Social Media Scams
September 2023 was a peak season for social media scams. Fraudsters impersonated famous people and companies such as Elon Musk, CZ, Vitalik and Ark Invest -among other celebrities and companies- through videos in Tik Tok and Twitter to lure investors. They promised a 1% return per day among other things. For further information on this topic, you can read this article.
A brand new technology such as Artificial Intelligence (AI) has also become an attractive mechanism for crypto fraud. In this sense, through deepfake technology, many scammers lured investors globally to invest in “new cryptocurrencies” with huge returns. Upon the lack of verification steps, users “invest” in a false cryptocurrency. Once funds are deposited, fraudsters discontinue any type of contact making use of the stolen money and of the KYC data as well. This has also been the case for a big company in Hong Kong, as our local partner covered in this article.
One of the most famous hacks is the one suffered by Vitalik Buterin in September 2023. Buterin’s X account was taken over by scammers, who promoted a fake NTF giveaway, prompting users to click on a deceitful link. This incident reflects a growing concern regarding phishing scams on the X platform. So, our advice is to be alert upon making investment decisions suggested by profiles or accounts on the internet.
Also, we can mention the Celsius crypto scam (for further information, read our article on this topic and on suspension of funds’ withdrawal). Scammers renewed phishing attacks towards creditors by impersonating Celsius official account and attempting to impersonate Stretto account, the claims agent who handled the bankruptcy case.
As reported by BeInCrypto, this phishing strategy was targeted to Celsius’ crypto creditors. They received phishing emails with access to a phishing site that connected to crypto wallets, allowing hackers to steal crypto wallets information draining all assets. Scammers offered a 7-day exit window to claim creditors’ frozen funds. We highly recommend Celsius’ investors to visit Celsius official site: https://cases.stretto.com/celsius/ .
Regional Money-Laundering
Beyond these news and global methodologies, we’d like to focus on regional criminal activity and the sophistication of the law-enforcement and security agencies involved. In September 2023, a criminal organization linked to the Brazilian crime was dismantled in Argentina by the Argentine police through a series of raids conducted in the City of Buenos Aires and in the provinces of Mendoza and Buenos Aires. This organization – a Brazilian family- was suspected of laundering money for Comando Vermelho, one of the most powerful criminal groups based in Brazil, through cryptoassets.
The alert that opened the investigation was a series of transfers and fiduciary assets (not crypto). Raids were conducted by the Argentine Federal Police in our country and an efficient cross-agency collaboration was vital to conduct criminal investigations in Brazil as well. The Brazilian Court ruling over the Organized Crime succeeded in conducting raids and freezing assets for an amount of BRL 681 million and the seizure of real and personal property. Meanwhile, in Argentina, enforcement authorities were able to seize ARS 40 million, USD 300,000 and virtual wallets. For further information, read this article.
“Real estate” scam in the Mendoza metaverse
Listing other type of frauds, in August 2023 some individuals were arrested in Argentina on the grounds of crypto fraud through the fake sale of real property in the metaverse, resulting in some 80 defrauded people up to-date. Giovanni Tomás David Caroglio has been reported as the leader of this criminal organization according to the investigators. From the Legal Clinic of the Bitcoin Argentina NGO we have addressed this issue delivering legal advice to the victims involved. As reported by BeInCrypto, 3 of the defendants are being held under house arrest on a preventive basis; the other defendants have been granted bail in order to be released. This group was active in all sort of scams, not only in the metaverse but also in financial markets (prior to the metaverse scam).
The scammers promised high returns by investing in Nasdaq contracts without complying with local legislation governing investment funds. These crimes are being investigated by the Prosecutor’s Unit for Economic and Cyber Crimes of the Public Prosecutor’s Office of Mendoza.
Crypto “Cueva” (cave)
In a lower scale, local authorities are also behind crypto crime related to the “exchange” markets. These “crypto cuevas” are local exchanges that operate in the blue market. In this context, 15 people were arrested for illegal trade of cryptocurrencies in August 2023 although none of them was charged with any crime.
This organization is committed to the sale of cryptocurrencies to the Chinese community and small traders. In this case, I’ll state my position since I do not find any punishable offense in this operation that demanded 3 years’ investigations, 26 raids and 15 arrests that resulted in 4 fugitives. In my opinion, a waste of time and resources to fight against small foreign traders that intended to exchange their pesos for cryptocurrencies to be remitted to their countries of origin. As reflected in our article on “Nature of Cryptocurrencies within Argentine Legal Framework”, (mostly) cryptocurrencies are considered fungible and legal goods within commerce, and are not considered money nor currency. Some investigation sources reported to Clarín newspaper as follows: “It is like going to a “Cueva” to trade dollars. You simply go and ask to settle or buy bitcoin or any other cryptocurrency. But the investigation pursues to determine money-laundering of previous crimes, currencies smuggling and tax evasion.” Such a statement reflects a total lack of knowledge on the nature of cryptocurrencies. In any case, it could be tax evasion if someone failed to bill or pay any tax. To conduct such an investigation, considering the resources involved, mirrors a striking legal myopia given the progress made by security agencies and specialized prosecutors, as seen before.
Transactions with dollars amid financial turmoil
Something similar happened with transactions of assets in dollars by broker-dealers and exchanges. After the primary elections in 2023, the CNV shut down an exchange arguing “speculative transactions”. Said exchange was said to have transacted illegally with dollarized assets during several days in August 2023.
The regulation applied in this case is more connected with a political action seeking to prevent dollar value from climbing up than with controlling exchange transactions. However, this mechanism is not workable with cryptocurrencies since no governmental agency can exclude any individual or company from the blockchain.
Conclusion
Even though enforcement authorities (such as security agencies and prosecutors) have made progress locally and globally, deeper training in cryptocurrencies is required. Those fighting against crypto crime should be one step ahead of crypto criminals. The good news is that crypto fraud fell 2/3 in the last 12 months. This fact may be connected to the bear market, to better security agencies’ conditions and/or to more sophisticated users ready to spot these unfortunate byproducts of the crypto universe. From our side, we stick to the commitment of fighting against crypto fraud working alongside other crypto communities globally for a fruitful and safe crypto environment ahead.
