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Protecting Hearts and Wallets: How to Stay Safe on Valentine’s (And Any Other) Day
16/02/2024 17:08
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Protecting Hearts and Wallets: How to Stay Safe on Valentine’s (And Any Other) Day

Online dating has turned into a global phenomenon, but it has also brought about a surge in romance scams, with scammers expertly manipulating individuals’ emotions, leading to substantial financial losses.

Cryptocurrency can be used as a method of extracting money from victims in such scams, but industry leaders like Binance are combating this issue with strong security measures, compliance, and user education efforts.

Binance is committed to maintaining a secure environment through collaborations with law enforcement agencies globally, processing thousands of information requests, conducting training, and raising user awareness about scam tactics and prevention.

Valentine’s Day, a celebration of love and connection, is just around the corner. While romance is in the air, cunning scammers looking to steal your money rather than your heart are never too far.

The digital era has revolutionized the way we embark on the quest to find a soulmate. Millions around the world now turn to online dating platforms or meet others through social media to kindle romantic connections. While these platforms offer convenience of connecting with romantic partners and have yielded numerous heartwarming success stories, they also open the door to online romance scams.

Decoding Romance Scams: What They Are and How They Operate

Online dating scams, often referred to as romance scams or romance fraud feature criminals who adeptly masquerade as potential romantic partners, skillfully weaving webs of deception while exploiting the emotions of vulnerable individuals.

Tigran Gambaryan, Head of Financial Crime Compliance at Binance, sheds light on the mechanics of these scams: “Imagine someone convinced they’ve stumbled upon a profound connection via a dating app or social media. These fraudsters morph seamlessly, echoing your every sentiment and aspiration with uncanny precision. They latch onto the nuances of your conversation, crafting personas that seem perfectly aligned with your ideal match. Mention your enthusiasm for a certain hobby, and suddenly, it’s their obsession too. Share your hopes for a meaningful relationship and a future together, and they echo your sentiments, professing their readiness for commitment. It’s as though they have a direct line to your thoughts, expertly reflecting your desires back at your. Reflecting on my experiences as a Special Agent, I see a striking similarity in tactics. These manipulations are not unlike the schemes I’ve seen where fraudsters sell lies to get their hands on your money. The essence of their approach remains the same: exploit trust and fabricate connections to achieve their deceitful ends.”

However, behind these charming personas, there’s a harsh reality: the person on the other end is typically a scammer using a fake profile. These scammers are experts in manipulation and gradually building trust, all with the ultimate aim of extracting money or stealing personal information.

Romance Scams on the Rise: The Costly Consequences and Crypto’s Role

Romance scams are on the rise across the board, with alarming statistics to illustrate the extent of the issue. Globally, more than 1 in every 4 adults surveyed for the 2023 Norton Cyber Safety Insights Report reported having been victim to an online dating or romance scam. a. In the United States alone, the US Federal Trade Commission received 11,235 dating and romance scam complaints in 2016. By 2020, this number had skyrocketed to a staggering 52,593 cases, marking a 368% increase over four years. In 2022, the situation escalated even further, witnessing a more than 30% year-on-year surge. Nearly 70,000 individuals reported falling victim to these scams, resulting in a cumulative loss of $1.3 billion.

Although cryptocurrency is not the most frequently used payment method in these scams, it still accounts for a substantial 34% of the total reported losses, as indicated by the same FTC report. Nevertheless, it’s crucial to dispel the misconception that cryptocurrency serves as a haven for scammers. On the contrary, illicit activity within the crypto space constitutes only a small fraction of global transactions and is, in fact, in decline. According to Chainalysis’ latest 2024 Crypto Crime Report, the share of all crypto transaction volume associated with illicit activity has decreased from 0.42% in 2022 to a mere 0.34%. A key driver behind this trend is that industry leaders like Binance work hard to prevent and combat scams by maintaining strong security and compliance measures and educating users about common threats. This plays a pivotal role in the collective fight against blockchain-related crime.

According to Binance’s data for 2023, romance scams made up roughly 2% of the total reported scam cases. Though this percentage might seem modest, the collective financial losses experienced by the victims surpassed tens of millions of USD, averaging nearly 14,000 USD per victim. Evidently, dating scams have emerged as one of the most financially detrimental forms of fraudulent activity, underscoring the urgent need for awareness and prevention within the crypto ecosystem.

Unmasking the Deceptive Tactics: Real Stories of Romance Scams

Erin Fracolli, Global Head of Intelligence and Investigations at Binance, unveils a common scenario observed in romance scams: “Scammers often first connect with victims on dating apps or sites, where they build trust. Victims are lured into making investments with promises of high returns, only to later discover that it’s fake. Victims often initially invest small sums and can even make “withdrawals” or receive small amounts of their investment back, which makes the investment seem real. Eventually, however, they will be unable to recover larger deposits or “investments.” Scammers will also demand taxes, fees, or upgrades, in a last attempt to extract even more money. Victims often only realize they have been scammed at this point or after they do research on the fraudulent platforms.”

This type of an investment scam is known as “pig butchering.” Scammers gain trust by demonstrating initial “profits” to encourage victims to invest more. Once they’ve exhausted all available funds from the victim, the scammers vanish, leaving their targets unable to recover their investments. The term “pig butchering” reflects how scammers “fatten” victims with fake gains before making off with their money. These tactics are not exclusive to the cryptocurrency realm and have been employed in various fraud schemes over the years.

Here are real-life stories from individuals who fell victim to these heart-wrenching schemes. Their names have been changed to protect their identity.

John’s encounter with a scammer named Liddy on Tinder serves as a cautionary tale. Liddy, who portrayed herself as a young clothing store owner from Asia, quickly transitioned their conversation to WhatsApp. There, she persuaded John to invest in a high-return platform. Initially, John proceeded with caution, starting with a small sum and following Liddy’s guidance, which led to modest profits and withdrawals. These actions built trust but also lowered John’s guard. However, when John attempted to withdraw a larger sum, the app blocked the transaction and demanded a 30% tax payment within 72 hours, threatening to freeze the account. In the end, John paid the full amount, but the app’s customer service went silent, and Liddy disappeared. Over two months, John lost the equivalent of more than $100,000.

Another victim, Michael, encountered a woman named Rose on social media, who claimed to be a cryptocurrency trader. Rose showed a keen interest in Michael, and their relationship grew through online communication and phone calls. To prove her authenticity, she shared a scan of a fake driver’s license. As time passed, Michael became more comfortable and entrusted her with his money for investments.

Tigran Gambaryan elaborates, “With time, the victim, enticed by the promise of high returns, ended up sending crypto equal to over $500,000. It was only later that he realized it was a scam. By then, he had not only lost his savings but also his home, as he believed they were purchasing a house together. We collaborated with law enforcement to identify the scammer and helped recover $200,000 for the victim, although such outcomes are quite rare.”

In other cases, scammers employ a different approach by requesting money from their victims to assist them in fabricated, dire situations. The range of reasons provided by scammers knows no bounds, spanning from alleged urgent medical operations and terminally ill relatives to claims of being kidnapped by dangerous criminals or simply needing funds for a plane ticket to finally meet in person. Erin Fracolli remarks, “As with many scams, victims don’t meet their supposed love interests face-to-face, and their interactions are solely conducted online or over the phone.” She emphasizes, “while some scammers will even conduct video calls with victims, these video calls are often short and poor quality.”

Another victim, a woman, crossed paths with an individual named George through Facebook Dating. Their connection flourished rapidly, and they envisioned building a life together. However, George’s narrative took a distressing turn as he revealed that his bank account had been frozen amid an ongoing investigation, rendering him financially helpless and unable to support his two children. Stranded in Cyprus, longing for a return to the UK, George leaned on the woman for financial support. Guided by compassion and trust, she extended a substantial sum, surpassing 20,000 USD, swayed by George’s sincere commitment to repay the debt upon his UK return. Sadly, as skepticism set in and the victim halted the flow of funds, George vanished into thin air, leaving his repayment pledge unfulfilled.

Each of these stories serves as a stark reminder that anyone can be a target, and it’s crucial to stay informed and cautious when engaging with potential romantic interests online.

Binance’s Collaborative Approach to User Safety

Binance remains dedicated to ensuring a secure cryptocurrency environment through active collaboration with law enforcement agencies globally. The company’s specialized teams, consisting of over 70 members, efficiently processed more than 58,000 requests in 2023 from over 13,000 registered law enforcement officials worldwide. Recently, Binance supported the United States’ Federal Bureau of Investigation (FBI) and Department of Justice (DOJ) in a significant pig butchering case where over $112 million in funds were seized. These collaborative efforts led to the apprehension of multiple illicit groups and scammers.

Additionally, the team conducts regular training sessions for law enforcement personnel, providing insights into blockchain fundamentals and the legal aspects of cryptocurrency. In 2023, Binance’s Law Enforcement Training Team, supported by the Investigations Team, organized 120 training sessions, both onsite and online. These initiatives bolster the safety of Binance’s platform for users and their investments in the ever-evolving crypto landscape.

As scams and the methods employed to execute them evolve alongside the rapid pace of the crypto industry, the Binance Risk team also remains proactive. They employ a wide range of tools and measures, including real-time risk monitoring, to ensure that our users don’t fall victim to scammers.

Recognizing that users themselves are always the first line of defense against scammers, Binance is prioritizing educational efforts, such as the dedicated Know Your Scam series, to help users stay on top of the latest schemes and tactics that scammers employ, as well as tips for avoiding them.

Warning Signs of Romance Scams and How to Avoid Them

So, how can you protect yourself from falling victim to romance scams, especially those involving cryptocurrencies? Here are some essential tips:

  • Stick to the Dating App: If you use a dating app, keep your communication within the platform’s messaging service. Scammers often want you to switch to private communication channels like text, social media, or phone calls quickly to evade detection on the dating site.
  • Beware of Profiles That Seem Too Good to Be True: Scammers mask their real identity by crafting fake personas and employing stolen or manipulated photos of attractive individuals. They may even employ AI technology to create deep fakes, fabricate counterfeit IDs, alter their voices, and fabricate videos. To protect yourself, take the initiative to conduct thorough research and validate the legitimacy of the individual associated with the profile.
  • Take It Slow: Don’t rush into a relationship. Ask questions and watch out for inconsistencies in the other person’s story that might reveal them as an impostor.
  • Pay Attention to Persistent Meeting Excuses: If someone repeatedly cancels in-person meetings with various excuses, especially after several months, don’t dismiss it. This is a significant red flag, and your suspicion should grow.
  • Never Send Money: If someone you’ve recently encountered online and have never met in person requests financial aid or promises lucrative returns, whether through cryptocurrency, wire transfers, or any other method, it’s likely a scam.
  • Be Skeptical of Unrealistic Promises: High returns with low risk are often deceptive; if it appears too good to be true, it probably is.
  • Protect Your Personal Information: Never share sensitive personal or financial information, such as passwords or private keys, with anyone, even if they claim to represent a trusted entity (police, investigation team etc). Consider using a password manager and adopting good cybersecurity practices to safeguard both yourself and your loved ones.

As you navigate the digital landscape in your quest for love, remember that not everyone online has genuine intentions. By staying vigilant, practicing caution, and heeding the warning signs, you can reduce the risk of becoming a victim of romance scams, protecting your heart and your wallet alike.

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