Catching Scams before they Happen

Cryptocurrencies and the blockchain are newer technologies that serve as a decentralized currency system, a way to transfer assets, verify ownership, and much more. While the rise of cryptocurrencies and blockchain technology serve as a positive impact for many, scams within the industry have become more apparent. Additionally, while Individuals can use the blockchain to hide their identity and act as a strand of numbers behind a screen, it’s no wonder why scams and malicious acts of theft can be common in the industry. Recently, our compliance team, the Bitcoin ATM operator, and a customer encountered a new scam that involves romance and well, Bitcoin…

Scams Vs Compliance

A customer visited one of our operator’s ATM locations to purchase some bitcoin. The customer started a transaction to purchase ten-thousand dollars worth of bitcoin from the ATM, and shortly after made another transaction attempt to purchase an additional ten-thousand dollars worth of bitcoin. As part of our compliance processes, the customer is contacted via phone to confirm a large bitcoin transaction like this. We have seen many different types of scams in the past and that is why we are always so adamant about customers being contacted right after initiating a transaction for large dollar amounts of Bitcoin. This time when the operator called the customer to confirm the transaction and their KYC details, they were shocked… 

The Bitcoin ATM operator had called the customer wanting to complete a purchase for the now 20 thousand dollars of Bitcoin. The customer confirmed over the phone that they were the trying to purchase the Bitcoin and that they needed the Bitcoin right away. The operator asked the customer what they needed the large amount of bitcoin for so urgently. The customer said that his girlfriend had been kidnapped, and the kidnappers were holding her for ransom until he sends over ten-thousand dollars in Bitcoin. After hearing this information, the operator advised the customer to contact law enforcement right away. 

The customer urgently explained that the kidnappers had provided him with a QR code and told him to send the Bitcoin directly to the QR code right away. After further questioning, the customer told the operator that he and his girlfriend are “online dating” and have yet to meet in person.

Romance Scam

Continuing with our compliance procedures, the operator asked the customer a few more questions about his relationship with his online girlfriend. They have been talking for over a month and are apparently “in love.” While speaking with the customer, the operator learned that the customer’s “online girlfriend” is living in a completely different country than him. After more questioning, it was discovered that the customer has also never verbally spoken on the phone or face-timed with this girlfriend. Once learning this information, the operator advised the customer that he is most likely being scammed and that the transaction to the digital wallet would not be able to be completed. The operator explained further that Bitcoin sold from these types of ATMs, is only done directly to an individual and to a wallet that they own/control. Further, it would be a bad idea to proceed with sending the Bitcoin to what clearly appears to be a romance scam.

The Importance of Compliance

Our operator did a great job in advising the customer to reach out to the foreign embassy and to file a missing person request, if the customer truly believes his online girlfriend is kidnapped in a foreign country. After the operator was finished talking through this process, the customer came to the realization that he was in fact most likely being scammed and that his “online girlfriend” was more than likely fake. 

Within our compliance, we always advise operators to reach out personally to every customer wanting to complete a transaction for a large amount of Bitcoin. This helps the customers be certain of their decision, and verifies that it is truly them purchasing the Bitcoin. Moreover, this helps educate customers to avoid scams and fraud. 

 

About the Author

 

BTM Compliance, LLC, is a Veteran-owned and operated company providing federal compliance services to operators of the Bitcoin ATM industry.  To learn more about Bitcoin ATM Compliance and the services we provide contact us here


*This blog article cannot and does not contain legal advice. The information is provided for general informational purposes only which are factually based on research and personal experience. This is not a substitute for professional advice from your own legal counsel. Accordingly, before taking any actions based upon such information, we encourage you to consult with your legal counsel. We do not provide any kind of legal advice. The use or reliance of any information contained in this blog is solely at your own risk. 

 

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