US law enforcement agency, the Federal Bureau of Investigation (FBI) is warning people to be brace for increased criminal activities involving the use cryptocurrencies. In the particular, the FBI is advising people to be on the lookout for an increase in cryptocurrency fraud schemes related to COVID-19
The call comes as the world is struggling to contain the COVID-19 virus with the drastic measures adopted seemingly failing to stop the growth rate of new infections. Some people have lost their jobs while others are now working from home. In the meantime schools and non-essential businesses remain shut.
The increased number of people confined to their home as a result has provided an opening for cyber criminals who seem to target everyone from the young to the elderly.
In a statement, the FBI said: “Developments in cryptocurrency technology and an increasing number of businesses accepting it as payment have driven the growing popularity and accessibility of cryptocurrency.
There are not only numerous virtual asset service providers online but also thousands of cryptocurrency kiosks located throughout the world which are exploited by criminals to facilitate their schemes. Many traditional financial crimes and money laundering schemes are now orchestrated via cryptocurrencies.”
Home confinement and government imposed lockdowns have inadvertently increased the appeal of cryptocurrencies. Proponents for the adoption of digital currencies have seized on this opportunity created by COVID-19 fallout to encourage greater use of these alternative currencies.
As blockchain advocates tout the potential of this technology in helping to ensure a fair and corrupt free distribution of donor funds, criminal syndicates are using the same cause as a smokescreen to advance their agendas.
According to the FBI, scammers posing as employers may ask unsuspecting people to accept a “donation” of funds into their bank accounts and then proceed to deposit them into a crypto kiosk.
However, often the reality is that the so-called donations are likely to be stolen money and the conversion to cryptocurrency is done to obfuscate their final destination. FBI is warning those accepting and transferring such stolen money of the implications of acting as an illegal money mule and the potentially unlicensed money transmission.
Criminals are also using Ponzi schemes disguised as a new investment or the development of a unique cryptocurrency, which must be financed by an initial coin offering (ICO) or any other investment vehicle to take a victim’s money. Investors are thus warned to be wary of investment promises that seem “too good to be true”.
Although there are legitimate charities, investment platforms, and e-commerce sites that accept payment in cryptocurrency warns that undue pressure to use a virtual currency should be considered a significant red flag.
The FBI is also giving the following tips regarding finances and cryptocurrency and how you can better protect yourself from fraud:
- Verify that a vendor/charity is legitimate and accepts cryptocurrency before sending payments/donations.
- Conduct extensive research on potential investment opportunities.
- Do not use your personal bank accounts for work-from-home business-related activity or provide your bank account information to someone who is not named on the account.
- Contact law enforcement before paying out blackmail and/or extortion attempts and before converting your money into cryptocurrency to pay them.