Bitcoin Scams: An Irreversible Transaction November 11, 2024 If you’re not familiar with Bitcoin, there are a few key things you should know. In the simplest terms, Bitcoin is different from traditional currency because it is exchanged digitally (not tangibly like paper money, coins, or cards) and it is decentralized (meaning it is not controlled or backed by one central party, like the government or bank). For these reasons, if you send Bitcoin to another individual’s Bitcoin wallet, there is no one who can help you reverse that transaction. If you decide you want to invest in Bitcoin, or even use it for currency through companies like PayPal, a financial advisor can help walk you through the process. But no one, under any circumstances, should be instructing you, convincing you, or ordering you to put your money into their Bitcoin wallet. If they are, it’s a scam. Types of Bitcoin Scams Not all Bitcoin scams are the same. In fact, fraudsters can be pretty creative in their approach to stealing your money. If you experience any of the following, keep your guard up. Government Impersonators In this scenario, a fraudster impersonates a government agent from the IRS, Social Security, or some other government administration. Using this veil of authority, they convince their victim to pay a supposed debt or face jail time. They may even have the ability to spoof a legitimate government office’s phone number, making their claims even more convincing. The scammer provides a QR code and directs the victim to make their payment through a Bitcoin ATM. Panicked, the victim complies. Utility Company Impersonators The perpetrators pretend to be from a utility company and threaten the victim with shutting off their electric or other utility services if a payment is not made immediately. Again, the victim acts out of fear and follows instructions to make their payment through a Bitcoin ATM. Ponzi / Pyramid Schemes In these instances, the victim is offered a guaranteed return in exchange for an upfront deposit. These scams may use complicated jargon such as forex trading, mining, binary options, or claim to have digital tokens with higher earning rates than Bitcoin. Ultimately, the scammers will deny the victim’s attempts to withdraw their money from the Ponzi scheme. Fake Merchandise This scam promises deals that are too good to be true on high-value items such as cars, vacation rentals, and concert tickets. The deal is usually accompanied by a compelling story involving the death of a family member or a military deployment that explains the reduced price. The victim makes their purchase through the Bitcoin ATM and never receives the item. Money Mule Scams In this situation, money is deposited into the victim’s bank account and they are directed to send the money to the criminals by depositing it into a Bitcoin ATM using the criminal’s wallet QR-code. The reality is that the funds are stolen and the victim has been recruited as a “money mule” to unwittingly participate in money laundering. Often, the fraudster has faked romantic interest in the victim or is claiming to be their employer. In either case, the victim feels a sense of loyalty that compels them to follow through with depositing the funds. Phishing Scams Fraudsters send emails, text messages, or create websites impersonating reputable Bitcoin or cryptocurrency services. These messages or sites trick victims into providing sensitive information like their Bitcoin wallet addresses, passwords, or private keys, which are then used to steal the victims' Bitcoin. Warning Signs of Bitcoin Scams Transactions sent over the Bitcoin network, including ones sent from Bitcoin ATM machines, occur immediately and are irreversible. This is the primary reason that many machines provide scam warnings and ask customers to verify they have control over any wallet address they scan in. Here are some additional warning signs to keep top of mind: “Protect Your Money” - Government Bitcoin accounts/digital wallets and Bitcoin federal safety lockers do not exist. If someone mentions moving your money into a federally regulated Bitcoin wallet to keep it secure, it’s a scam. “Guaranteed Return” – If someone promises to pay you a specific percentage of earnings weekly or daily, or claims you’ll receive a bonus for referring other people, it’s a scam. “Act Now” – As with any type of fraud, if the communication is accompanied by a heightened sense of urgency to act or respond immediately, it’s a scam. Reporting Bitcoin Scams Remember, once Bitcoin is sent, that transaction cannot be canceled, reversed, or refunded in any way. However, reporting the incident is critical to preventing the scammer from striking again. To report a Bitcoin scam: Inform your financial institution right away, especially if you moved money. Contact the police. Submit the information to the FTC: ReportFraud.ftc.gov