The dark side of cryptocurrency

During the epidemic, business was awful, so when Freya, a mother of four, stumbled across what she thought was a feasible investment option, she was confident it would turn things around. Instead of altering her fortunes, she and her family quickly realized it was a nasty con that would cost them a fortune. Freya, 48, has lost over £30,000 after being duped by a mystery and illegal cryptocurrency company claiming to be situated in Canary Wharf.

She says, ‘It was devastating.’ ‘It’s difficult to trust someone again after anything like this.’

Freya is one of many people who have been duped by con artists who promise extraordinary returns to people who invest in the unpredictable cryptocurrency markets, only to be defrauded of large quantities of money. Bitcoin and Ether are digital currencies that operate without the need for central banks or government regulation, creating idealistic aspirations that crypto may be used to build a better, more equitable financial system. Its decentralized nature, on the other hand, provides thieves with anonymity and the capacity to target victims from anywhere on the planet.

And the consequence isn’t simply monetary; cryptocurrency also poses a significant threat to the environment. Mining cryptocurrency — the process of confirming transactions and producing new coins – consumes massive quantities of electricity and emits the equivalent of a small country’s CO2 each year.

Its ecological impact is so bad that President Biden recently issued an executive order directing officials to look at measures to reduce the “negative climate impacts and environmental pollution” of cryptocurrency. Freya operates a business with her spouse in Telford. She looks for her children as well as her old mother, who suffers from dementia, and her father, who suffered a stroke and is unable to talk.

Computer crime: a hacker steals a password and an individual’s identity. Freya and her family lost tens of thousands of dollars after falling prey to crypto scammers. In May 2021, the mum-of-four, who had a basic understanding of crypto, told Metro.co.uk that she created a Bitcoin trading account to pursue investing and then ‘came across a company called Invxsler online, in pursuit of fresh income streams during a pandemic downturn.

On the company’s website, it advertises itself as crypto investing service with high returns, claiming that consumers can ‘trade like an expert and multiply your profits with the strength of 100X leverage.’ To put it another way, send us your money, and we’ll make 100 times as much for you.

‘Work has been difficult owing to Covid and Brexit,’ Freya explains. ‘We knew someone who had made enough money trading bitcoin to place a down payment on a London home.’ Many others had made a lot of money, so I decided to give it a shot. I was looking for a firm that seemed more hands-on, and Invxsler met the description. ‘How could I be so wrong?’

Freya conducted some research online to ensure she was dealing with a reliable organization and discovered ‘plenty’ of articles claiming Invxsler was trustworthy. As a result, she sent them £200 to invest in cryptocurrencies. Requests for additional funds started coming in almost immediately.

After doubling down on the scheme’s fraudulent promises, an ‘account manager’ named Nina, who claimed to be Danish, called Freya’s husband and persuaded him to send more than £3,000. ‘They are quite competent and knowledgeable in their field,’ Freya explains. ‘They enquire about the kids and the weather.’ You start to trust them, but all they’re doing is leading you down a rabbit hole.’

Nina then began calling Freya every day, asking intimate questions about her family life, which at the time did not appear alarming due to the scammers’ competence. Freya began to regard Nina as a friend after telling her about her money worries and her parents. Nina even persuaded their eldest kid, who was beyond the age of 18, to create a bank account with £1,000, which was never refunded.

A bitcoin logo and monetary symbols are displayed on a computer screen. Freya’s 18-year-old daughter was even persuaded to part with money to invest in bitcoin by the con artists. The scam then progressed to the next stage. Freya was handed over to Martin, a “manager” who claimed to know of another way to make even more money.

‘He claimed we could make a lot of money, but we’d need $10,000,’ she recalled. The website appeared to be professional, and there were few negative reviews at the time. The company was excellent at speaking to you in a loving, cheerful manner, as though they wanted us to profit.

Soon after, both Nina and Martin claimed to have caught Covid, so a new representative named ‘Ian’ came in and said that he was setting up a group account that would raise one million pounds and be split among 20 people. Freya was encouraged to join on the condition that she deposit £18,000, which she was assured would significantly grow. Freya and her husband withdrew the money out of their firm and gave it to the Investor in July 2021.

‘We were assured this money was only needed for three days,’ she says. ‘We can’t take it back now.’ I’m unable to withdraw any of my £32,545 investment. ‘They brainwash you and try to pressure you into making quick judgments by telling you that if you don’t invest right now, you’ll lose a lot of money.’

Their agony, however, did not end there. Freya was repeatedly asked for money by the company, which increased the pressure on her to respond swiftly – a common scammer approach. The group has now made each member £250,000, she was told. However, the price of bitcoin was rapidly falling, and unless she paid more than £20,000, she would lose £30,000.

Freya began asking more questions, wanting to get her money back or, at the very least, to see some terms and conditions, as the prospect of parting with any more cash set off warning bells. She has been waiting months for Ian to call her, but he has never done so.

And despite reporting the incident to the police and Action Fraud, as well as registering a complaint with her bank and the crypto exchange she used to transmit payments, Freya has yet to receive any of her funds. Freya is speaking out after losing almost £30,000 to assist others in avoiding becoming victims of a similar scam.

‘It still bothers me, and I’ve lost faith in myself,’ she admits. ‘I wouldn’t call myself a vulnerable person, but anything can happen to anyone.’ We were unable to recover our funds. The family came out to warn others about the scammers so that they do not become victims. (Image courtesy of Getty Images/iStockphoto.)
‘They were aware of our four children. My parents were ill and elderly, so we informed them. They, on the other hand, were unconcerned. I’m particularly sorry for my daughter, who also lost $10,000. It makes me sick to my stomach.’

The Invxler website has changed addresses after the family was defrauded, but it is still accessible online. Although scam warnings and negative reviews can now be found on Google, the bogus positive ratings can still be found. Invxsler is a ‘luxury brokerage striving to please serious clients with a diverse service,’ according to one website, which discusses its services in an authoritative, competent, and convincing tone.

‘We suspect this firm may be providing financial services or products in the UK without our approval [so] you should be aware of engaging with this illegal firm,’ according to the Financial Conduct Authority.

Jane Lee works as a Trust and Safety Architect at the San Francisco-based digital fraud prevention firm Sift, where she investigates novel sorts of fraud.

Also, read – How Is Blockchain Being Used In Clearance And ICT Services?

She told Metro.co.uk about a ‘pig slaughtering’ dating site crypto fraud. Scammers’ nasty, sadistic attitude toward their victims is reflected in the moniker, which even looks to mock them.

‘In this swindle, the victims are referred to as slaughtered pigs,’ she explains. ‘They are raised for the promise of “happily ever after” and massive crypto gains in exchange for their hefty profit. The victims, in reality, are ordinary individuals who have been left financially and emotionally crushed.’

The ‘Pig Butchers’ spend months winning the trust of people they meet on dating apps, swindling victims out of their cash with both romance and the false promise of fast crypto profits.

They begin by creating phony accounts, matching possible victims, and building confidence before switching the conversation to WhatsApp, which is encrypted and allows the scammers to remain anonymous while reducing their risk of being detected. After that, the victims are wooed with amorous texts and the promise of expensive gifts.

‘Inevitably, the topic of money comes up,’ Jane explains. ‘The con artist will pitch the appeal of cryptocurrency returns, bragging about how much money they’ve made investing and promising to teach their victim so they, too, can make some extra cash.’

Anonymous hackers’ hands holding a credit card
Scammers entice victims to hand over money to ‘invest’ in cryptocurrency by ‘romancing’ them.

Victims are directed to a fraudulent trading site operated by the scammer after creating an account on a legitimate crypto platform. When victims ‘invest,’ they are immediately presented with phony graphs and stats depicting ‘earnings.’ When customers are asked to pay out earnings or return the initial payment, scammers urge consumers to send over as much money as they can.

Louise Bennett, a civil fraud, cryptocurrency, and asset recovery lawyer at Keystone Law, has worked on a number of romantic fraud cases in which offenders create fake accounts on dating sites and convince victims to send money.

A victim lost £83,515 of her life savings after falling for a ‘honeytrap’ on Tinder and being persuaded to register an account with the crypto exchange Binance and then transferring cryptocurrency Tether (USDT) to a ‘bogus electronic platform.’

‘Romance frauds have expanded tremendously as a result of the pandemic as conversations have moved online,’ Louise explains. ‘In the last two years, my practice for this type of work has doubled, and I get regular inquiries concerning honey trap frauds, where people lose thousands of pounds in cryptocurrency.’

‘Fraudsters are smart, and these types of online romance frauds are almost always carried out by members of a huge organized criminal organization.’ Because the crypto realm is primarily unregulated, it is fertile ground for scammers.

‘Thousands of frauds are committed every day, and the number is increasing across the board. Because we are using online dating tools more than ever before, we see a rise in honey trapping fraud.’

In fact, no method is off-limits in the dark world of crypto fraud. Scammers, for example, have taken advantage of the conflict in Ukraine this year. They’ve been preying on worries of a pandemic for the past two years.

UkraineTokens is a fictitious currency created by a group of thieves. Anyone who purchased it believed they were helping civilians harmed by the violence. In reality, they were merely handing over money to con artists in exchange for a useless piece of paper. Criminals have also pretended to be refugees on social media in order to solicit cryptocurrency donations or set up bogus charity websites. The outcome is the same. Victims submit their crypto to the perpetrators and never see it again.

‘Scammers will always take advantage of the chaos,’ says Michal Salat, director of threat intelligence at cybersecurity firm Avast. ‘Scammers are by their very nature unethical, and they will take advantage of individuals who are attempting to aid the most vulnerable.’

Criminals are even attempting to profit from the conflict in Ukraine. Because fraudsters are so good at covering their trails, it’s often impossible to spot them. However, several unusual individuals have been linked to dubious crypto schemes.

After writing an Instagram post promoting a cryptocurrency called EthereumMax, Kim Kardashian was one of three celebrities named in a class-action lawsuit this year.

‘Are you guys interested in cryptocurrency????’ Kardashian made a statement. ‘This is not financial advice; instead, I’m relaying what one of my friends told me about the Ethereum Max token!’

The currency surged in value after Kim’s post before plummeting to near-zero value. K Kardashian has yet to comment on the incident, which the Financial Conduct Authority’s head, Charles Randell, described as the “financial promotion with the single largest audience reach in history.”

According to Sharon Davies, CEO of Young Enterprise, the rise of so-called “finfluencers” has offered crooks a new opportunity to target victims.

‘Given the pandemic’s financial pressures and the rise in social media usage, young people are more vulnerable to online scams than ever,’ she adds. ‘They’re attracted by ‘get rich quick schemes and the belief that businesses and figures with enormous social media followings must be trustworthy.’

Fake brand partnership requests from people posing as employees of a company offering paid services are a prevalent fraud. These ‘ DM to collab’ offerings are almost always scammed that trick customer into purchasing things they don’t need.

‘Another form of scam that has grown in popularity as a result of the pandemic involves bitcoin investments. Young people see their favorite celebrities and influencers promoting possibilities to invest in digital currencies, which might lead to significant losses.’

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Crypto mining consumes a high amount of energy, which is terrible for the environment. Because crypto mining consumes a lot of energy, miners must operate their computers for an extended period simply to process a single block, which consumes 150,000 kilowatt-hours of energy – enough to power 170 average US homes for a month.

“When you realize that crypto mining and transactions occur on a regular basis all over the world, the magnitude of the problem immediately becomes clear,” says Ivan Liljeqvist, CEO of the blockchain development business Moralis. ‘Several studies have revealed that bitcoin mining consumes more electricity per year globally than certain small countries, which is alarming.’

Meanwhile, Jeremy Cheah, associate professor of decentralized finance at Nottingham Business School, adds that there are “many examples” of communities that have “survived” crypto’s environmental impact.

He told Metro.co.uk that ‘crypto mining has been demonstrated to disproportionately damage the poor and disadvantaged.’

Locals in the Democratic Republic of Congo are frequently ‘outcompeted’ by miners who consume low-cost renewable energy, leaving them unable to power their homes. Before the government outlawed crypto mining in Kosovo, 90% of it was fueled by the burning of lignite reserves – a sort of inexpensive, low-grade coal.

‘During the recent energy crisis, Kosovans were subjected to rolling blackouts around the country due to electricity shortages,’ says the report. Cheah keeps going. “There are many additional examples of environmental, labor, and corporate groups forcing local and national governments to take action by prohibiting mining.” Bitcoin mining, for example, has posed a threat to New York’s environment and water quality by releasing excessive carbon emissions and harmful chemicals into the atmosphere.’