Surge in Online Dating Scams: Exploiting Trust for Cryptocurrency Fraud
Summary:
The article highlights the alarming rise in online dating scams, specifically those involving cryptocurrency. As the online dating industry is expected to reach $3.1B in 2024, romance scams are quickly becoming a significant concern. Authorities note that these scams exploit trust and fabricate relationships, with victims collectively losing over a billion dollars, with $1.3 billion reported in 2022 alone. It also mentions the concerning trend of "pig-butchering" online fraud schemes, which are proving costly for US victims through fraudulent cryptocurrency-related investment tactics.
Amid the romance of Valentine's Day, it serves as a stark reminder that love-seekers can often fall prey to scams. With the prediction that the digital dating industry will reach a net worth of $3.1B in 2024, and an estimated 440 million individuals to participate in online dating by 2027 per figures from Statista, the concern is remarkable. Data from Binance, collected from its security and compliance department revealed an uptick in online romance scams recently, as observed by other security firms and analysts. According to Norton’s 2023 Cyber Safety Insights report, one in every four adults globally disclosed falling for an online dating/romance scam. The United States Federal Trade Commission counted in 2016, the number of complaints related to dating and romance scams was 11,235. This number has dramatically increased to around 70,000 complaints in 2022, resulting in losses of $1.3 billion for these love hopefuls. The U.S. Treasury Department's recent report reveals that even though cash continues to dominate global money laundering, in the domain of romance scams, crypto payments led to a 34% loss in the total reports. In 2023, Binance's internal data credentials estimated that 2% of the total reported cases were romance scams. Even this cautious figure implies an average loss of $14,000 per victim. Tigran Gambaryan, Binance's Head of Financial Crime Compliance, compared romance scam tactics to those employed by financial fraudsters, based on his prior tenure as a U.S. IRS investigator. He emphasized that these scams exploit trust and craft false relationships to achieve their deceptive objectives. Binance's global lead for intelligence and investigations highlighted several instances the Binance team were involved in handling. It included one case where a user lost $100,000 to a scammer they had met on Tinder, who over time extracted money from them. Another alarming case saw a person lose cryptocurrencies worth $500,000 to a scammer they met on social media, following months of building trust via direct messages and phone calls. Binance, in this case, aided law enforcement in recovering $200,000 of the victim's funds. The rapidly increasing "pig-butchering" trend of online fraud has been identified by multiple security firms and law enforcement agencies. Findings released by Sophos in January 2024, highlight that "pig-butchering" is rapidly becoming one of the dominant sectors of online fraud, costing U.S. victims billions of dollars through deceitful crypto-related investment schemes. Decentralized Finance (DeFi) applications and protocols are also increasingly deployed by fraudsters as a method of swindling their victims after gaining their trust. Scammers are exploiting these platforms to sidestep traditional roadblocks such as requiring victims to transfer funds. In this approach, victims need only to link a Web3 wallet to a rogue contract to potentially suffer a loss.
Published At
2/14/2024 5:00:00 PM
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