CoinDesk reporter Leigh Cuen is joined by attorney Preston Byrne, a partner at the Washington, D.C., office of Anderson Kill, to speak about schemes, scams and constitutional rights.
“There is basically little or no difference, a minimum of within the point of origin…whether something may be a scam,” Byrne said, regarding inaccurate blogs and representations of software projects. “Take Ethereum, for instance . Ethereum had all manner of promises that were made…the statements coming from the Ethereum Foundation were somewhat more measured.”
Regardless of whether any particular project is an effort at fraud, it’s likely that online money schemes of each variety will become more common during this coronavirus crisis. consistent with Thomas Papageorge, head of the buyer Protection Unit at the San Diego District Attorney’s office, there’s a “clear pattern” of more white-collar crimes since the recession began.
“The rate of incidents, the quantity of fraud, does increase dramatically during an emergency situation like this,” Papageorge said. “I’ve heard about new sorts of scams that involve cryptocurrency … investment scams and bogus advice about protecting your savings or bitcoin.”
Bitcoin evangelist Andreas Antonopoulos tweeted that fraudsters were impersonating him to supply unemployed people fake jobs, identity thieves trying to find personal information. Likewise, CoinDesk impersonators also are targeting people across the world .
According to Carnegie Mellon University economics professor Sevin Yeltekin, the financial stressors people are experiencing today make them “more susceptible to those scams.” However, there’s a bright side , she said, because businesses that survive the present recession will do so because they reimagined how they operate, including “risk management.”
Even tech-savvy people like Lisa Gus, startup investment lead at the govt Blockchain Association and co-founder of the startup WishKnish, are often susceptible to fraudsters in such stressful times. Gus said she spent several weeks being led on by a scammer impersonating a Binance employee before her startup’s security solution MetaCert identified a phishing domain behind the fraudster’s email account, [email protected]
“About LinkedIn, I’m not the sole one being inundated with fake [investment] offers…the amount of propositions I’ve been getting [is up],” Gus said. “Especially for larger companies, it’s impossible to trace profiles that are related to them.”
With regards to the present instance, a LinkedIn spokesperson recommended members “take precautions” in these trying times and “report any messages or postings they believe are scams to us so we will investigate.”
Larger companies often charge early-stage blockchain projects for working together, whether it’s cited as marketing costs or listing fees. In Gus’ case, the fraudster had due diligence paperwork and non-disclosure contracts, which made the scammer’s request for a bitcoin deposit less suspicious.
As for retail users, ShapeShift CEO Erik Voorhees has “definitely seen more phishing attempts” since early March. Likewise, a Binance spokesperson said thus far in 2020 the corporate saw a mean of 180 scam reports per month, which dwarf the unreported instances. therefore the exchange offers a public verification tool to see whether websites, phone numbers, emails, Telegram and WeChat handles are literally affiliated with Binance.
That’s why the blockchain explorer Etherscan launched the “EthProtect” program in April, to tag wallet addresses reportedly used for fraud. Etherscan CEO Matthew Tan said the corporate uses internal “circuit breakers” to attenuate false positives and aims to supply users with “actionable data” to form “informed choices” about who they transact with.
As for the attorney Byrne, he said in some cases cryptocurrency projects may conflict of consumer protection issues, albeit they’re not considered unregistered securities, frauds or scams.
“There’s a variety of representations of things, what you’ll say about things, that aren’t necessarily true but aren’t fraudulent,” he said.
The fact is, cryptocurrency now exists. People will use it unethically, an equivalent way they are doing with all other sorts of money. But there are lawful and constructive ways to use the technology also .
“You can operate a bitcoin business during a regulatory compliant fashion,” Byrne said. “However, it requires tons of labor and advice and style to try to to that correctly.”