MY MONEY

The cryptocurrency cons that begin as romance scams

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The moonward trajectory of Bitcoin has garnered mainstream attention. What's received less attention, though, are the associated cryptocurrency scams you'll want to avoid.

Crypto scams come in all shapes and sizes. This month, Stefan Qin, a 24-year-old Aussie cryptocurrency hedge fund manager, pleaded guilty in the United States to defrauding his investors of US$90 million.

But you don't have to be investing big money to get scammed - scammers sell their fraud in bulk.

crypto scams that begin as romance scams

Last June, a report from the Australian Securities and Investment Commission (ASIC) reported a rise in cryptocurrency scams from March to May 2020 of 20% year on year.

They noted that "offenders are difficult to catch and money lost on bitcoin scams can be difficult to recover, especially when offenders operate outside of Australia and all contact has been online."

"Many cryptocurrency scams begin as dating and romance scams," the Australian Competition and Consumer Commission (ACCC) tells Money.

Such scams are referred to as romance-baiting.

"Victims form a romantic connection with a scammer via dating sites and are then lured into investing in fake cryptocurrency investment schemes."

The ACCC says investors should be wary of news articles featuring celebrities spruiking a product of service. Almost certainly, celebrity photos or their likeness have been used without their permission.

"In 2020 we saw a new trend of people receiving SMS messages with links to fake ABC news articles promoting cryptocurrency investment scams," says the ACCC, but "these did not necessarily involve celebrities."

If it seems too good to be true, it probably is

Crypto scams often work by initially purporting a profit, and this initial 'profit' may even be returned to you in the hope you will double down with an even bigger investment.

"It may only be apparent that these profits are fake when you ask to withdraw larger portions of your funds or profits," says the ACCC.

"At this point, scammers may either disappear and stop all contact with you or may demand that you invest more money in order to access these funds."

If you're thinking about investing in cryptocurrency, it's always best to seek professional advice first.

You can check if a financial advisor is registered via the ASIC website.

"Remember, even if you found and initially expressed interest in an investment opportunity, this doesn't necessarily mean it is legitimate," says the ACCC.

The Moneysmart website contains a list of companies you should not deal with.

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David Thornton is a journalist at Money magazine. He previously worked at Your Money, covering market news as producer of Trading Day Live. Before that, he covered business and finance news at The Constant Investor. David holds a Masters of International Relations from the University of Melbourne.
Comments
Helen Goodfellow
February 14, 2021 9.21pm

I received an email concerning trading in Bitcoin. Following a phone , I paid $250 to start the account on my credit card. Alarms bells started ringing when I was told a financial advisor would call from the U. K. at a certain time, being 6 pm. I decided not to take the call.

I received a "Declaration of Deposit form which I had to sign & return. I didn't. It was from TradeLax. They also wanted all my details , drivers licence, or passport, etc.

Many phone calls from mobile phones ensued, I declined to answer. I then received an email fromCorey Gray

again asking for me to sign. I replied that I had decided not to proceed as I thought it was a scam.

I contacted my bank to ask them to stop the authorisation. They stopped any further payments on my MasterCard and I now have a new card. I doubt if I will receive a refund from TradeLax. The amount converted to $329.68. Please advise if this is a scam. Many thanks.

Helen

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