Beware

A potential client reached out to me a few weeks ago, having been conned out of about $30,000. A case decided last month out of Norfolk Superior Court essentially mirrored the circumstances of the inquiry I got, right down to being the almost exact same amount. It also illustrates the difficulty in recovering money after a scam. And if the cash has been converted to crypto, it’s now one step even further away.

It's a variation on the old scam: target gets a phone call from someone purporting to be from some governmental authority, there is a potential problem, and the government official can resolve the problem once they receive a certain amount of money.  It’s not the Nigerian Prince swindle, but not really that different either.

The victim in the Norfolk County case had gotten a phone call from someone claiming to be from the Department of Homeland Security and that he was being implicated in a money laundering scheme. The scammer told the victim the source of the investigation centered around packages to be delivered with his name on them. To avoid arrest, he would need to pay a little over $30,000-converted into crypto-to avoid arrest. Shortly thereafter, he realized he had been scammed and called the Franklin Police, who seized the cash from the crypto ATM where the victim had deposited the cash. Needless to say, the bitcoin was long gone from the crypto wallet.

Having no chance to find the perpetrators, the victim looked to recover from the owner of the ATM, Athena Bitcoin, Inc. Unfortunately, the judge found them to be blameless. In fact, he noted that multiple warnings at various steps in the exchange process addressed exactly the type of scam the victim was in the midst of, particularly if requests for cash deposits were from a government entity or were for the receipt of a package. More importantly, the judge found that because Athena had no knowledge of the scam and had converted the cash into crypto as per the victim’s instructions, the money the victim deposited was rightfully Athena’s.

This ruling is a stark reminder that in the world of cryptocurrency, the burden of vigilance falls squarely on the user. If you find yourself on the phone with a 'tech support agent' or a 'government official' demanding payment via Bitcoin ATM, you are your own last line of defense. Stop. Hang up. And remember this simple rule: No legitimate entity will ever insist you pay them with irreversible cryptocurrency. If you are in the middle of such a scam, do not press 'send.' Walk away from the machine and immediately contact your local police and the FBI's Internet Crime Complaint Center (IC3).