A recent media release by Australian Federal Police (AFP) has revealed that Australian citizens lost around 180 million Australian dollars (about $122 million) in cryptocurrency scams over the past 12 months. This amount is nearly the half of total investment scams which stand at $382 million Australian dollars (around $269 million). The AFP data also revealed a startling trend that most scam victims (around 60% of total) were people under 50 years of age. This is significant because it is generally believed that older generation is more prone to scams.
AFP Assistant Commissioner Richard Chin opined that this shift indicates that younger people who usually possess more advance knowledge on technology, are also not safe from such scams. Richard Chin believed that the reported figures of $122 million in scams still might not be true because there is a possibility that many victims may not have reported scams due to fear of embarrassment or they might not have realized that they have been scammed.
The media release exposed two common techniques which are being used by scammers to deceive people; “pig butchering” and “deepfakes”.
Pig butchering is when scammers first create false friendship particularly on social media or messaging apps. Creating such a relationship can often take weeks or months. Once relationship is built, scammers try to convince victims to invest in fraudulent apps or projects with promises of high return and little or no risk. These projects appear legitimate and identical to well-known platforms or projects. Once invested, most of the high returns shown on such apps are fake which further encourage victims to put more money in them. Once, victim has put all possible investment, scammers disappear with all the money.
Deepfakes technique employs artificial intelligence to impersonate famous personalities or celebrities in form of audio clips, video ads or news articles. Ostensibly genuine, these celebrities promote fake investment opportunities so victims are ensured of guaranteed success this way. Potential investors putting their money in such schemes end up in financial loss.
To prevent such scams, AFP has urged Australian citizens to be cautious in their financial dealings especially when an offer appears too good to be true. It has also arranged a “Scams Awareness Week”, which runs from August 26-30 where citizens are being encouraged to share their scam stories in order to stop such incidents in future.
This media release by AFP points to an ever increasing problem of crypto scams. Chainalysis, a blockchain insights company, had also recently highlighted a rise in crypto scams in the first half of 2024. It is crucial for individuals of all age groups to remain alert and exercise extreme caution when dealing with online financial transactions.