Financial scams involving digital currencies like Bitcoin are a growing component of the overall fraud universe that still involves gift cards, Western Union/MoneyGram, money orders, and bank wires.
Scammers are looking to say and do anything to convince you of a urgent need to pay through Bitcoin, and they will often “helpfully” point out nearby ATMs where you can follow their commands.
Scam artists like Bitcoin because transactions cannot be cancelled, reversed, or otherwise refunded once made.
Athena receives numerous reports of fraud per month, so we want to share much of what we’ve learned to look out for when it comes to Bitcoin, digital currency, and physical cash kiosks.
Warning: Scam artists can spoof or fake ANY telephone number or email address they want!
Do NOT rely upon caller ID at all to determine who is calling.
A pop-up message will appear on your computer telling you that it has been hacked and you need to call a Microsoft (or Apple / Google) support number for assistance. The pop-up is often accompanied by a loud warning sound.
DO NOT CALL ANY NUMBER THAT APPEARS IN A POP-UP!
Scammers place these messages on victim’s PCs and tablets in the hopes that they will call the scammer impersonating a major tech company. The scammer will often have you download remote access software that can potentially view and access anything on your PC, including bank accounts. Ultimately, the scammer’s goal is to convince you that something is wrong with your bank and ask you to withdraw physical cash to “secure it” through a Bitcoin ATM. Often multiple scammers are involved in each incident impersonating the tech company and an agent from your bank.
The solution to this one is easy: Always call out to your bank using the number on your bank statement or visit a branch of your bank in person to verify the situation! Bank personnel will never call you and ask you pull out cash.
Seek professional computer repair services to remove any malware on your PC, tablet, or phone.
Someone pretending to be from your utility company (usually electric) will call or email you to claim you are late on a bill. They will then threaten to shut off your electric or other utility service if you don’t pay immediately in bitcoin.
Just HANG UP, take a breath, and find the number for your actual utility company who you may call for the real status of your account.
Scammers count on you being panicked and willing to follow their direction without question. Don’t talk to them and don’t call any numbers they give you. Refer to your utility bill or website for actual contact information. See also: www.utilitiesunited.org
A very common form of the impersonation scam is where you will receive a call supposedly from a government agency. This could be the Social Security Administration, U.S. Marshals, FBI, Department of Homeland Security, Immigration and Customs Enforcement, local police, and more. The scammers will often tell you that you are in trouble and are about to be arrested, or that you are connected with criminal activity and you need to help them clear your name / SSN.
Regardless of the setup, the scam always ends with you taking cash out of your bank and putting it into a “government kiosk” (really a Bitcoin ATM). The perpetrators often have another scammer call you pretending to be a different person to “confirm” the fraud.
This particularly awful fraud has impacted many…. JUST HANG UP and block the number that is calling you. Call out to or visit someone you trust, instead, for support and advice!
Again, never send bitcoin to anyone pressuring you to do so.
Some government scams take the form of demands from the IRS to pay debts owed. The scammer can contact you through any communications method, including phone calls. This type of scam can be potentially very costly for the victim, including a high risk for stealing sensitive personal information. The scammer may threaten you and will sometimes provide details to pay via bitcoin.
Of course, Uncle Sam does not yet accept bitcoin. Never pay supposed IRS debts via an ATM!
This is any situation where you are receiving money from someone else (physical cash, personal or cashier’s checks, bank-to-bank transfers, Venmo/Paypal, bank-to-bank transfers) and purchasing bitcoin on their behalf. This may also involve a “cut” or fee that you get to keep yourself for your “service”.
This situation is highly dangerous and will subject you to further prosecution for participation in money laundering. The likely reason someone would pay you to purchase bitcoin for them is because they want to obscure the source of past theft, fraud, or other criminal behavior.
Do not help them!
Relationship scam: Victim believes they are in a relationship with someone they either rarely meet or never meet and is often in another country. Scammer asks them to help pay for urgent expenses, including costs of traveling to see the victim, equipment for a business, customs fees, medical bills, and so forth. Bitcoin is especially applicable here since it is often used for cross-border payments. Unfortunately, relationship scams can go unnoticed for quite some time and result in a devastating betrayal.
Grandparent scam: Victim is contacted by a supposed relative, often a grandchild, cousin, niece, or nephew who needs bail money or is otherwise in urgent trouble. After briefly describing the problem the scammer cuts off communication except for payment instructions, intending to panic the victim. This scam particularly impacts the elderly. We would suggest taking your time and verifying the story with other relatives before sending any money.
If it sounds too good to be true, it almost always is!
Social Media (Facebook, Instagram, Tiktok, Twitter, Discord, Telegram, etc.): Victims are contacted by “friends” through social media platforms and told about high earnings through some investment site / app or via a particular investment advisor. The “friend” accounts are often hacked, and the scammers target everyone connected to the hacked account. Other solicitations may come through direct messages that allow one-on-one conversations. Scammers direct you to send money – often via digital currency – to a third-party or to a legitimate-looking website. You may even be able to login and track your “earnings” on this website, but the entire thing is fake. As soon as you request a withdrawal, the website will request payments of fees and taxes using new money. Many would-be investors end up paying these fees and wind up losing even more money.
Always call your friend to verify any investment situation and never allow social media ads or direct messages to strongly influence your investing decisions.
Ponzi / Pyramid schemes: Victims will see ads for investment programs promising unusually high rates of return. Claims are often made to behind-the-scenes forex or digital trading. Many also advertise their own new token as being a “better Bitcoin” where you can get in on the ground floor–the implication being that it will, too, experience Bitcoin-like rates of explosive growth. Unfortunately, virtually all of these are scams. The investment principal from later investors are used to pay out the earlier investors until the whole scheme collapses. One of the biggest warning signs are promises to pay a specific percentage of earnings daily or weekly. Pyramid schemes are often tacked on in the form of referral bonuses. They rely upon ever expanding downstream networks of distributors to promote the scheme and are also doomed to collapse.
Bitconnect is a famous example of a Ponzi and Pyramid scheme from 2017/18 whose token lost 99% of its value following state regulatory pressure (1,2,3). Other notable scams include Onecoin, Gladiacoin, and USI-Tech.
Ponzis will always exist in one form or another and wreck many naive investors’ lives. Don’t let it happen to you.
Check cashing scam: This category also includes fake jobs or interviews. Someone remote will offer to pay you via check (sometimes other forms) and expect you to send bitcoin to another destination for some believable reason. Excuses include sending money to clients, purchasing a wardrobe, or paying for transportation. Not only is this potentially money laundering, but most likely you will see the original check bounce and only you will be responsible for the lost cash or bitcoin. In short, if someone is sending you money just so you can send money somewhere else, be very suspicious.
Advance Fee scam: Someone contacts you to tell you that you’ve been awarded a grant, lottery winnings, or are due to receive an inheritance. The scammers often impersonate governments or lawyers. To receive this award, you have to first send bitcoin through an ATM to pay for the “processing fees” or “taxes”. The scammer will then disappear and leave you high and dry. Never pay governments or lawyers via Bitcoin / digital currencies, especially if they are promising you something or contact you out of the blue.
These are listings for “great deals” on typically high-value items on Craigslist, eBay, OfferUp, Amazon, and other places where individuals can post ads. They are most likely selling….
Apartment rentals / down payments: Scammers either point to legitimate listings on Airbnb or other listing sites, create copycat websites that look like these sites, or possibly create their own fake listings just to lure people into a conversation outside of a legitimate rental website. Once the victim communicates with them the scammer will give the victim instructions via email or some other channel to pay for their “reservation” or “down payment” with bitcoin. We’ve also seen EasyRoommate and HomeAway affected by this.
Tickets for concerts or other events: Scammers will list on Craigslist or other individual ad sites fake or non-existent concert tickets sold for bitcoin. As is usual in these cases, the scammer will just disappear, and you will be out hundreds of dollars. We’ve seen theme park tickets also the subject of this scam.
Used cars / eBay Motors scam: The scammer will post a used car for a very low price on Craigslist, reusing photos and data from some older or legitimate listing elsewhere. The scammer will often tell a personal story involving the death of a family member or military deployment forcing them to sell the car. They will also promise to ship the car to the buyer, offering no way to meet in person. What’s worse is that they will go to great lengths make their emails look real, but the car doesn’t exist, eBay has no knowledge of it, and the victim will simply lose their money.
eBay, Amazon, Airbnb, Ticketmaster, and many other major retailers DO NOT yet accept bitcoin!
…and if they did, they would do so only through their own secure websites.
Unsure about a payment? STOP! …and give us a call (312-690-4466) or message. We can’t determine if your destination is legitimate, but we can help you assess the risk that it may not be. Likewise, anyone can call out to the AARP Fraud Watch helpline for advice and support: 877-908-3360 (Mon-Fri 7:00 am – 11:00 pm ET)