FBI Seizes $112m From 'CryptoRom' Criminals
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The US Department of Justice (DoJ) has seized six crypto currency wallets believed to have been used to launder the proceeds of investment fraud scams of virtual currency worth an estimated $112m (£90m) linked to crypto-currency investment scams.
Scammers have been using accounts to launder funds acquired via crypto-currency confidence scams, called “CryptoRom”.
The schemes involve fraudsters cultivating long-term relationships with victims online to coax them to make crypto-currency investments. The catch is that the transferred funds end up in the swindler’s pockets while the victim is abandoned.
Judges in Arizona, California and Idaho authorised seizure warrants for six virtual currency accounts that prosecutors say were used to launder proceeds of the various frauds after they were socially engineered into investing their savings in dodgy digicash schemes. “According to court documents, the virtual currency accounts were allegedly used to launder proceeds of various crypto-currency confidence scams. In these schemes, fraudsters cultivate long-term relationships with victims met online, eventually enticing them to make investments in fraudulent crypto-currency trading platforms.
“In reality, however, the funds sent by victims for these purported investments were instead funneled to crypto-currency addresses and accounts controlled by scammers and their co-conspirators,” says the US Department of Justice news.
"In this case, the FBI Phoenix Division has identified at least 69 victims with an estimated loss of at least $33.9 million related to these various fraudulent investment platforms," according to the California court document.
The scheme often involves faking a romantic interest in the victim, earning the scheme the title of “crypto-currency romance” or “CryptoRom.”
“These particularly vicious frauds, where scammers carefully cultivate relationships with their victims over time, have devastated families and cost individuals their life savings,” Assistant Attorney General Kenneth Polite said.
The hacking scam criminals create a relationship with their victims over a number of months and gradually scammers introduce the idea of trading in crypto. Initial “investments” are often small, so as not to spook the victim. The criminals later connect the victim to a fake investment website, promising profitable returns and then the money invested goes directly into the pockets of these cyber criminals.
Only when the victim decides to withdraw a big sum do they realize the whole thing is a scam. Often they’ll be told to pay an exit fee or taxes to gain access to their accounts, which also goes to the scammers. According to the FBI’s Internet Crimes Complaint Center, investment fraud is the most common scam, totaling $3.31 billion in losses in 2022, a 183% increase from 2021.
US Dept. of Justice: I-HLS: The Regsister: Cybernews: International-Adviser: Infosecurity Magazine:
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