Cryptocurrencies. About these risks is silent [OPINIA EKSPERTA]

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Old like the world, but dressed in cinematography are used for fraud. They attract a vision of a beautiful, easy life or celebrities who celebrate their “quickly gained” wealth in online media. This is to encourage investing, obtaining cryptocurrencies or using solutions based on them. Going to specific matters of clients and people who wanted to invest in cryptocurrencies, seven typical problems and threats can be indicated. Here they are.

1. Your data, their profit – extortion in the crypto world

As in the case of classic scams from bank accounts – in the world of cryptocurrencies, the perpetrators use sociotechnics, threats or mislead victim. The perpetrators will apply threats or mislead the victim by promising the short profits. By using social engineering, they prompt victims to act in accordance with their interest. In the office, we have cases in which fraudsters claimed that the funds disappeared from the cryptocurrency portfolio and demanded the transfer of all data, allegedly needed to recover them.

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2. Using the image of celebrities

Currently, one of the highly recorded candidates for the president of Poland has been publicly praising cryptocurrencies for many years, showing his investments. This means that criminals willingly use his image. This is not new – similar actions were observed in the USA, where fraudsters used the image of Elon Musk.

In promotional materials, criminals suggest that the celebrity allegedly recommends a specific form of investment in cryptocurrencies and shares his “secret”. The link given in false materials leads to a crafted page, advertised as a tool for analyzing trends and the use of market variability. In order to use the platform, the user must set up an account and pay the initial capital in the amount of at least PLN 1,100. He is tempted by the promise that the money will start to “earn on themselves”. Nothing could be more wrong – it's a scam. To make the message credible, fraudsters, however, publish various types of celebrities, including from public interviews and speeches.

3. Fraud using false advisers

Currently, a case is going on against a citizen of Ukraine and a citizen of Georgia, who is accused of fraud to the detriment of 600 people, with a total value of about PLN 40 million. The criminal practice consisted in creating “technical facilities” – a call center, whose employees, contacted the victims, pretending to be advisers, consultants or accounting careers. The callers urged to install the software that enable remote access to computers. After accessing access, the perpetrators carried out financial operations through foreign online currency exchange offices and stock exchanges. According to the prosecutor's office, the procedure used methods of masking and anonymization of IP addresses, as well as the so -called Spoofing – impersonating trusted entities. The so -called Simboxes, i.e. devices for anonymizing telephone connections.

4. Abuse at the “digging” stage

Irregularities occur at the very beginning – during the process of creating cryptocurrencies. There are many examples, but one of the most famous is the discovery of the illegal cryptocurrency mine in the basement of the Faculty of Law, Administration and Economics of the University of Wrocław. The mine was detected when a computer equipment fire was fire, which caused smoke in ventilation. The police determined that the equipment was illegally connected to the power grid and used huge amounts of electricity. A similar situation took place in the Supreme Administrative Court. The high demand for computing power and energy means that people dealing with digging cryptocurrencies are tempted to use the work environment for their own purposes. These types of activities are illegal – they use other people's resources for private benefits.

5. Mine diagram at the former FSO factory in Żerań

A similar abuse – also related to kicking cryptocurrencies – was the scheme implemented at the former FSO factory in Warsaw's Żerań. Criminals persuaded over 600 people to conclude contracts for the purchase and lease of specialized computer equipment and graphics cards. The victims donated almost 56 million zlotys, 67,000 dollars, 35,000 euros and equipment worth about 2 million zlotys. The devices were to work without interruption, and the profit from the dug cryptocurrencies was to be shared with clients – every month the established part of the income was to reach them. As established in the investigation of the Regional Prosecutor's Office in Warsaw, All the extracted cryptocurrencies went to unknown virtual portfolios, and the victims did not receive any benefits. It was a classic financial pyramid based on new technologies.

6. Affers related to cryptocurrency exchanges

Cryptocurrency exchanges are a particularly vulnerable space – the larger the stock exchange, the greater the assets. An example is the WeX exchange, whose owner was detained in Poland. According to media reports, the disappearance of cryptocurrencies with a value of $ 450 million may be related to the actions of the Russian FSB. Another case is the BitCurex exchange, which disappeared from the network almost a decade ago. At the time of closing, its bills contained over PLN 5.7 million – and the lost 2300 BTC has a much higher value today. It is also a common form of fraud to impersonate legally operating stock exchanges. Criminals use the reputation of known platforms to extort pre -fees, which of course are lost.

7. Speculating inflating the values ​​of cryptocurrencies

Some Cryptocurrencies are created or “resuscitated” only to artificially conquer their value. When speculators make the assumed profit, they sell assets and abandon the project, which causes a sharp decrease in value. False transactions on smaller stock exchanges are often used here, where prices are manipulated. This mechanism can be compared to classic stock fraud, where companies with apparent potential are intentionally “pumped” and then abandoned after profitable operations on their actions or shares.

Warning for entrepreneurs

Risks may also apply to professional entities operating on the cryptocurrency market as an entrepreneur. It is obvious to the risk of charges related to money laundering, and in some cases – also with fencing. These are complex matters in which, in addition to criminal threads, there are also issues in the field of bank and civil law. Experience shows that misunderstanding the specifics of the cryptocurrency market and the principles of its functioning leads to the initiation of proceedings (blocking accounts, the application of security, charges, etc.) in situations where this should not take place. We help our clients, but the duration of such proceedings, the need to explain and some kind of administrative resistance make the actions of state bodies very severe – even if they finally end with acquittal or redemption of allegations.

Instead of a summary

Cryptocurrencies have become an integral part of modern financial markets. Their global, decentralized character opens up enormous opportunities for investors and entrepreneurs – from alternative forms of capital placement, through innovative business models, to the development of blockchain technology, which revolutionizes not only finances, but also logistics, data protection or real estate sector. More and more clear regulations, such as MICA EU regulations, create a space for legal and stable projects, which promotes market professionalization. On the other hand, the cryptocurrency industry attracts not only innovators, but also criminals. Poland has often been the arena of loud scandals – from financial pyramids, such as Dascoin, through false investment platforms, to impersonating known brands and celebrities. The market is still full of fraud, phishing, scams and abuses that hit both beginner investors and more experienced players.