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How do fraudsters use Bitcoin and steal savings from unaware users? –

In the media, Bitcoin was the loudest in two moments. When its price reached $ 20,000 in 2017 and then collapsed sharply, and later when you had to pay $ 40,000 for 1 BTC in January 2021. Cryptocurrencies led by Bitcoin are innovative technology and extraordinary prospects for the future of the economy. This future usually does not tempt with its foundations – decentralization, openness and privacy. Much more attention is drawn to promises of great profits in a relatively short time.

BTC price change in dollars, 2013-2021, source: Coinmarketcap.com

Bitcoin scammers

There have been numerous educational campaigns, press articles and media programs about cryptocurrencies as highly volatile assets. In most cases, these materials caution against investing all their savings in assets over which no one controls directly. Ultimately, everyone has the right to make the decision to invest in Bitcoin on their own.

The growing popularity of cryptocurrencies and the myths that Bitcoin can be “earned well in a short time”, apart from investors, also attracts another group – scammers who, under the cover of investing in Bitcoin, will at all costs try to extort money from people blinded by the desire to profit.

Fraud comes in all sorts of forms. Sometimes these are threatening emails, messages from the “customs service”, letters asking for funds to be sent to a given BTC address, referring to celebrities who earn on cryptocurrencies, and even – direct phone calls of fraudsters who pretend to be employees of a company that trades YOUR Bitcoin .

On the pages of , we described the patterns of the most popular cryptocurrency scams and scams. This article explains how internet liars and telephone liars who want to get rich at your expense work. In the last part, we will tell you how you can verify that a given bitcoin platform is safe.

Cryptocurrency is digital money

Bitcoin is a cryptocurrency. What does it mean? Cryptocurrencies (or digital currencies) are digital money whose transactions and bills are confirmed and registered by users who provide the computing power of their own equipment (computer or dedicated equipment, so-called “cryptocurrency miners), and not on the central monetary authority – as in for traditional currencies (PLN, USD, EUR). To put it simply, cryptocurrencies are a type of payment instrument that does not have a material counterpart (cash), and is not subject to the central authority controlling transactions (they are encrypted and automated). Hence – transactions are, in principle, anonymous. To transfer cryptocurrencies, “wallets” are used – special “accounts” from which we (and only we) can trade. Wallets, however, unlike bank accounts, are not assigned to specific people. Each bitcoin wallet has its own unique address, the owners of which can remain anonymous. To create a bitcoin address, a simple application is enough, in which we do not have to provide any private data (which is why we say that bitcoin is private money).

Privacy – a double-edged blade

Technically, it is privacy, anonymity, and the lack of central control over funds that are most remarkable about Bitcoin. For the first time in history, we use digital money, which, as users, we can control 100% thanks to our wallet (in the form of an application on a computer or so-called hardware wallet. BTC privacy and technicalities present a number of benefits. The cryptocurrency network always works – for a small fee we can make the transfer at any time, and the addressee of the transaction may be located anywhere in the world.

In addition, only the person who has the “password” to the secured wallet has access to the funds. No bank, court, or any central authority has access to your funds – until you share your private key (i.e. an alphanumeric string associated with only one specific wallet). Bitcoin transactions cannot be canceled – thus you cannot withhold or reverse payments. This eliminates, among others the problem of the so-called “Chargeback”, i.e. the possibility of withdrawing payment for purchases, which happens in the case of payment cards and is a pain for e.g. owners of online stores.

An example transaction concluded on a Bitcoin blockchain – pay attention to the wallet addresses, one of them is anonymous.

Snacks for cheaters

The above elements bring numerous benefits to ordinary users who operate in the cryptocurrency environment on a daily basis. Unfortunately, the benefits of BTC in the wrong hands can also be used for scams and scams. Due to the fact that the transaction cannot be reversed, scammers convince their victims to transfer BTC funds to their wallets. Cryptocurrency wallets are not assigned to specific people, so after making a transfer, it is very difficult, and often impossible, to identify the addressee. That is why cryptocurrencies are so eagerly used by fraudsters and to make transactions on the black market. Many times, however, cryptocurrency scammers do not even use Bitcoin for their scams – they just need made-up, imaginative stories that you can easily earn a lot. Below, we present you some of the most popular tricks used by fraudsters to make you aware of the risks, avoid mistakes and warn your loved ones (so that they too are safe and not fall victim to fraudsters).

Threat emails

Cryptocurrencies are intended to protect our privacy. Personal data of each of us, such as telephone number, name and surname, relatively often fall prey to hackers attacking databases of various companies. In this way, sensitive information about us and our loved ones can fall into the wrong hands.

In December 2020, Ledger – one of the world’s largest companies creating specialized hardware cryptocurrency wallets, fell victim to hackers. Marketing databases of their customers (e-mails, telephone numbers) leaked onto the web. Soon after, people whose details were on Ledger’s lists began to receive disturbing news:

“Theme: FUNERAL
Subject: Customs and Revenue Service THIRD ATTEMPT TO CONTACT
Content: Hello, I found out from a reliable source about your crypto savings.
I live in the same city as you and I know your home address.
I can make a seizure with the guys at any time and attack you either
your family. Don’t count on home security, it won’t be mine
the first break-in. Nor will you be the first death toll.
For about PLN 1000 to the address provided, we can forget about the whole matter. Of this
what I see you have a lot of savings so it won’t be a problem.
You have 48 hours to make a deposit or you will have blood and you will be
an example that sometimes it is better to pay than to ignore the message.
Bitcoin address: bc1qhhyqc64am094c2huvrhka2r4mr8kg5chzmwavz
The clock is ticking…”

“Hello. [imie nazwisko]
I know you are a cryptocurrency holder! I also live in Krakow and I know you live [poprawny adres]
You are getting ready to break into your house and rob you of everything when you don’t expect it.
For only $ 500, I offer you that we will leave you and your family alone this Christmas.
Health and peace of mind is more important than a few $, don’t you think?
BTC: 1DiTEqgSqYmEhsaVkNiovuTACpor8WtfaH
ETH: 0x098a51560aeBD7E09Baab1690D95b0c11E6A6edb
You have until tomorrow. Send confirmation in the feedback message.
Remember that we are watching you. Don’t even think about going to the police with it. “

However, similar messages end up in user mailboxes not only after this particular hacker attack. In such situations, the most important thing is to remain calm. It is worth contacting the police.

Telephone scammers

“In connection with the failure to comply with the pre-authorization procedure, I inform you that, in accordance with the provisions of the Act of March 1, 2018 on counteracting money laundering and financing terrorism, your funds in the amount of 2.1 BTC after August 7, 2020 may be subject to the decision of the National Revenue Administration. forfeiture to the Treasury. “

The telephone consultant of Bitcoin Investment Group begins the conversation with these words. In the middle of the day, we receive a call from an unknown number. The man on the other side of the handset informs us that, as a result of registration on a certain internet portal, two years ago, we joined the partner program, in which our bitcoins are traded by Bitcoin Investment Group sp.z o.o. (which of course does not exist). The “consultant” will inform us that the funds accumulated for 2 years can be withdrawn under certain conditions. At this point, we are asked to perform one of the steps – log in to the bank after installing the tracking software on the computer or enter the card number on the website of a fictitious cryptocurrency exchange office. As a result, we give fraudsters access to our bank accounts from which they can steal our money. Matchmakers can be so brazen that they try to contact us several times until they are successful.

In order not to get bogged down by these kinds of tricks, it’s best to figure out how they work. Below we publish recordings of conversations with representatives of telephone scams. Unfortunately, when browsing online bitcoin forums, we will find out that many people have been harmed in this way.

Fraud on celebrities

Szymon Hołownia, Kuba Wojewódzki, Maciej Orłoś … and many others. One of the popular techniques of influence is the claim of authority. Internet scammers often use the image of celebrities and important personalities to trick people into transferring their funds to specified bitcoin addresses. However, they more often redirect users to the websites of fictitious cryptocurrency exchange offices, where they extort payment / credit card numbers.

scammers

These types of links are most often found on social media. They are often posted on Facebook via fake accounts. They also often find their way to us in private messages sent to us by friends who most likely clicked the sinister link themselves. The link may also appear on social media as an advertisement, pre-authorized by Facebook. Therefore, every time we see a message trying to convince us that there is “one simple way to earn a million zlotys on bitcoin” and Szymon Hołownia (or another famous figure) will show us … do not believe it.

Financial pyramids, false platforms – how to defend yourself?

We should also mention all sorts of other “bitcoin” scams that we can meet on the web. Since there are plenty of shady investment offers, it is difficult to present them all in one article. First of all, we should pay attention to several factors each time:

  • If we are contacted by a stranger who tries to persuade us to join a financial program or to persuade us to invest in cryptocurrencies as part of an “investment group”, we should be vigilant. These people often promise large profits in return for “comfortable working from home”. The sentences about “financial freedom” and “earning money on the Internet” are the slogans we will most often be confused with. In practice, we will be persuaded to engage in an investment program, which is most likely a simple financial pyramid.
  • Investment offers often redirect us to websites that legitimize the tricksters. These pages tend to be moderately optimized, chaotic, and feature “directors” characters that convince us to invest in a given platform.
  • When verifying this page, we will often see that the people presented are practically not online and their platforms are on the warning lists KNF and UOKiK.
  • Also note in which country the project is registered. These “shady” ones very often run away to tax havens.
  • Every time we come across a new “investment project” related to cryptocurrencies, it is worth doing some basic research. Visiting the websites of UOKiK and the Polish Financial Supervision Authority will help us verify whether a given project is considered potentially harmful to investors. This way, you can avoid being pulled over by “companies” like FutureNet (FutureAdPro), Netleaders (DasCoin). The above are defunct financial pyramids that have stolen millions of dollars worth of funds.
  • When you start your adventure with cryptocurrencies, try to use large and popular services with a good reputation among the community. If you choose a cryptocurrency exchange – let it be a large entity that has been operating on the market for many years. However, even this is not always enough. The history of the collapse of the popular cryptocurrency exchange Bitmarket had a famous echo in Poland.

Prosecution of criminals

Since there are so many cheaters, why are they so hard to catch? In the case of cryptocurrency scams, catching criminals is not that easy. Very often, organizations conducting such activities protect themselves very well. This is often due to the previously discussed features of cryptocurrencies – privacy and anonymity. The police have only limited tools and possibilities to prosecute criminals. The insufficient level of cryptocurrency regulation in Polish law is also a gateway to organizing various abuses.

In the present reality, each of us should ensure the safety of ourselves and our loved ones. As people familiar with the cryptocurrency environment, the team encourages sharing knowledge and supporting people who are not familiar with the functioning of Bitcoin and other digital currencies. They are very often elderly, especially vulnerable to the actions of fraudsters.

If you suspect that someone is trying to cheat you, you can turn to entities that operate in the Polish cryptocurrency space for help. We recommend contacting the Polish Bitcoin Association, the Blockchain and New Technologies Chamber of Commerce and the editorial office.

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