transfers and prepaid cards, noting:
“Many victims report being directed to make wire transfers to overseas accounts or purchase large amounts of prepaid cards. The use of cryptocurrency and cryptocurrency ATMs is also an emerging method of payment. Individual losses related to these schemes ranged from tens of thousands to millions of dollars.”
The FBI noted that in “pig butchering” scams, victims are “coached through an investment process” and “encouraged to make continuous deposits by the fraudsters.”
“When the victims attempt to cash out their investments, they are told they need to pay income taxes or additional fees, causing them to lose additional funds.”
Crypto ATMs have long been utilized by scammers who pose as public officials, law enforcement agents or employees of local utility companies, and coerce victims to send them payments under the guise of paying off bills or unpaid taxes to avoid further penalties.
There are nearly 33,500 cryptocurrency ATMs in the United States, according to data from Coin ATM Radar, with the U.S. accounting for 87.4% of the global crypto ATM distribution.
The U.S. Federal Trade Commission sent out a warning regarding crypto ATM scams in January, while also noting that the scammers do sometimes pose as potential romantic partners.
The FBI urged people to “verify the validity of any investment opportunity” introduced by these types of people, keep an eye out for domain names impersonating legitimate exchanges and misspelled URLs and to not download any apps if the legitimacy cannot be verified.
Law enforcement agencies across the U.S. have warned about pig butchering and romance scams on several occasions. While it could be assumed that the victims are not well-educated regarding technology or investing, this isn’t always the case.
In June, it was reported that tech-savvy professionals from Silicon Valley were being duped by a wave of pig butchering scams in San Francisco, with multiple people losing more than $1 million apiece to this type of financial fraud.
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Savannah Fortis
The financial service provider Mastercard launched a new crypto service related to risk management on Oct. 3. Mastercard’s new service, Crypto Secure, is aimed to help banks find and prevent fraud on crypto merchant platforms.
Crypto Secure combines the usage of artificial intelligence, blockchain data and public records of crypto transactions, along with other sources, to determine crime-related risks of crypto exchanges within the Mastercard network.
Mastercard already has a similar service with fiat currency transactions available to banks.
The president of cyber and intelligence business for Mastercard, Ajay Bhalla, said this development helps its partners stay compliant with local regulations when fighting fraud in the crypto space:
“The idea is that the kind of trust we provide for digital commerce transactions, we want to be able to provide the same kind of trust to digital asset transactions for consumers, banks and merchants.”
Banks and other Mastercard card issuers that use Crypto Secure will see color-coded risk ratings of crypto merchants, which represent the risk of suspicious or fraudulent activity connected to said merchant.
Crypto Secure is run by CipherTrace, a California-based startup for blockchain security that was acquired by Mastercard the previous year.
While the tool doesn’t make judgements for banks it provides another level of advisory on crypto transactions. Mastercard currently has around 2,400 crypto exchanges within its network.
Crypto payments are becoming more mainstream thanks to centralized payment processors like Visa and Mastercard. Last year Visa reported over $1 billion in crypto spending, while Mastercard has recently created new crypto payment options in countries such as Argentina and Indonesia.
However, as crypto continues to enter the public eye so does any fraud and crime related to the industry. According to Chainalysis data, 2021 marked a new all-time high in crypto crime with fraudulent wallet addresses receiving $14 billion.
In Australia, in 2022, investors lost $242 million to investment and crypto-related scams. While some executives have recently related crypto to a Ponzi scheme, others are calling on social media giants to be aware of crypto scams linked to their platforms.
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Savannah Fortis
Emerging markets continue to forge their way into the crypto scene finding a plethora of use cases, especially in the combined Middle East and North Africa (MENA) region.
A new report from Chainalysis reveals that the crypto market in the MENA region is the fastest growing in the world. Transaction volume in the MENA region reveals users received $566 billion in crypto in the time frame of July 2021 to June 2022. This is 48% more than the previous year.
MENA is followed by Latin America and North America with a growth of 40% and 36%, respectively.
This region is made up of approximately 22 countries which include emerging markets such as Morocco, Egypt and Turkey. In these countries, the usage of cryptocurrencies finds practical use cases in savings preservation and remittance payments.
In countries such as Turkey and Egypt, which have both faced major devaluation of their local fiat currencies, crypto usage for savings preservation and remittances is especially dominant.
Within the timeframe of the report, Egypt’s tripled transaction volumes can be accredited to local economic volatility. It has a year-over-year growth of 221.7% in crypto transaction volume. Turkey is the largest crypto market in the region, with $192 billion in crypto received within the reporting period.
The wealthier countries of the MENA region, such as the Gulf nation of the United Arab Emirates (UAE), which is home to the crypto haven of Dubai, have also been contributors to the local crypto scene, though in a different capacity.
According to the report, both Saudi Arabia and the UAE made it into the region’s top five countries in terms of received crypto value.
When it comes to these Gulf nations, however, crypto can be seen more in large institutional usage rather than person-to-person payments like remittances.
Major crypto companies like Binance have received approval to set up operations in the UAE’s Abu Dhabi and Dubai, along with the neighboring country Bahrain.
A local partnership with Binance Pay in the UAE has even allowed local entrepreneurs can set up businesses using crypto.
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This Daily Dose was brought to you by Cointelegraph.
