Crypto scammers focus on new target: Dating apps

Romance scams — the term for online scams that involve feigning romantic interest to gain a victim’s trust — have increased in the pandemic. So have crypto prices. That has made crypto a useful entry point for criminals looking to part victims from their savings. About 56,000 romance scams, totalling $139 million in losses, were reported to the Federal Trade Commission last year, according to agency data. That is nearly twice as many reports as the agency received the previous year. In a bulletin last fall, the Federal Bureau of Investigation’s Oregon office warned that crypto dating scams were emerging as a major category of cybercrime, with more than 1,800 reported cases in the first seven months of the year.

Experts believe this particular type of scam originated in China before spreading to the United States and Europe. Its Chinese name translates roughly as “pig butchering” — a reference to the way victims are “fattened up” with flattery and romance before being scammed. Jan Santiago, the deputy director of the Global Anti-Scam Organization, a non-profit that represents victims of online cryptocurrency scams, said that unlike typical romance scams — which generally target older, less tech-savvy adults — these scammers appear to be going after younger and more educated women on dating apps like Tinder, Bumble and Hinge.

“It’s mostly millennials who are getting scammed,” Santiago said. Jane Lee, a researcher at the online fraud-prevention firm Sift, began looking into crypto dating scams last year. She signed up for several popular dating apps and quickly matched with men who tried to offer her investing advice. “People are lonely from the pandemic, and crypto is super hot right now,” she said. “The combination of the two has really made this a successful scam.” Lee, whose company works with several dating apps to prevent fraud, said that these scammers typically tried to move the conversation off a dating app and onto WhatsApp — where messages are encrypted and harder for companies or law enforcement agencies to track. From there, the scammer bombards the victim with flirtatious messages until turning the conversation to cryptocurrency. The scammer, posing as a successful trader, offers to show the victim how to invest his or her money for fast, low-risk gains.

Then, Lee said, the scammer helps the victim buy cryptocurrency on a legitimate site, like Coinbase or Crypto.com, and provides instructions for transferring it to a fake cryptocurrency exchange. The victim’s money appears on the exchange’s website, and he or she starts “investing” it in various crypto assets, under the scammer’s guidance, before the scammer ultimately absconds with the money.

What makes this particular scam so insidious is how much more elaborate it is. Some victims have described being directed to realistic-looking websites with charts and tickers showing the prices of various crypto assets. The names and addresses of the fake exchanges are changed frequently, and victims are often allowed to withdraw small amounts of money early on, making them more comfortable depositing larger sums later. “This kind of scam is quite labour-intensive and time-consuming,” Santiago, of the Global Anti-Scam Organization, said. “They’re very meticulous in their social engineering.”

Cryptocurrencies are particularly useful to scammers, experts say, because of the relative privacy they offer. Bitcoin transactions are publicly visible, but because digital wallets can be set up anonymously, technically sophisticated criminals can obscure the trail of money. And because there is no central bank or deposit insurance to make victims whole, stolen money usually can’t be recovered.