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The Almighty Buck Crime

Crypto Fraud is Growing Exponentially (yahoo.com) 86

Posted by EditorDavid from the borrowed-apes dept.
The Los Angeles Times reports on "a massive surge of criminal fraud that has been pummeling crypto users with unknown billions of dollars in losses with little relief in sight." The growth in crypto fraud has turned exponential in recent years. The reported losses from crypto scams in 2021 were 60 times larger than in 2018, the Federal Trade Commission reported earlier this month, with crypto now accounting for 1 out of every 4 dollars lost to fraud in the reports monitored by the agency. Over 46,000 people lost more than $1 billion in crypto to scams since 2021, but the real sum of losses is likely vastly larger because most frauds are not reported, the agency said.... "Since 2021, $575 million of all crypto fraud losses reported to the FTC were about bogus investment opportunities, far more than any other fraud type," the agency reported.

Financial losses specifically from NFT crimes just through May this year were already more than 600% higher than for all of 2021, with the space seeing twice as many hacks and bigger and bigger heists, according to analysis from digital privacy firm Top10VPN.

For many victims, there's little hope of getting their lost art back. The marketplaces where NFTs get sold — crypto exchanges — can't cancel or reverse fraudulent transactions the way a traditional bank or credit card company might; the whole point of crypto was to cut out these sorts of financial middlemen, which many crypto fans greatly distrust. Crypto technology was built out of a "libertarian ethos" in which "there's no nanny state that's going to take care of you," said Jeremy Goldman, an intellectual property attorney who specializes in legal issues involving crypto assets. "These are the consequences when there's a mistake ... there's no one to unwind it, you can't call customer service, you can't go back to the mothership, you can't go back to the bank."

But at the same time, law enforcement agencies in the U.S. have also shown a growing willingness and ability to mount sophisticated investigations into crypto fraud.... [I]n March, federal agents sought a court order to seize roughly $165,000 worth of Ethereum in a digital Binance.US wallet. Officials said the cryptocurrency had been stolen from an Orange County investor, nicknamed "P.M.," who got tricked into giving up his coins by an fraudster pretending to be a Coinbase technical support representative.
On the bright side, BuzzFeed notes that actor Seth Green has recovered his prized Bored Ape NFT from "Mr Cheese" for $297,000 worth of Ether.

But the Los Angeles Times points out that another victim of a Bored Ape heist has sued the creators of Bored Apes. Their lawyer argues the company "refuses to police their own community. They're the gatekeepers, they can lock out the thieves if they wanted to, and they won't do it."
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Crypto Fraud is Growing Exponentially More

Crypto Fraud is Growing Exponentially

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  • Because the value of cryptocoins is decreasing exponentially.

    • Re: (Score:3)

      by shmlco ( 594907 )

      Yes, but which extreme will we hit first? One where every single coin is stolen ad infinitum... or the one where the value goes to zero...

      In which case why bother?

  • Scamable (Score:5, Insightful)

    by Retired Chemist ( 5039029 ) on Sunday June 19, 2022 @12:52PM (#62633912)
    Maybe scammers have caught on to the fact that crypto owners are easily scammed. After all they have already invested in what is basically a scam.

    • It's entirely a scam! The only justifiable, legitimate use of crypto is for political dissidents in totalitarian regimes, and even they barely use the stuff.

      • It's a terrible choice for that population as all crypto blockchains keep a record of every transaction back to the beginning of time. If you use crypto for political dissent you are basically outing yourself.

        • There are coin tumblers and such, but yes, cash and third parties are the way to go.

          • Re: (Score:2)

            by micheas ( 231635 )
            And the FBI has shown that they can trace money that is laundered through coin tumblers. (They revealed this ability in indictments in a child porn bust)

    • By buying "crypto", you are identifying yourself as someone ready and willing to be scammed.

    • Maybe scammers have caught on to the fact that crypto owners are easily scammed. After all they have already invested in what is basically a scam.

      And that crypto itself is the ideal medium for scamming.

      • And that crypto itself is the ideal medium for scamming.

        NFTs are giving crypto a run for its money in the scamming department, and the fact that NFTs and crypto go hand in hand is no accident.

    • Re: (Score:2)

      by AmiMoJo ( 196126 )

      Seth Green didn't "recover" his stolen NFT, he just bought it back from the scammer for over $100,000 more than he paid for it the first time. He's now spent almost half a million dollars on a JPEG.

      The message is clear. Crypto bros are both easy to scam and willing to throw good money after bad to get their stolen JPEGs back.

  • My expectation... (Score:4, Funny)

    by theycallmeB ( 606963 ) on Sunday June 19, 2022 @12:57PM (#62633928)
    I expect that the dollar value of crypto fraud is going to decrease exponentially in 2022, hopefully dropping so much someone can steal all of Bitcoin and not meet the threshold for a jury trial.

  • I find it amusing anybody believed that Seth Green's supposedly stolen NFT was anything more than a publicity stunt to promote his idiotic animated series.

  • Fake libertarians love Crypto. Real ones would object to yet another fiat currency.

    • Isn't any currency a fiat currency? Gold is only valuable because it's rare, and it's only a viable "currency" if your government says you can use it to pay taxes or fines, which makes it "fiat". If someone towed an asteroid with a mass of 10,000,000 metric tons into earth orbit and discovered it was 80% gold, what would happen to your currency?

      • The astroid will be cut to pieces and disappear, and the people involved in the asteroid recovery operation would be cut to pieces and disappear.

    • We all know the straight up real libertarians are those that embrace the Land Value Tax

      • Georgists aren't well-liked in libertarian circles. They demand a state; most libertarians believe a state should be optional.

        • Wouldnt that specifically be ancaps though? Most libertarians I have encountered preach minarchism, especially the American variety who usually just want small federal government

          Of course most libertarians seem unable to agree what a libertarian is, which is only natural.

          • Of course most libertarians seem unable to agree what a libertarian is, which is only natural.

            I think that's because, deep down, they know that they're just people who are disproportionately angry about having to pay taxes.

            • And that's why even though I was half joking I said the Georgists were the true libertarians.

              Pining for some zero tax stateless society is just as silly as the anarcho communists they love to make fun of so much.

              The theory that you could replace all taxes with a LVT does have some merit to it though, and it has the potential to draw in varied political beliefs. I think the libertarians are dead in the water for another few decades if they don't do something big like that, for those that actually care about

  • There is no honor among thieves.

    Actor Seth Green has recovered his prized Bored Ape NFT from "Mr Cheese" for $297,000 worth of Ether.

    This is utterly ridiculous and proof that this "marketplace" is not sustainable. For a market to succeed among patrons, it must have fidelity. Imagine if it was legal for a thief to break into a house and change the locks, which would then transfer ownership of the house to the thief. People will stop buying homes, not only because they won't have the means to protect them

    • "there's no nanny state that's going to take care of you" = wild west world where the most brutal organized criminals are in charge. Not sure why the lack of enthusiasm for crypto around here!

  • crypto in general is just one big scam. :-)

  • I thought with the collapse, it would finally be over, and now it's growing again?

  • He got the NFT back?
    Or was it marketing for his new show all along?

  • So what I take away from this (Score:5, Insightful)

    by Randseed ( 132501 ) on Sunday June 19, 2022 @02:15PM (#62634108)
    So what I take away from this is that scammers have finally figured out that anyone investing in NFTs is mentally challenged and bordering on stupid.

    • Bordering?

    • Re: (Score:2)

      by AmiMoJo ( 196126 )

      It's not just the investors. Many of the platforms that trade NFTs are hopelessly insecure. One scammer uploaded a load of counterfeit NFTs that had the little "verified" marker simply copied into the image itself, making them appear legit.

      I've noticed that one of the downsides of consumer protection and banking security laws is that people assume they are safe even when they are not.

  • Cryptocurrency is a very impressive technology because it manages to be a pyramid scheme, a ponzi scheme, an insider trading scheme,
    AND money laundering scheme. At the same time!

  • It was my (albeit limited) understanding, that one of the features of blockchain is that all transactions are perfectly recorded and verifiable across the network, so it would seem pretty difficult to scam people without getting caught. But at the same time most ransomware attackers request payment by crypto, so does this reveal a strange duality in the security aspect of the blockchain, or is it just false advertising?

  • Oh wow an industry with zero regulation (Score:3)

    by hsmith ( 818216 ) on Sunday June 19, 2022 @02:28PM (#62634140)
    and billions of dollars flowing through with no friction it is ripe with fraud? You don't say.

  • Anyone one since the inception of Bitcoin and other crypto, that got involved with it in any way deserves to lose what ever they payed into it, and then some. They did so for 1 of only two reasons⦠they are incredibly stupid and gullible, or patently greedy that was looking to scam someone else. In either situation they deserve to lose it all just as a way of reminding them how stupid they were. For those who got in, scammed the next greater fool and got out, they too should suffer⦠an

  • What is increasing exponentially is the chumps realizing they have been played.

    Crypto has always been a scam. Some criminals and tax dodgers were willing to lose a percentage to do money laundering. Their losses fueled the "profits" of the traders, which attracted lot more FOMOs and believers on the greater fool theory.

    The money launderers are realizing the limits of the operation, and criminals are realizing it is not as anonymous as they thought. The real identity behind the wallets can be traced, law

  • It's already pretend money (Score:4, Insightful)

    by Tony Isaac ( 1301187 ) on Sunday June 19, 2022 @02:42PM (#62634162) Homepage

    How much more "pretend" does it have to be before it becomes fraud?

    • How much more "pretend" does it have to be before it becomes fraud?

      If everything is unregulated, how can there be fraud?

      Fraud has a specific legal definition; and my understanding of cryptocurrency is that it wanted as much distance between itself and messy things like fraud as possible.

      Metere quod seminas.

      • "Fraud" may have a specific legal definition. But it also has a general, common definition. https://en.wiktionary.org/wiki... [wiktionary.org]

        Any act of deception carried out for the purpose of unfair, undeserved and/or unlawful gain.

        Fraud doesn't have to meet the specific legal definition to be, in fact, fraud.

        I don't know about cryptocurrency attempting to avoid fraud. It seems to me the whole point was to avoid regulation, which is a recipe for fraud.

    • How much more "pretend" does it have to be before it becomes fraud?

      Dunno. NFT values are about as valid as high-priced art, and we've been supporting that scam for decades within the elite class.

      (Yes, we can stop pretending they're all art aficionados.)

      • Just because we don't understand the high prices fetched by unique works of art, doesn't make them pretend. When you buy a work of art, you are buying something that you can actually possess, that no one else can possess because it is truly unique. You can protect your possession by storing it in a safe place, to protect it against theft or gunshots or thrown pieces of cake.

        When you buy an NFT, you don't actually own anything. That URL you think you bought will disappear and become worthless, probably a lot

        • When you buy an NFT, you don't actually own anything.

          It (supposedly) gives you the 'right' to claim 'ownership' of a row in a database.

          Most people think the NFT is the image (and vice versa) but that's not the case.

          The associated image is not the NFT, it's just a visual placeholder.

          It's not a picture of any particular bored ape or whatever- all the image is is a unique visual marker (a placeholder) and it has no actual relation to the NFT itself, none at all.

          The thing is, the placeholder can be changed, swapped, altered, or removed at anytime and -according t

        • Just because we don't understand the high prices fetched by unique works of art, doesn't make them pretend. When you buy a work of art, you are buying something that you can actually possess, that no one else can possess because it is truly unique. You can protect your possession by storing it in a safe place, to protect it against theft or gunshots or thrown pieces of cake.

          Yes, and we can also pretend that some shit (sometimes even actual shit) slapped on a canvas is worth seven figures, while the business own, er I mean "art aficionado" discuss with a fine-art insurance agent how much they're going to dedu, er I mean "value" this incredibly rare piece of not-a-tax-dodge.

          NFTs essentially hold value for the same reason art does; feeding pretentious emotions and financial corruption. A COA doesn't magically hold it's value in the market. That only means someone might eventual

          • Re: (Score:2)

            by micheas ( 231635 )
            Well, and if you look at the five elements of a valid contract published at Cornell Law School [cornell.edu]:

            The basic elements required for the agreement to be a legally enforceable contract are: mutual assent, expressed by a valid offer and acceptance; adequate consideration; capacity; and legality. In some states, element of consideration can be satisfied by a valid substitute.

            You might find that NFTs are a bit problematic if you are not the original owner of an NFT and the creator of the NFT fails to uphold their

            • Well, and if you look at the five elements of a valid contract published at Cornell Law School [cornell.edu]:

              The basic elements required for the agreement to be a legally enforceable contract are: mutual assent, expressed by a valid offer and acceptance; adequate consideration; capacity; and legality. In some states, element of consideration can be satisfied by a valid substitute.

              Ironically enough, even a referenced standard of contract definitions, had to include "some" fine print to really clarify that contracts are not black and white. Kind of like how Capitalism is now Too Big To Fail in "some" industries. Many shady shades of grey.

              You might find that NFTs are a bit problematic if you are not the original owner of an NFT and the creator of the NFT fails to uphold their end of the contract.

              You also mind find fine art storage a bit problematic when you're the owner, and the storage vendor fails to uphold their end of the contract and prevent a physical theft or fire. Naturally that's where the other half of the fine art scam kicks in(

        • When Maurizio Cattelan tapes a banana to a wall and sell that for $120.000 [artnet.com], the person buying that definitely does not buy an object that can be objectively valued to $120.000. What a person buying the $120.000 banana is actually buying, is a contract where Cattelan waives his right to tape other bananas to walls, and grants the buyer the right to tape a banana to a wall and to say "this is Maurizio Cattelan's work." The owner can then sell his contract to another owner, hopefully at a higher price, the pri

          • This is what is known as a "straw man" argument. No typical person would insist that taping a bandana to a wall is really "art" or is really valuable. But that doesn't mean that no art is valuable or unique. That bandana will likely soon be forgotten, because modern art is, if nothing else, fickle. In that sense, your example is apt, all these NFTs are likely to be soon forgotten.

            • I think too that the taped banana will go down the drain of history, to be honest, specially if we consider the long term. In 3000 years, taped bananas will be forgotten, but the Great Pyramids will still be there.

              On the other hand, I think John Cage's scores [wikipedia.org] will remain. This is also a kind of immaterial work, so it has 0 "physical object" value, but as long as copies of the work are around and get transmitted from generation to generation, people won't cease to wonder about it and think of ways to reinter

  • "Bored ape" seems like an object of sanity and reason.

    • "Bored ape" is also a pretty good description of the average reader of this "story".

      Quite frankly: Crypto is done for. We get it. Tell us when GPUs become affordable again and then let's talk about something meaningful.

  • Kind of like a tax on being stooopid
  • If we look back before the 1900’s such financial scams were common. Only after regulation was passed and govt agencies started looking into it, did things improve.

    Same with food. It used to be a mess until the govt stepped in

    Same thing is now happening in Crypto

  • You go where the marks are.

  • It's not growing exponentially. It's fraud all the way down, always has been. Bitcoin, and cryptocurrency, are a new form of investment fraud. https://salbayat.org/the-stran... [salbayat.org]

  • Crypto technology was built out of a "libertarian ethos" in which "there's no nanny state that's going to take care of you," said Jeremy Goldman

    And this is why libertarians are stupid.

    They have a bunch of thought terminating cliches, like calling anything and everything a "nanny state", as if that's the only alternative to unbridled freedom. All they have to say is "nanny state", and everyone of them nods like sheep.

    What next, are they going to call reproducible backups "nanny state"?

    Are brakes on cars nanny states?

  • Crypto may very well be a scam dressed up in a haze of inscrutable techno-jargon, then again, it could be an important technology in a nascent form that could shape the future of finance. If it is the latter, then maybe a few knowledgeable individuals are buying now in preparation for the next surge, and the general public never gets the full explanation of what's behind blockchain's true value. It has been promoted by some very respected billionaires and gotten a lot of high profile press, which has contri

    • The problem as I believe it to be is that crypto has a triple headed problem set:

      1. Even if the concept has merit the implementation is decidedly beta. If crypto has a future, it's unlikely to be any that have been invested in so far as they all have massive underlying technical flaws that are difficult to patch out.
      2. The rampant speculation and FOMO have inflated the spot price of these "coins" by tens of thousand times what is necessary for them to have utility. This is to their massive detriment in anything
      • I tend to agree with you, but with so much high level endorsement, it seems cruel to chastise less savvy investors that have already lost appreciable sums in the exchanges. "When it was going up"? For all I know it may still be due for a tear. We never know what will happen on the right side of the chart.
  • Saying "cryptocurrency fraud is increasing" is like saying water is getting wetter.

    It serves no (non criminal) purpose that isn't far better served by... banks.
  • of course it is surging, if it doesn't surge then their income will be cut by 70-80%. inevitable inflation of service costs provided under crypto.
  • Crypto wanted freedom/unrestrained control and are crying now !

  • "For many victims, there's little hope of getting their lost art back..."

    The NFT isn't the art, it's the receipt; seems the journalist fell for the most common scam.

  • All crypto and NFT should be regarded as scams until proven otherwise. What seems incredible to me is so many people have unwittingly become co-conspirators. i.e. some idiot buys a procedurally generated picture for $100. In order to exit with profit he has to convince some other idiot to buy it for for more money. Therefore he starts hyping up the potential of this picture and brazenly perpetrating the same scam he fell victim to. At some point there are no more buyers because the whole idea is stupid and

  • Exponentially? Really? Data please. "Journalists" are ignoramuses. The only major whose job it is to tell others about stuff they know nothing about.

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