Romance scams
are on the rise, and now using crypto
to bleed hearts and accounts
dry
Romance scams are on the rise, and now using crypto to bleed hearts and
accounts dry
Alexandra Posadzki Financial and cybercrime reporter
Published 17 minutes ago Updated 3 minutes ago
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In June of 2021, a man identifying himself as Moshe Theodor McNigh befriended
a Toronto woman on Facebook and began to woo her.
He persuaded her to invest approximately $355,000 in bitcoin through a site
called Legacyfxtraders.online.
A few months later, the woman – who police are not naming owing to concerns
for her safety – was contacted by authorities in Nigeria, who told her that
she’d been defrauded. The man she’d actually been chatting with, they alleged,
was a Nigerian named Omonkhoa Precious Afure. Local police had arrested him
and seized his assets, according to a news release .
Fortunately for the woman, her story has a relatively happy ending. In
December, after a ruling by the Nigerian courts, police returned $225,000 of
her money – “right before Christmas,” said John Armit, a detective constable
with the Ontario Provincial Police’s anti-rackets branch.
“It was a really special moment for us to hear that the funds came back …
because so often that’s not the case,” said Det. Constable Armit, who was part
of a collaborative effort between Nigerian and Canadian law enforcement. “It’s
a testament to relentless investigators and also international co-operation.”
Fraudsters are siphoning millions of dollars out of the Canadian economy each
year. Fraud victims reported a total of $577-million in losses to the Canadian
Anti-Fraud• Высокие технологии » Системы безопасности, контроля и автоматизации » Антифрод-системы
• Информационные технологии » Антифрод-системы Centre in 2023, and 2024 will likely surpass that figure, with
$574-million of losses reported as of the end of November.
Romance fraud is unique in that the number of victims is small, but each
individual’s losses may be substantial. As of September, victims of romance
fraud had reported $37.2-million of losses to the anti-fraud• Высокие технологии » Системы безопасности, контроля и автоматизации » Антифрод-системы
• Информационные технологии » Антифрод-системы centre, making it
the second-highest-grossing scam type after investment fraud, at $228-million.
The figures likely represent the tip of the iceberg; according to one
estimate, just 5 to 10 per cent of frauds are reported to the centre.
Erin West, who runs an initiative called Operation Shamrock that aims to
disrupt cyberscams, calls the situation unprecedented.
“We have never seen any kind of scam take off in the way this has taken off …
We are inundated all day, every day, with victims who’ve lost everything,”
said Ms. West, a recently retired state prosecutor in California’s Santa Clara
County.
The scheme that targeted the Toronto resident was a classic romance fraud with
a modern twist.
In a typical romance fraud, the fraudster convinces the victim that they’re in
a relationship, then uses that bond to siphon money out of the victim. But the
emergence of cryptocurrency• Экономика » Финансы » Платежные средства » Платежные системы интернета » Криптовалюта has added a new dimension• Музыка » Музыкальные жанры » Стиль Метал » Метал-альбомы » Альбомы блэк-метала » Музыкальные Альбомы Darkthrone » A New Dimension to many of these frauds,
which often incorporate investment scams.
Fraudsters target victims who are lonely and sometimes elderly, spending days,
weeks or even months grooming them. They’ll chat with their victims for hours
a day, trying to learn as much as they can about the person, including what
assets they own.
“The scammer is portraying themselves as living a really elevated lifestyle,”
said Ms. West. “They just got a new Range Rover. They’re going to Hawaii next
week. Should they get a Hermes bag?”
Eventually, the scammer will tell the victim that their luxurious lifestyle is
funded with cryptocurrency• Экономика » Финансы » Платежные средства » Платежные системы интернета » Криптовалюта investments. They trick the victim into sending
them money and the victim thinks it’s for legitimate investments. Fake
websites are created with dashboards to convince the victim that the
investments are growing.
“They think, ‘Oh my God, this really does work.’ And so, they get talked into
putting all of the rest of their money into this, and and by the time they’re
done, they’ve liquidated their retirement accounts, their children’s college
accounts and then they come to realize that it was all a fraud,” said Ms.
West.
These types of investment scams don’t always involve faking a romantic
relationship. Sometimes the scammer establishes a long-term friendship. The
common element, said Ms. West, is that “it does not end until they’ve gotten
every last penny from the victim.”
Some experts call these schemes “pig butchering,” a term derived from the
practice of “fattening up” the victims by gaining their trust before
“slaughtering” them by stealing their funds.
The Association of Certified Fraud Examiners designated pig butchering as the
top fraud of 2024 in its annual year-end report. Researchers at the University
of Texas at Austin• Соединённые Штаты Америки (США) » Населенные пункты США » Города США » Столицы Штатов США » Остин (Техас)
• Соединённые Штаты Америки (США) » Населенные пункты США » Города США » Города Техаса » Остин (Техас) recently traced US$75-billion to crypto exchange accounts
belonging to criminal organizations perpetrating pig-butchering scams.
“We have seen many victims who have lost more than their life savings,” said
Sammy Wu, manager of investigations at the B.C. Securities Commission. “They
would remortgage their home. They would put in millions of dollars.”
The difference between a run-of-the-mill romance scam and a pig-butchering
scheme is not only the extent to which victims’ resources are drained. While a
romance fraud may be perpetrated by an individual acting alone, pig butchering
is “an industrialized, full-scale attack that is being run by Chinese
organized crime,” according to Ms. West. Often, the people chatting with the
targets are human trafficking victims holed up in compounds in places such as
Cambodia, Laos or the Philippines who are forced to commit crimes.
Local intermediaries known as money mules may be used to move the funds. Some
of them are knowingly complicit, while others may themselves be victims
tricked into unwittingly moving money for organized crime, said Mr. Wu. “You
have probably received texts on your cell phone saying that you can make $600
an hour working from home, right? A lot of these are just recruiting money
mules,” he said.
Most victims aren’t as fortunate as the Toronto woman who got most of her
funds back. Cryptocurrency• Экономика » Финансы » Платежные средства » Платежные системы интернета » Криптовалюта has made it easier for criminals to move money
across borders and to obfuscate the trail, as some virtual currency• Экономика » Финансы » Платежные средства » Платежные системы интернета » Криптовалюта exchanges
don’t require their clients to provide government-issued photo ID.
“They really have no idea who’s operating the cryptocurrency• Экономика » Финансы » Платежные средства » Платежные системы интернета » Криптовалюта account, so the
trail of money is effectively stopped,” said Ashley Ferguson, a lawyer at
Investigation Counsel, a boutique law firm that specializes in fraud recovery.
Cryptocurrencies• Экономика » Финансы » Платежные средства » Платежные системы интернета » Криптовалюта such as Monero• Экономика » Финансы » Платежные средства » Платежные системы интернета » Криптовалюта » Monero that are specifically designed to protect
privacy pose an additional challenge, said the OPP’s Det. Constable Armit.
Given how challenging recovery can be, some regulators and law enforcement
agencies are focusing on disrupting the fraud schemes before they succeed.
The BCSC, for instance, has been working with internet service providers to
shut down websites that are being used to perpetrate securities fraud. In 2024
alone, the securities regulator managed to get 69 websites taken down.
And in December, the OPP announced that its Project Atlas initiative had
stopped $70-million of victims’ funds from landing in the hands of bad actors.
Police identified crypto wallet addresses belonging to fraudsters and provided
the addresses to crypto exchanges, which could then freeze funds and kick bad
actors off their platforms.
“We need these sorts of projects where we bring in the private sector, the
public sector and law enforcement in order to combat these crypto frauds,”
said Det. Constable Armit.
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