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Bitcoin Phone Scammers Defraud Victims of $2 Million in New York

Scam Alert

The New York Police Department (NYPD) has issued warnings on an increase in Bitcoin-related fraudulent activity where con artists impersonate key government officials to defraud unsuspecting victims.

NYPD spokesperson says con artists using this method have already stolen millions of dollars from hundreds of people.

New York is only the latest in an increasing number of cities around the world beset by criminals taking advantage of virtual currencies to commit fraud. Law enforcement agencies from California to Australia and even Taiwan are grappling with the rising spate of cryptocurrency-related crime.

Bitcoin Phone Scammers on the Rise

According to the NYPD, there is an increase in cases of fraudsters impersonating Social Security Administration officials to defraud victims using Bitcoin.

The police department says there have been more than 200 cases since the start of the year amounting to over $2 million.

The figures recorded in 2019 so far constitute a massive increase in such crimes from 2018. NYPD figures show that it only recorded three such incidents in the whole of 2018.

The scam usually works with the con artist posing as a Social Security Administration official calling a victim to deceive them that the Social Security Number (SSN) has been implicated in some illegal activity like drug smuggling or money laundering. The scammer then threatens the victim with arrest unless money is paid to make the false charges disappear.

Commenting on the issue, Nilda Hofmann, the NYPD community affairs chief declared:

“Sophisticated phone scams use the trust victims have in their own government and law enforcement agencies against them. Victims of this type of phone scam are not limited to senior citizens – these criminals are targeting every stratum of society and every demographic is vulnerable.”


NYPD: Don’t Pay up, Hang up


For the NYPD, the only best way to combat such an illegal shakedown is to not engage with the fraudsters. Police say the criminals go to great lengths to perfect their subterfuge, even employing spoofing of their caller IDs to make them seem like legitimate government officials.

The longer victims stay on the phone, the more likely they are to fall for the intimidation or as Hofmann puts it:

“If you even suspect a call to be fraudulent, don’t take a chance, just hang up.”

The police department says it is doing its level best to run interference with its partners in the financial industry to track these fraudsters.

By carefully following transaction trails on the blockchain, law enforcement agencies across the world have been able to arrest numerous cryptocurrency fraudsters.



Bitcoin Winter Not Enough to Deter Crypto Scammers

Despite the Bitcoin bear market of 2018, it appears there was no slowing down in the spate of cryptocurrency crimes. Blockonomi has reported on several instances of cryptocurrency-related thefts running into hundreds of millions of dollars.

The Australian Competition and Consumer Commission (ACCC) says Bitcoin fraud in the country grew by about 190 percent in 2018 with total losses topping $4 million. Most of the victims were men between the ages of 25 to 34 with social media platforms and emails being the man conduit employed by the scammers.

Back in April, the French Autorité des Marchés Financiers (AMF) issued warnings about a firm promoting fake cryptocurrency trading programs. Many bad actors in the space tend to capitalize on the knowledge gap in the industry to defraud unsuspecting victims.

Even with the rising spate of cryptocurrency fraud, the losses from such activities still pale in comparison to the thefts occurring via nonvirtual currency means. The ACCC report showed that Bitcoin fraud was less than six percent of the financial crimes recorded in Australia in 2018.

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