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Scams at a Glance:
Florida Attorney General’s Office Cryptocurrency Scams
Scams at a Glance:
Cryptocurrency Scams
Cryptocurrency may be used as payment in certain Investment and Business Opportunity Scams:
transactions, while others buy cryptocurrency as Scammers may pose as a company promising
an investment, hoping the value increases. consumers that they can earn a lot of money in
a short time and asking consumers to pay in
Cryptocurrencies are typically offered by private
cryptocurrency for the right to recruit others
exchanges and not backed by the federal
into a program. Other scammers start with
government or a central bank. If cryptocurrency
unsolicited offers from purported “investment
is stored with a third party that goes out of
managers” who promise to help the consumer
business or is hacked, the government has no
increase their money if the consumer places
obligation to help return the lost value. Unlike
the cryptocurrency they bought in a specific
paying with a credit or debit card, if a consumer
account. Once the victim logs in to this
attempts to dispute a purchase, cryptocurrency
supposed “investment account,” they find that
exchanges typically do not have a process for
they can’t withdraw their money unless they
returning lost funds.
pay fees.
Payments made with cryptocurrency are typically
Bait-and-Switch Investment Scheme: These
not reversible. Once a cryptocurrency transaction
schemes defraud victims by first helping them
takes place, the buyer can usually only get the
earn profits, then encouraging the victims to
cryptocurrency back if the seller returns it.
transfer funds to a fraudulent trading platform
Cryptocurrency is a type of digital or virtual Investors should know that taxes must be where the money is stolen. After convincing
currency designed to be used over the internet paid on gains made from cryptocurrency the victim to invest with the scammer, the
by private exchanges. Being a virtual currency, investments. scammer will typically prompt the victim to
there is no physical coin or bill, and consumers establish an account with a legitimate
must use a service, called an exchange, if they cryptocurrency exchange. Afterward, victims
wish to convert cryptocurrency to U.S. dollars are directed to transfer earnings from the
or other fiat currency. Bitcoin and Ethereum legitimate platform to another cryptocurrency
are well-known cryptocurrencies, but there are website that is a fraudulent, imposter platform.
many different types of cryptocurrencies, and These fraudulent websites may only operate
new ones are continuously being created. for a short time and then victims are blocked
Cryptocurrency can be bought through an from accessing the phony investment accounts.
online exchange platform and stored in a Rug-Pulls: Scammers may create a new
cryptocurrency wallet, which can take many cryptocurrency and fraudulently encourage
forms—from mobile apps, paper wallets, victims to purchase it as an investment despite
online wallets or a hardware wallet (which may having little actual value. As the price of that
look like a USB stick). Some investors earn cryptocurrency increases, the scammers then
cryptocurrency through a complex process sell their holdings and take a profit while
called “mining,” which uses computer Scammers are always finding new ways to steal
victims’ money. Because cryptocurrencies have victims are left with a cryptocurrency worth
equipment to assist in completing far less than what they invested.
cryptocurrency transactions in exchange for a quickly become popular, scammers may prey on
small amount of cryptocurrency. the unsuspecting.