Texans Are Losing Millions to Internet, Cryptocurrency Scams

Texans Lose Millions to Crypto Scams

Bezalel Eithan Raviv, co-founder of the blockchain analysis firm Lionsgate Network, calls cryptocurrency scams a national crisis. His advice? Trust no one.

Bezalel Eithan Raviv is the co-founder of Lionsgate Network, a blockchain analysis firm in Israel. The company helps governments, corporations and individuals around the world go after malicious crypto funding or recover lost funds. He said recovering money from crypto scammers is hypercomplex.

“It’s like when you break an egg,” Raviv said. “Everything was contained beautifully before. Once you broke it, ask me to bring it back together. It requires skills.”

One of the most recent crypto scams Raviv could recall came out of Dallas. A Dallasite got tricked into pressing a link for a supposed moneymaking campaign. “Everyone wants to press those today with inflation, prices are high, people need more money to end the month,” Raviv said. This Dallasite was asked to invest as little as $250 into what Raviv called “a clean cut dummy platform,” a fake platform for trading cryptocurrency. “He was seeing profits, incredible profits, on the screen, not knowing that it’s all smoke and mirrors.”

The Dallasite eventually saw through the scam, but only after throwing $500,000 into the fake platform. “That was everything he had,” Raviv said. “That is incredible, but it’s not original.”

According to the FBI internet crime report last year, cryptocurrency investment scam losses rose from $2.57 billion in 2022 to $3.94 billion in 2023. “These scams are designed to entice those targeted with the promise of lucrative returns on their investments,” the FBI report said. In 2023, the FBI received 43,653 complaints about crimes involving cryptocurrency. Another 25,815 complaints concerned cryptocurrency wallet crimes. The FBI report does not break down crypto crimes by state but it found that Texans sent in more than 47,000 complaints related to internet crimes. They amounted to over a billion dollars in losses for Texans, according to the report.

Even worse, Raviv has heard stories of people who hired recovery firms that turned out to be scams themselves. “What we see here is basically a huge operation of financial terrorism around the world that has two main motives,” he said. “One is for profit and the other is actually nations going after tier-one countries, such as the U.S., the UK, Australia, Germany, France. So, basically, we’re seeing that there is, behind the scenes, a lot of the crime in crypto; its birthplace are countries that are of the triangle of China, Iran and Russia. So, there’s more to it than the eye actually meets.”

Raviv said the company also works with police departments on cases involving crypto. “They basically consider crypto as a big headache because of the anonymity around it,” Raviv said. “So, basically, they relinquish the cases very quickly after they’re being reported. And we kind of help to be that middle company, middle person, to offer the evidence, which will basically get them to act on behalf of our clients.”

Jesse Carr, a spokesperson for the Dallas Police Department, said its financial crimes unit investigates all cryptocurrency scams that are reported to the department. “The unit works closely with federal partners to thoroughly investigate these types of cases because many times they can cross state and federal jurisdictions,” Carr said by email. “Since January 2023, the Dallas Police Department has investigated about 30 cases specifically involving cryptocurrency.”
Raviv said crypto scams can be broken down into four kinds: fake trading platforms, pig butchering scams, wallet hacks and fake recovery services.

“So, in fake trading platforms, we have dummy platforms,” he explained. “Basically you would call yourself, I don’t know, any name like Incredible FX, right? And you will invite people to make money, but there will be nothing behind this. You will not really be trading in the market.” There are also proxy platforms that will mimic popular existing trading platforms but with just a slightly different domain name.

Next are pig butchering scams. According to Time magazine, these get their name after the practice of farmers fattening hogs before slaughter. They may involve phishing people on social media or via text and tricking them into making fake crypto investments.

Wallet hacks involve scammers using malicious smart contracts to withdraw money from any of your digital wallets. Lastly,  fake recovery services are exactly what they sound like. You’ve lost money to a scammer and found a company that supposedly can help you get it back. Well, joke’s on you — that company’s a scam, too, and you’re not getting the money back that you paid them.

Oftentimes, police don’t know how to handle crypto scams, Raviv said. Because of this, the scams may go underreported. “We’re receiving the cases, and we’re filtering the numbers, and we’re getting very different numbers,” he said. According to Raviv, only one of 16 people will report a crypto scam case to the police. “This is the biggest struggle for real recovery services, that fake recovery services and all the other scammers out there enjoy the fact that law enforcement are not doing their job,” Raviv said. “The only victim here is the citizen because there is a crime here that is not being attended to.”

He called crypto scams a nationwide crisis. “We’re talking about an incredible threat, and we’re seeing, basically, lack of movement in addressing such a huge problem,” Raviv said. “We really want to blow our horn to say something is going very, very wrong here.”

Read more at Dallas Observer

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