{"id":14060,"date":"2022-04-17T12:45:52","date_gmt":"2022-04-17T12:45:52","guid":{"rendered":"http:\/\/egrowonline.com\/?p=14060"},"modified":"2022-04-17T12:45:52","modified_gmt":"2022-04-17T12:45:52","slug":"in-focus-from-fraud-to-pig-butchering-the-dark-side-of-crypto","status":"publish","type":"post","link":"http:\/\/egrowonline.com\/?p=14060","title":{"rendered":"In Focus: From fraud to ‘pig butchering’ \u2013 the dark side of crypto\u00a0"},"content":{"rendered":"


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Business was bad during the pandemic, so when mum-of-four Freya thought came across what she thought was a viable investment opportunity, she was sure it would turn everything around.<\/p>\n

However, instead of changing her fortunes, she and her family soon discovered it was a cruel scam that would cost them a fortune.<\/p>\n

Freya, 48, is now more than \u00a330,000 out of pocket after being scammed by a mysterious and unlicensed cryptocurrency firm that claimed to be based in Canary Wharf.\u00a0<\/p>\n

\u2018It was devastating,\u2019 she admits. \u2018When something like this happens, it becomes hard to trust anyone again.\u2019<\/p>\n

Freya is one of many people who have fallen victim to con artists who promise huge payouts to people who invest in the volatile crypto markets \u2013 but end up being robbed of vast sums of money.\u00a0<\/p>\n

Digital currencies like Bitcoin and Ether operate without the need for central banks and government control, raising utopian hopes that crypto can be used to create a better, fairer financial system. However, its decentralised nature also offers criminals anonymity and the ability to target victims from anywhere in the world.\u00a0<\/p>\n

And the impact is not just financial, as crypto also poses a serious risk to the planet. Mining crypto \u2013 the process of verifying transactions and generating new coins \u2013 uses vast amounts of electricity and creates the same amount of CO2 each year as a small country.<\/p>\n

Directly contributing to climate change, it\u2019s ecological impact is so serious that President Biden ordered officials to urgently investigate ways to reduce the \u201cnegative climate impacts and environmental pollution\u201d of crypto in a recent executive order.\u00a0<\/p>\n

Freya, from Telford, runs a business with her husband. As well as looking after her children, she provides care to her elderly mother, who has dementia, and father, who suffered a stroke that left him unable to speak.<\/p>\n

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Freya and her family lost thousands after being targeted by Crypto scammers (Picture: Getty Images)<\/figcaption><\/figure>\n

In search of new income streams during a pandemic slowdown, the mum-of-four, who had a basic understanding of crypto, tells Metro.co.uk that she opened a Bitcoin trading account to pursue investment and then \u2018came across\u2019 a company called Invxsler online, in May 2021.<\/p>\n

Marketing itself as a crypto investment service that offers huge returns, on the company\u2019s website, it claims to allow customers to \u2018trade like an expert and increase your profits with the power of 100X leverage\u2019. In other words: send us your money and we\u2019ll earn you 100 times as much.\u00a0<\/p>\n

\u2018Work had been a struggle due to Covid and Brexit,\u2019 explains Freya. \u2018We knew someone that had earned enough money trading bitcoin to put a deposit on a house in London. Plenty of people had earned a lot of cash so I thought I would give it a go. I wanted a company that seemed a bit more hands-on and Invxsler fitted the bill. How wrong could I be?\u2019<\/p>\n

Wanting to make sure that she was choosing a reputable company, Freya did some digging online and found \u2018plenty\u2019 of articles that claimed Invxsler was trustworthy. So, she sent them \u00a3200 to invest in crypto. Requests for more money began almost immediately.<\/p>\n

An \u2018account manager\u2019 called Nina, who claimed to be Danish, phoned Freya\u2019s husband and persuaded him to transfer more than \u00a33,000 after doubling down on the false promises of the scheme.\u00a0<\/p>\n

\u2018They are really professional and good at what they do,\u2019 Freya explains. \u2018They talk about the weather, ask about the kids. You begin to trust them, but what they are really doing is taking you down a wormhole.\u2019<\/p>\n

Nina then started to call Freya every day, asking intimate questions about her family life, which did not seem worrying at the time due to the skill of the scammers. Freya told Nina about her money worries and her parents, and even began to regard her as a friend. Nina even managed to persuade their eldest child, who was over 18 at the time, to open an account with \u00a31,000 \u2013 which was also never returned.<\/p>\n

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The scammers even persuaded Freya\u2019s 18-year-old daughter to part with money to invest in cryptocurrency (Picture: Getty Images\/iStockphoto)<\/figcaption><\/figure>\n

\u00a0Then came the next stage in the scam. Freya was passed on to a \u2018manager\u2019 called Martin who claimed to know about another way of making even more cash.\u00a0<\/p>\n

She recalls: \u2018He said we could make lots of money, but would need \u00a310,000. The website looked professional and there were hardly any bad reviews at that point. The company was very good at talking to you in a caring, happy way as if they wanted us to profit.\u2019<\/p>\n

However, soon after both Nina and Martin claimed to have caught Covid, so a new representative called \u2018Ian\u2019 stepped in, explaining that he was building a group account that would raise one million pounds to be shared among 20 people.<\/p>\n

Freya was invited to join, as long as she invested \u00a318,000 \u2013 an amount she was assured would massively increase. In July 2021, Freya and her husband took the cash out of their business and handed it over to Invxler<\/p>\n

\u2018This money was only needed for three days, we were told,\u2019 she recalls. \u2018Now we can\u2019t withdraw it. I can\u2019t access any of my \u00a332,545 investment.<\/p>\n

\u2018They brainwash you and try to pressure you into making fast decisions by saying that you will lose out on a lot of money unless you invest right now.\u2019<\/p>\n

However, their ordeal didn\u2019t end there. The company kept asking Freya for money by putting more pressure on her to act quickly \u2013 a classic scammer tactic. She was told the group had now made each member \u00a3250k. However, the price of bitcoin was dropping fast and she would lose \u00a330k unless she paid more than \u00a320k.<\/p>\n

The thought of parting with any more cash sent alarm bells ringing and Freya began asking more questions, demanding to get her money back or, at the least, to see some terms and conditions.<\/p>\n

Since then, she has been waiting months for a call from Ian, but he never phoned.<\/p>\n

And Freya is yet to see any of her money returned \u2013 despite calling the police and Action Fraud as well as filing a complaint with her bank and the crypto exchange she used to send payments.<\/p>\n

After losing over \u00a330k, Freya is speaking out to help others avoid falling victim to a similar crime.\u00a0<\/p>\n

\u2018I still find it upsetting and have lost confidence in myself,\u2019 she admits. \u2018I wouldn\u2019t say I was a vulnerable person but if it can happen to us, it can happen to anyone. We were not able to get our money back.<\/p>\n

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The family are speaking out to warn others so they don\u2019t fall victim to the scammers (Picture: Getty Images\/iStockphoto)<\/figcaption><\/figure>\n

\u2018They knew about our four kids. We told them that my parents were ill and elderly. But they didn\u2019t care. I feel most guilty about my daughter, who also lost \u00a310,000. It makes my stomach turn.\u2019<\/p>\n

Since the family were ripped off, the Invxler website has changed its address, but is still available online. Although a Google search now shows scam warnings and bad reviews, the fake positive reviews can still be seen. Metro.co.uk found one website that claimed Invxsler is a \u2018luxury brokerage aiming to satisfy serious clients with a diverse service\u2019 and discusses its \u2018services\u2019 in an authoritative, expert and convincing tone.\u00a0<\/p>\n

The Financial Conduct Authority has also issued a warning which states: \u2018We believe this firm may be providing financial services or products in the UK without our authorisation [so] you should be wary of dealing with this unauthorised firm.\u2019<\/p>\n

Jane Lee is a Trust and Safety Architect at the digital fraud prevention company Sift, in San Francisco, whose work is dedicated to investigating new types of fraud.<\/p>\n

She told Metro.co.uk about a dating site crypto scam called \u2018pig butchering\u2019. The name reflects the cruel, sadistic attitude scammers have towards their victims \u2013 and even appears to mock them.\u00a0<\/p>\n

\u2018In this scam, victims are referred to as pigs being prepared for slaughter,\u2019 she explains. \u2018They are raised for their meaty profit under the promise of \u201chappily ever after\u201d and big crypto wins. In reality, the victims are everyday people who are left financially and emotionally devastated.\u2019<\/p>\n

The \u2018Pig Butchers\u2019 spend months gaining the trust of people they meet on dating apps, using both romance and the false lure of fast crypto returns to swindle victims out of their savings.<\/p>\n

They start by setting up fake profiles, matching potential victims and building trust before moving the conversation to WhatsApp, which is encrypted and allows the scammers to maintain anonymity and reduce their risk of getting caught. The victims are then won over with romantic messages and the promise of expensive gifts.<\/p>\n

\u2018Inevitably, the conversation turns to money,\u2019 says Jane. \u2018The scammer will sell the allure of crypto gains, bragging about how much they\u2019ve made investing, and promising to coach their target so they can earn a little extra cash, too.\u2019<\/p>\n

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Scammers are also \u2018romancing\u2019 victims so they hand over money to \u2018invest\u2019 in crypto (Picture: Getty Images)<\/figcaption><\/figure>\n

Victims are told to create an account on a legitimate crypto platform and then sent a link to a fake trading site controlled by the scammer. As victims \u2018invest\u2019, they are instantly shown fake graphs and metrics showing \u2018profits\u2019. Scammers persuade them to hand over as much money as they can and then simply disappear when asked to pay out earnings or give back the initial deposit.<\/p>\n

Louise Bennett, who is civil fraud, cryptocurrency, and asset recovery partner at Keystone Law, has worked on several romance fraud cases in which criminals set up profiles on dating sites and persuade victims to transfer money.\u00a0<\/p>\n

In one scam, a victim lost \u00a383,515 of life savings after falling prey to a \u2018honeytrap\u2019 on Tinder and being talked into opening an account with the crypto exchange Binance and then transferring cryptocurrency Tether (USDT) to a \u2018bogus electronic platform\u2019.<\/p>\n

\u2018Romance frauds have dramatically increased due to the pandemic when communications moved online,\u2019 says Louise. \u2018My practise for this type of work has doubled in the past two years and I receive regular enquiries about honey trap scams, involving people losing thousands of pounds of cryptocurrency.<\/p>\n

\u2018Fraudsters are very sophisticated, and these types of online romance scams are, more often than not, committed by members of a large organised criminal gang. The crypto world is largely unregulated, so it is ripe territory for fraudsters.<\/p>\n

\u2018Thousands of frauds being committed daily and is on the rise across the board. As we are using online dating tools more than ever, it follows that we are seeing increased frauds within the honey trapping sphere.\u2019<\/p>\n

In fact, in the murky world of crypto fraud, no tactic is off-limits. This year, for instance, scammers have been taking advantage of the war in Ukraine. For the past two years, they have been preying on fears about the pandemic.<\/p>\n

One group of criminals set up a fake currency called UkraineTokens. Anyone who bought it thought they were donating money to civilians affected by the conflict. In fact, they were simply giving money to fraudsters in exchange for a worthless currency. Criminals have also posed as refugees looking for crypto donations on social media or set up fake charity websites. The results are the same. Victims send over their crypto and never see it again.\u00a0<\/p>\n

\u2018Scammers will always take advantage of chaos,\u2019 explains Michal Salat, threat intelligence director at the cybersecurity firm Avast. \u2018By their nature, scammers don\u2019t operate ethically and will take advantage of people trying to help the most desperate.\u2019<\/p>\n

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Criminals are even using the conflict in Ukraine as a way to scam money (Picture: REUTERS)<\/figcaption><\/figure>\n

It is often very difficult to identify the scammers because they are adept at hiding their tracks. However, some unlikely people have been associated with questionable crypto schemes.\u00a0<\/p>\n

Kim Kardashian was one of three celebs sued in a class action this year after she wrote an Instagram post about a cryptocurrency called EthereumMax.\u00a0<\/p>\n

\u2018Are you guys into crypto????\u2019 Kardashian posted. \u2018This is not financial advice but sharing what my friends just told me about the Ethereum Max token!\u2019<\/p>\n

After Kim\u2019s post, the currency skyrocketed in value before plunging to a value of next to nothing. Kim has not yet spoken out on the incident, which Charles Randell, chairman of the Financial Conduct Authority described as the \u2018financial promotion with the single biggest audience reach in history\u2019.<\/p>\n

The rise of so-called \u2018finfluencers\u2019 has also given criminals a new way to reach victims, says Sharon Davies, CEO of Young Enterprise.<\/p>\n

\u2018Given the financial pressures of the pandemic and increase in social media usage, young people are more vulnerable than ever to online scams,\u2019 she warns. \u2018They are being drawn in by \u2018get rich quick schemes\u2019 and the misconception that brands and figures with large social media followings must be credible.<\/p>\n

\u2018One common scam is fake brand collaboration requests, from people who appear to be working on behalf of a brand offering paid work. The majority of the time these \u2018DM to collab\u2019 offers are scams which trap users into buying products, and usually don\u2019t exist.<\/p>\n

\u2018Another type of scam that has surged in popularity during the pandemic centres around cryptocurrency investments. Young people see their favourite celebrities and influencers appearing to promote opportunities to invest in these digital currencies which can result in them nursing big losses.\u2019<\/p>\n

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The energy used during crypto mining is causing huge damage to the environment (Picture: Getty Images)<\/figcaption><\/figure>\n

With c<\/strong>rypto using large amounts of energy during \u2018mining\u2019, miners having to keep their computers running for a very long time just to process a single block, which uses a total of 150,000 kilowatt-hours of energy \u2013 enough to power 170 average US homes for a month.\u00a0<\/p>\n

\u201cWhen you consider that crypto mining and transactions take place all over the world on a daily basis, the size of the problem quickly becomes apparent,\u2019 explains Ivan Liljeqvist, a crypto industry expert and CEO of the blockchain development firm Moralis. \u2018Several studies have already shown that bitcoin mining uses more electricity globally per year than in some small countries, which is frightening.\u2019<\/p>\n

Meanwhile, Jeremy Cheah, associate professor of decentralised finance at Nottingham Business School, adds that there are \u2018numerous examples\u2019 of communities \u2018enduring\u2019 the environmental impact of crypto.<\/p>\n

\u2018Crypto mining has been shown to disproportionately impact the poor and vulnerable,\u2019 he tells Metro.co.uk.\u00a0<\/p>\n

In the Democratic Republic of Congo, locals are often \u2018outcompeted\u2019 by miners who use up cheap renewable electricity, meaning they cannot afford to power their homes. In Kosovo, 90% of crypto mining was powered by burning reserves of lignite \u2013 a type of cheap, low-grade coal \u2013 before the government banned mining.\u00a0<\/p>\n

\u2018At the height of the recent energy crisis, Kosovans experienced rolling blackouts across the country due to energy shortages,\u2019 Cheah continues. \u201cThere are also other examples where environmental, labour and business groups are pressuring their local and national governments to act by banning mining. For example, the bitcoin mining activity has threatened New York\u2019s climate and water quality by way of excessive carbon emissions and toxic chemicals being released into the air.\u2019<\/p>\n