Scammers strike gold💰
Nameet Potnis
Founder @Muzify | Connecting Music Superfans with Their Tribe and Empowering Artists | Payments & E-commerce Expert
The past year saw Uncle Sam's children being robbed.
» $3.82 billion in total.
And crypto investment scams?
» $2.57 billion of that.
"The unprecedented rise in investment fraud is due to a combination of traditional and modern tactics, with the bulk of the increase coming from cryptocurrency-related scams" - reads the Carlson Law [report]
Scammers' favourite territories
Like every wild west tale, some territories are teeming with more outlaws than others. California, unfortunately, is where they hit the jackpot, robbing the residents of a staggering $870 million in 2022.
However, outlaws don't stop at state lines. They roam the land from New Hampshire to Iowa, Mississippi, and West Virginia. Turns out, investment scams are most common in larger states like New York, California, and Florida.
Deception and false gold
One common trick of the outlaws is the use of deepfake videos, parading as well-known individuals promising investment gold mines.
Scammers are now using AI to create super convincing deep fakes, like a video or a voice clone, to trick people. A woman, thinking she's interacting with Elon Musk, lost $750,000 in an investment scam. She received fake profit papers, but her money was gone.
If an investment sounds too good to be true, it probably is.
Another mask these outlaws wear is that of crypto ICO fraudsters. They stage elaborate hoaxes, complete with fake ICOs and promises of lucrative returns. Once they've got your gold, they vanish without a trace.
Lastly, the pump-and-dump swindlers. They stage fake market activity to inflate prices, luring investors to buy high. Once they've sold their share, the 'gold mine' collapses, leaving the rest holding nothing but dust.
Everyone's a target
From professional athletes to your average Joe and less tech-savvy seniors, no one's safe. Between 2004 and 2018, pro athletes from NFL, NBA, MLB, and NHL lost $585 million to investment scams. But it's not just the stars who suffered. Hard-working Americans and seniors are among the most targeted, with the elders losing close to $1 billion last year.
Scam Signs:
Post-Scam Steps:
AI helping the sinners?
Now, the tech world's been all about how AI can be the knight in shining armour for the crypto-verse, saving it from scams. But they've been missing a crucial point: AI could very well be a double-edged sword.
Meta reported blocking more than 1,000 malicious links masked as ChatGPT extensions in March and April alone.
The so-called AI project Harvest Keeper defrauded its users of about $1 million earlier this year in March 2023.
Search "ChatGPT" or "OpenAI" on DEXTools, and you'll find over 700 token trading pairs. What's happening here is that scammers are riding the AI wave, minting tokens despite OpenAI's silence about stepping into the crypto realm.
And they're getting smart. Using AI, these scoundrels amplify their reach on social media and build what looks like a dedicated fanbase - trick you into thinking a project is popular.
With the rise of AI, scams are getting more intricate. Take "pig butchering" scams. An AI can play nice, befriend you, and then scam you. With AI chatbots or virtual assistants, the scams are getting more sophisticated, mimicking human-like conversations. You've got fake tokens, ICOs, pump-and-dump schemes and, of course, the deepfakes—all under the AI umbrella.
Alphapo hack update
The Alphapo payment provider hack that occurred on July 23 is now estimated to have caused losses of over $60 million, according to @zachxbt. Previously, the loss was reported to be around $31 million. Alphapo is a centralised crypto payment provider for various online businesses, including gaming sites and e-commerce subscription services.
Security experts discovered that the site's hot wallets had been drained of at least $21 million, with some sources suggesting the losses were even higher. Alphapo is known for providing services to platforms like HypeDrop, Bovada, and Ignition.
Is Lazarus Group at it again?
Crypto payment gateway CoinsPaid suspects that the Lazarus Group was responsible for a $37.3 million hack on its internal systems. The company halted operations for four days but has since resumed in a limited environment. Customer funds remain intact, but significant damage was done to the platform and the firm's balance sheet.
CoinsPaid believes that the hackers were aiming for a much larger sum. The company has filed a report with Estonian law enforcement and is confident that the Lazarus Group will be held accountable. The hack may be linked to recent hacks in Atomic Wallet and Alphapo.
TTD BTC ₿
Robert F. Kennedy Jr., that Democratic Presidential hopeful you've heard about, just gave each of his seven kids a neat little present - a couple of Bitcoins each. Why? Well, he's decided to put his money where his mouth is. His words, not mine.
After his bullish speech at the Bitcoin Miami Conference, Kennedy Jr. found himself on the receiving end of some raised eyebrows and questioning glances.
"Promoting such a volatile commodity but got no skin in the game, huh?" They said.
And what does Kennedy Jr. do? He gets a hefty check, and the next thing you know, he's buying two Bitcoins for each of his seven offspring! We're talking four sons, two daughters, and a daughter from his most recent marriage to Hollywood's own Cheryl Hines.
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Now, rewind to his Miami speech. He was all "I am not an investor, I am not here to give investment advice." But here's the kicker. A leaked financial disclosure suggested Kennedy was sitting on a Bitcoin treasure "between $100,001 and $250,000" at the end of June.
If he had indeed bought 14 Bitcoins, each at $26,800, post-conference, his total holdings would've rocketed past $380,000 by end June. With Bitcoin now priced at $29,327, that's a cool $410,000 nest egg.
If elected President, he plans to back the U.S. dollar with Bitcoin, exempting it from capital gains taxes. He sees Bitcoin as the driving force behind bringing innovation back to America.
TTD SBF 🦹🏻 ♂️
The US prosecutors are considering dropping a charge against him for conspiracy to make unlawful campaign contributions.
How did this turnabout happen? Well, let's just say that The Bahamas played the trump card. The island nation has decided not to extradite Bankman-Fried for this specific charge. The US attorney, Damian Williams, threw in the towel, indicating that they won't be carrying this charge forward to trial.
"The Bahamas did not intend to extradite the defendant on the campaign contributions count," Williams wrote in a letter to District Court Judge Lewis Kaplan. "In keeping with its treaty obligations to The Bahamas, the Government does not intend to proceed to trial on the campaign contributions count."
Now, don't forget, Bankman-Fried hasn't been playing on a clean slate. He's up against a staggering 13 charges, 8 of which were unsealed last December, and includes the one that's now heading for the chopping block. The other 5 were thrown into the mix a bit later in February and March 2023.
Once this charge is dropped, SBF will be wrestling with 12 charges that include accusations of fraud, money laundering, and bribing Chinese officials.
The Warning
In a recent hearing on July 26, things took a turn. The Assistant US Attorney Danielle Sassoon accused SBF of using his get-out-of-jail card to intimidate Caroline Ellison, who also happens to be his former flame and work buddy. SBF's new pastime? He's been dialling up a reporter - around 100 times, give or take - who wrote the juicy New York Times piece that aired Ellison's private online journals.
Judge Lewis Kaplan is set to hear arguments from the US government on July 28 and from SBF's defence on Aug. 3.
His advice for Bankman-Fried?
'Better take it seriously.'
To add to the suspense, the judge has already given the green light to a temporary order which means SBF can't run his mouth outside court until there's a verdict on the bail situation.
TTD Meta ♾️
Meta, formerly Facebook, has reported significant financial losses amounting to $3.74 billion in Q2 2023 due to its investment in metaverse-related ventures.
This drop in Reality Labs' revenue is attributed to lower sales of its Quest 2 VR headset and rising expenses due to staffing costs. Meta projects that the operating losses of Reality Labs will continue to rise due to VR-related product development and further investments in the metaverse.
Zuck's hopeful
"As our investments in AI continue, we remain fully committed to the metaverse vision as well," Meta CEO Mark Zuckerberg said. "We've been working on both of these two major priorities for many years in parallel now, and in many ways, the two areas are overlapping and complementary."
Alibaba will be the first Chinese company to use Meta's open-source AI model, Llama, for zero-cost development of programs. Alibaba Cloud has deployed a Llama 2-based solution, allowing businesses to develop software and tools using AI.
Llama 2 was released in July 2023 as a free-to-use service, competing with OpenAI's ChatGPT and Google's Bard. Meta intends to offer Llama 2 for free to companies with less than 700 million monthly active users.
TTD Bills 📔
Two game-changing crypto bills just cleared the hurdle at the United States House Financial Services Committee.
On July 26, lawmakers in the US gave a thumbs up to the Financial Innovation and Technology for the 21st Century Act and the Blockchain Regulatory Certainty Act.
That's quite a mouthful, but the gist is simple - it's time to separate the crypto sheep from the securities goats.
The Financial Innovation and Technology for the 21st Century Act swung through the committee with a 35-15 vote. The act will set down the rules for crypto firms on when to register with the Commodity Futures Trading Commission or the Securities and Exchange Commission.
Meanwhile, the Blockchain Regulatory Certainty Act is all about removing the speed bumps for the 'blockchain developers and service providers.'
Think miners, multisignature service providers, and decentralised finance platforms.
There's always a catch. This time, it's the Digital Assets Market Structure bill. Some folks on both sides of the aisle just didn't feel the vibe. The bill was slammed for playing too nice with the crypto industry and giving the cold shoulder to SEC's regulatory guidance.
While there's a long road ahead for these bills, it's undeniable that this is a monumental moment for the US crypto community.
TTD Surfer 🏄