FBI El Paso warns against rising cryptocurrency scams

El Paso News

EL PASO, Texas (KTSM) — Cryptocurrency is a legitimate currency that the FBI El Paso Division says is being manipulated by criminal enterprises to launder and steal money.

Scammers are leveraging the financial decline and uncertainty caused by the pandemic that coincides with an increase in cryptocurrency exchanges. 

But, what is cryptocurrency?

Paul Davis, Cyber Supervisory Special Agent at the FBI El Paso Division, explained that cryptocurrency is a long string of numbers called a blockchain that is exchanged between users for a specified value that is independent from governmental interference.

“It’s a peer-to-peer currency that individuals can share and exchange things of monetary value without having a government agency like a bank or government-backed entity with that,” said Davis. 

The FBI reports that people of all ages are being targeted for cryptocurrency-related fraud schemes because it does not require a bank account and the process is user-friendly.

“Right now, there are more than 5,000 cryptocurrencies being traded on the exchange. These currencies combined probably have a combined value of over $200 billion,” said Davis, noting the many different opportunities for criminals to defraud people using the complex cryptocurrency exchange system.

Moreover, the FBI says many traditional financial crimes and laundering scams are being performed using cryptocurrency. Davis explained that part of the appeal of using cryptocurrency is utilizing “hot wallet,” which acts as a digital wallet connected to the internet.

A “cold wallet” is not connected. “So let’s say you take your blockchain of many — many — maybe thousands of numbers, said Davis, “and you put it on a hard drive so it’s safe.”

The value of cryptocurrencies is highly volatile, which leads to many fluctuations in the market.

“The valuation can change rather highly, which is what we say recently with Bitcoin,” said Davis.

Bitcoin reached its highest valuation — with one coin being valued at $65,000 — and then plunged in value to $30,000 per coin, causing a 30-percent dive in value. The decline wiped out Bitcoin’s benefits after Tesla announced it would be buying $1.5 billion in cryptocurrency. Bitcoin wasn’t the only cryptocurrency to spiral last week, with Ether down more than 22 percent and Dogecoin falling 25 percent.

The volatility of the value creates an apt breeding ground for scammers to lay their traps.

To protect yourself from cryptocurrency scams, the FBI offers the following recommendations when making cryptocurrency exchanges:

  • Verify the vendor/charity is legitimate before making the payment
  • Do research on potential investment opportunities
  • Never use your personal bank accounts for a work-from-home business activity or give your bank information to anyone not named on the account
  • Contact law enforcement before paying out any blackmail or extortion attempts and before converting any money into cryptocurrency

The FBI has a team dedicated to preventing and fighting cryptocurrency fraud and laundering schemes. To report fraud or suspicious activity, click here.

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