The mobile application showed a profit of $2.8 million on what appeared to be a hot day of trading on the Singapore exchange. But whenever the trader tried to withdraw funds back home in the United States, she faced customer service representatives asking for mysteriously high tax payments or fees, according to court documents.
U.S. officials say it’s a new and sophisticated scam draining millions of dollars from people who drop their guard online. Far from earning $2.8 million, the trader invested $9.6 million into the platform this year before it all vanished, according to court documents.
In a court filing in November, the Secret Service said five U.S. victims reported that they were enticed to invest large sums in cryptocurrency this year by scammers who created seven identical domains spoofing the website of the Singapore International Monetary Exchange. The scammers also created a smartphone app mimicking what traders use on legitimate platforms, officials said.
According to a warrant filed in federal court in the Eastern District of Virginia as part of the websites’ seizure last month, one victim in Richmond lost $289,000. Another, in Los Angeles, was drained of more than $200,000. The trader in Redmond, Wash., who thought she netted $2.8 million in one day in July said her account showed a total profit of about $7 million.
But the “trading profit” displayed on her app was an illusion, according to U.S. officials.
“After numerous attempts to withdraw their investments, they were unable to recover any portion of their cryptocurrency investment,” a Secret Service agent stated in the court filing in November.
Investigators call it a “pig-butchering” scheme. Scammers find targets on dating apps, social media or via text messages sent to a “wrong number.” They strike up relationships with the targets and slowly gain their trust, eventually floating the possibility of a cryptocurrency investment. Once the money is sent to a fake investment app, the scammer disappears with the funds.
Jason Kane, deputy assistant director of the U.S. Secret Service Office of Investigations, called it “the next generation of the long con.”
“The American public must be aware of the dedication these criminals have to defraud people out of their hard-earned money,” Kane said in a statement. “Fraudsters may identify their victims and coerce them into investments, producing so-called returns on the investments to solicit further investments. The public must be vigilant in their online activity, aware of who they are interacting with and suspicious of any solicitation of funds from an unknown source.”
The FBI said that the scam originated in China in late 2019. But by 2021, the FBI’s Internet Crime Complaint Center had received more than 4,300 annual complaints related to crypto-romance scams, which resulted in more than $429 million in losses.
“Scammers are using translation programs to communicate seamlessly with their victims,” the FBI said in a news release. “Victims have very similar stories: Meeting someone on a dating app, the scammer gains the confidence and trust of the victim, and then claims to have knowledge of cryptocurrency investment or trading opportunities that will result in substantial profits. The victim is then directed to transfer large amounts of cryptocurrency from the exchange account to cryptocurrency wallets controlled by fraudsters, ultimately losing it all.”
The trader in Washington state said she communicated with a scammer via LINE, a Japanese chat application, and WeChat, a Chinese app. The warrant application does not describe how the two became acquainted.
Her first investment was for $400, authorities said, but days later she poured another $100,000 into the platform, and wound up losing $9.6 million total. She said “customer service representatives” would make requests for “taxes” or “fees” whenever she tried to withdraw funds from her account, according to the warrant application.
In May, a representative on the fake Singapore exchange told the trader that “according to Financial Income Tax Act, if the total profit of the day exceeds 100% of the principal amount of the transaction, you need to pay 30.6% of the profit amount of personal income tax,” U.S. officials said. That meant paying another $570,384 in taxes, according to court records.
“Please pay as soon as possible, after payment we will deduct the tax for you, thank you!” the representative said.
After the trader made the purported income tax payments and tried to withdraw funds, she was told the next month that she had “received 33 abnormal” bitcoin and “your account now belongs to the abnormal state … you need to pay 33 BTC as a security deposit, to ensure that you are not involved in any illegal behavior,” the warrant application says.
That’s when the trader “determined it was a scam and stopped making investments,” according to court records.
U.S. officials said the investigation into the spoofed Singapore exchange is ongoing. Federal prosecutors have not identified suspects by name. Officials said people who believe they may be victims of a cryptocurrency scam should contact [email protected] or visit IC3.gov to file a report.
(c) 2022, The Washington Post · Salvador Rizzo
In an effort to capitalize on recent reports of fake companies luring unsuspecting victims to invest their hard earned cash in scams and phony business ventures, Parker Brothers, the makers of the famous board game, Monopoly, announced on Monday that the board game will be offering special discounted rates to new clients who pay a one-time $75,000 fee online, via credit card, that will enable them to buy and trade properties via their Monopoly game.
“The Monopoly Game, a subsidiary of Parker Brothers Inc., has a longstanding reputation as a reputable, highly respectable real estate-game company,” a statement issued by Parker Brothers on Monday said. “Millions of successful investors have built up their business empires via Monopoly trade investments, rolling the dice with us, selling and purchasing properties, and developing some of the most luxurious and profitable hotels in the annals of board game history.”
“Many of our clients started off with no cash at all, and borrowed Monopoly’s exclusively patented money to kickstart their successful investment board game careers,” the statement went on to say. “The authenticity and buying power of our reputable, above board paper currency has never been questioned, and has never been under suspicion.”
“And while there have been some instances of Monopoly investors who were ordered to ‘go to jail’,” the statement said, “this was due to their own disreputable business practices, and totally unrelated to any of our investment strategies.”
“Moreover,” the statement went on to say, “on those rare occasions, where some of our board game clients ended up going to jail, they typically spent very little time there, and upon their release, they continued their successful Monopoly game careers.”
“For a short time only,” the statement continued, “Monopoly is offering a 30% discount to new clients who sign up with us online and pay us a one-time $75,000 fee via credit card. New clients will receive interest-free loans for life, and will have unlimitted access to our reliable and trustworthy game cash, with which they can use to rake in their board game fortunes.