The world of blockchain and crypto assets is still in its beginning, even if the technology is known for more than a decade. Crypto assets, being it Payment Token, Utility Token or work of art blockchained as NFTs, are capturing the attention of the public and gaining new users and investors…
… and scammers, fraudster and thieves. Crypto assets are not only a perfect mean for money laundering e.g. by hiding the traces of illegal proceeds but it is also a perfect place for committing fraud.
A tellingly example of scam emerged on January 12, 2022, when scammers set up an orchestrated giveaway party of Vitalik Buterin. Mr. Buterin is co-founder of Ethereum, the blockchain of the cryptocurrency Ether and for many further blockchain applications.
The whole scam included a youtube „live session“ with Vitalik Buterin.
The story went on on the promoted website new-ether.org. The website showed a blockchain address which allegedly doubled the amount of ETH a user would send to.
The whole story was well elaborated as it took advantage of the common fear-of-missing-out phenomenon (fomo) – as allegedly other users already have sent in ETH and received double back: on which they wrote comments in an ongoing live chat. Additionally, the incoming and outgoing amounts were shown on a rolling live stream.
It is the perfect set up for driving people to irrational decision making. Under time pressure – as the free ETH were running away to other users – the users had only a limit period of time to make up their mind, if they did or did not want to miss out this chance… or loose money.
Eventually, if a user was not totally convinced, the scammers provided for individual live support that gave personal assistance to users.
The scam giveaway stopped at the 77,132 ETH shown above. The website still was available for a while then showed a message to the site-owner in Russian. The current says that the hosting period has ended as the account at the hosting website ran out of money.
Today, the same story is going on on the website newether.org. And it is hard to stop the scam.
Can we expect that this kind of fraud ends with more crypto regulation?
Probably not. The described activities were within the scope of regulation (e.g. in Germany) but as the whole story was promoted as free giveaway there would have been – from a legal point of view – no intent to generate a profit which is a minimum requirement for being regulated under the German Banking Act. Anyway, this was fraud and fraud is a crime.
Maybe there should be even some kind of regulation for giveaways offered to the public. At least some kind of pre-notice to a public register, where the offeror has to register himself. This might be a reasonable action with regard to AML and reduce the risk of fraud to the public.
However, users need to be very vigilant. There is no free lunch. Not even in the crazy crypto market with free airdrops and giveaways.
