Crypto Exchanges Unite in ‘Tech Against Scams’ to Fight Fraud

A coalition of prominent cryptocurrency firms, advocacy groups, and tech companies, spearheaded by Coinbase, has united to tackle the rampant scams that infest the industry. This alliance includes notable names such as Kraken, Gemini, Ripple Labs, Meta, the Global Anti-Scam Organization (GASO), and the dating app company Match. Together, they have introduced the “Tech Against Scams” initiative, which aims to address these fraudulent activities through public education and safety measures.

The primary goal of Tech Against Scams is to minimize the impact of extensive fraudulent activities by informing the public about the various tactics employed by scammers and suggesting effective strategies for avoiding these traps. In a press release, Coinbase pointed out “pig butchering” scams as a significant concern that the group intends to address.

Pig butchering is a particularly pernicious form of scam where fraudsters invest a considerable amount of time and effort into building a trusting relationship with their victims. These criminals gain the victims’ confidence, often through elaborate ruses, before making off with their money. Dating apps are a common hunting ground for these scammers, who use romance to build trust. Alternatively, they may lure victims with promises of lucrative but fraudulent business opportunities.

Coinbase emphasized that such scams are not unique to the cryptocurrency sector or even digital technology; they have been around for much longer, adapting to new platforms as they emerge. This historical context underscores the necessity for broader awareness and vigilance beyond just the crypto space.

The scope of the financial damage inflicted by these scams is staggering. According to the latest Crypto Crime Report from Chainalysis, approximately $5.9 billion was stolen through crypto-related scams in 2022. Notably though, illicit transactions only account for a mere 0.34% of all crypto transactions globally, as reported by Coinbase.

Adding a real-world dimension to these statistics, recent news from Reuters highlights a case where two individuals have been charged by U.S. prosecutors for their involvement in a crypto-targeted pig butchering scam. The accused, Yicheng Zhang and Daren Li, were apprehended by U.S. authorities in April. They allegedly orchestrated a scheme that swindled $73 million from their victims.

Investigations revealed that Zhang and Li funneled the stolen digital assets through 74 shell companies designed to obscure their fraudulent activities. Each shell company operated with a bank account that eventually transferred the embezzled funds to another account in the Bahamas. This elaborate laundering scheme illustrates the lengths to which scammers will go to cover their tracks.

The two suspects now face severe repercussions if found guilty. They have been charged with money laundering, and a conviction could see them imprisoned for up to 20 years, reflecting the gravity with which such financial crimes are viewed.

Through initiatives like Tech Against Scams, industry leaders hope to not only inform the public about the dangers but also to create a safer environment for all users. The urgency of such collective action remains clear, given the sophisticated and evolving nature of these scams.