Opinion Crypto Fraud in the time of a Pandemic

Crypto Fraud in the time of a Pandemic

March 28, 2020

The saying that a time of crisis is also a time of opportunity has been proven true time and time again. Presently, the entire world is in a state of emergency that has not been seen for more than 100 years. A viral pandemic is sweeping the globe as the COVID-19 illness and its carrier coronavirus are growing exponentially across the northern hemisphere and not showing any sign of abating.

In the current setting, it is easy to see what so many individuals across the globe are feeling terrified of what might come next. The same time is, sadly, also a period that has been traditionally used by many malicious parties looking to do either harm or gain profit from illegal means.

Right now, there is a range of such ventures targeting individuals who are worried about the epidemic and which are trying to extort money from them. Some of these are employing digital currencies, more precisely bitcoin, as a part of their wider criminal effort. Here is how they operate and what their impact might be on the generally poor state of cryptocurrencies in the public eye.

Scammers in the UK

The UK is one of the harder-hit European nations struggling under the coronavirus pandemic. Now, the UK watchdog warned the citizens that across the nation, a series of sophisticated scammers, some of whom are using bitcoin, are targeting victims. The vector of their attacks is the coronavirus crisis and the fear and doubt that is being generated around it.

Furthermore, in the time of esports, social media and endless mobile device notifications, this state of uncertainty is additionally amplified. The scammers are using the same hard times to try to hoax UK citizens. The watchdog used a series of so-called consumer alerts that it published in March to draw attention to this.

Manchester city council was involved, and so were the authorities at Norfolk and Pembrokeshire. All of them stated the same as the FCA or the Financial Conducts Authority and cautioned against opportunities and sophisticated crypto-tied schemes. A wave of these originated with the start of the pandemic in the country in mid-March.

Misrepresenting Organizations

The previously mentioned regional authorities identified several major tactics that the scams involving BTC employ. All of them, however, are taking advantage of the general – as the councils put it – social disorientation and high levels of anxiety related to this public health crisis. Manchester city council issued a direct warning. According to them, the fraudsters are introducing themselves as someone who is working for the US agency CDC (Center for Disease Control and Prevention) or the WHO (World Health Organization).

Both agencies have been endlessly in the news during the previous days and weeks, so people already have them on their mental radar. Once they make the introduction, they offer the victims access to a list of active areas of infection around their home and its wider region. To do that, they ask the victims to either click on a link that takes them to a page where their credentials are stolen or to make a donation to the fight against the pandemic.

The second option includes making a donation in the form of bitcoin or some other cryptocurrency. Other regional authorities recognized these but also schemes that offer victims to stay up-to-date with direct tracking of infections. To do that, again, they need to provide payments in bitcoin while it is almost certain that they get – in the best case – widely known public information they can access for free.

Remnants of Old Reputation

The FCA noted an interesting element in all of these return investment chances, like those in cryptocurrency assets, might be repurposed by the scammers. They would be able to piggyback on the same reputation, which is still alive and well in some circles and then lured their victims in. The present pandemic makes such an alternative more likely than similar scans in regular times.

At the same time, this shows that in some circles of the scam and fraud global community, the notion of playing on peoples’ perception of crypto as something that can make you rich is still a usable stereotype. One might think that the recent free fall of prices in the crypto market and the ongoing slump might have drastically dented that reputation, but as long as scammers are using it, it must still be present, even if in a diminished number of individuals.

USA Scam Cases

In the United States, cases of fraudsters taking on the instability from the COVID-19 outbreak has also been widely reported. A week ago, the United States Commodity Futures Trading Commission warned that scam enterprises are exploiting the crisis and using it to add surface credibility to schemes. Others have been doing the same to emotionally manipulate potential victims.

Along with all of this, cybersecurity researchers noted that misrepresenting as the WHO officials has been popular in the scam circles. Also, a ransomware attack called the CovidLock has also been noted. With it, the scammers are using the pandemic as a means of gaining access to individual computers and then locking them out with a strong encryption. This makes it similar to the WannaCry ransomware that also used cryptocurrency payments as a means of extorting money.

Times of Crisis

It should come as no surprise that scammers are trying to exploit the situation regarding the ongoing pandemic. With it in full swing in Europe and the US, the airwaves are saturated with stories about it and many dire warnings. The price of BTC might have slid drastically in the same period, but all of these scams show that public consciousness is still interested in cryptocurrencies.

Some, apparently, are still considering it something of a potentially high-yield investment, which the scammers are using against them. However, it still showcases that the same concept has not been taken away from the wider public with the recent market slump. Hopefully, many will be mindful enough to avoid being scammed because of the same outlook on crypto.