One day soon, those famous emails from Nigerian princes proposing to share their riches with anyone willing to give up their bank account number in an email will be seen as quaint artifacts from the early years of the internet.
More serious scams have taken their place, and one that’s been very successful involves cryptocurrency.
That relatively new word describes a digital currency that is a medium of exchange through a computer network. It is exclusively traded online and, perhaps most important, it is not backed by any central authority, such as the way the United States government supports the dollar.
Online currencies are protected by a strong cryptographic code — thus their name. Bitcoin is the oldest and best-known crypto.
Many advocates of this form of exchange believe traditional currencies, such as the dollar, are ultimately doomed to collapse because of decades of deficit spending. They may have a point, but when a lot of people are being ripped off in the crypto world, that makes the dollar look like a much safer haven — even with those Nigerian princes lurking.
The Washington Post explored the topic through the story of a 57-year-old retired police officer in New Jersey who lost $15,000 in cryptocurrency to scammers. Over a period of months, encouraged by an attractive woman that he met in an online dating service, the officer gave control of his crypto to the scammers. It is unlikely he’ll ever recover his investment.
Even worse, he got a couple of relatives to put up some money, along with a family friend. It’s all gone because each of them unwittingly signed an online “smart contract” that gave the scammers unlimited access to their money.
The irony is, the retired officer also worked as a casino security director, where he was responsible for spotting the shady characters trying to rip off the house. Yet he himself got played, trusting the advice of someone he’d never met in person.
Lots of people have made money owning cryptocurrency. But you clearly have to be careful. The Post reported, “The Federal Trade Commission estimates that Americans lost $750 million to crypto scams in 2021, and the number could rise this year.”
It said the crypto world is lightly regulated — perhaps because it’s so difficult to understand — and that has allowed scams to flourish. Law enforcement has been slow to respond to the problem — again, probably because this stuff can be so confusing.
And the crypto companies themselves seem to be of little help to victims. Two of them involved in the retired New Jersey cop’s loss told him there was nothing they could do.
The Post then used cryptocurrency records to identify 5,046 accounts where the same thing happened — the owner approved access to their money, which then got moved to a different account. The average amount stolen was $13,000, making this a $65 million heist.
Here’s the thing: If a newspaper was able to track this much alleged theft, the crypto companies have to be aware of it as well. Yet neither the companies nor law enforcement is doing much to find out what’s going on.
Given that risk, anyone who’s poorly informed about these online currencies, or who doesn’t understand how they work, would be advised to stay far, far away.
This is where all those warnings your parents gave you mean something. If something sounds to good to be true, it probably is. Caveat emptor — let the buyer beware. If you don’t understand it, why put your money in it?
Cryptocurrency may indeed replace the dollar and other money one day. But not until its monitors get a handle on scams like the ones that ripped off $750 million in a single year.
— Jack Ryan, McComb Enterprise-Journal
