The Kenosha Police Department has issued warnings to residents about a new scamming technique targeting their crypto holdings via Bitcoin ATMs. This comes amid ongoing investigations into two separate incidents where investors lost access to their Bitcoin (BTC).
Kenosha Police Issues Warnings to Residents About New Bitcoin ATM Scamming Technique
According to the Police, the victims reportedly received alerts on their phones saying their identities had been compromised. The scammers, posing in the guise of helping the victims salvage the situation, then ask them to transfer money to a “federal box” before their bank accounts are frozen.
They are encouraged to deposit money into a Bitcoin ATM and scan a QR code sent to their phones. Once the victim scans the QR code, the BTC they bought from the ATM is automatically transferred to the scammer’s wallet.
The criminals don’t stop there. They even ask their victims to purchase prepaid credit cards and provide them with the passcode, allowing the bad actors to use the cards immediately.
Kenosha Police is particularly concerned that the scamming technique could spread across Wisconsin like wildfire as the city has quite a few Bitcoin ATMs.
In a statement, the department warned that government agencies would never ask victims to deposit money or purchase an item to prevent a particular action, like the freezing of their assets.
Scammers are Coaching Victims to Ignore Warning Messages in Bitcoin ATMs
Some Bitcoin ATMs in the Kenosha area do notify users when it is suspected that they are prey to a fraud scheme and provide a helpline. However, the Police warned that the scammers are “coaching victims” to ignore these alerts or refer them to teller machines that do not issue warnings.
The department has advised Wisconsin city residents to contact the Police Fraud Unit on the helpline number 262-605-5203 in case they feel like they have been targeted. In addition, crypto users have been urged to get in touch with their friends and family if they suspect fraud.
The scammers are asking people not to contact their acquaintances or the police. Kenosha Police has asked residents to keep a close watch on elderly citizens holding crypto as they are easy targets for cybercriminals.
US Government Hot on Crypto Scammers’ Trails
While crypto scammers are busy updating their strategies and techniques, US government agencies have been at the top of their game when it comes to stopping these bad actors on their tracks. In recent months, the Securities and Exchange Commission (SEC) and the Department of Justice (DoJ) brought enforcement action against a number of individuals involved in crypto scams.
Just last week, the SEC entered into a settlement agreement with Brian Sewell, a 51-year-old Utah resident and founder of the American Bitcoin Academy and Rockwell Capital Management.
Brian was conducting an online cryptocurrency course where he cajoled students into investing Bitcoin in a hedge fund that his company had planned to launch. He even boasted that the fund would leverage AI to generate returns.
Sewell reportedly received approximately $1.2 million in BTC from 15 students. However, the conman did not launch the promised fund nor did he execute any of the trading strategies that he had discussed. In a unique case of crypto fraud, Sewell held onto investors’ Bitcoin instead of siphoning it.
Unfortunately, his crypto wallet was hacked and the tokens he held were stolen. The SEC then charged both Sewell and his hedge fund Rockwell with fraud. As part of the settlement agreement, the defendants have agreed to injunctive relief and Rockwell is set to pay $1.6 million in disgorgement and prejudgment interest while Sewell will pay $223,229 as a civil penalty.
Similarly last month, the DoJ indicted Australian national David Gilbert Saffron and Los Angeles resident Vincent Mazzotta Jr. for their roles in a $25 million Ponzi scheme involving AI and crypto trading.
They are accused of luring investors with the promise of high yield from crypto trading facilitated by an AI-powered trading bot. However, instead of using the funds for trading, Vincent and David misused them for extravagant personal expenses, which included private chartered flights, luxury hotel stays, rental of private mansions, hiring of a personal chef, and private security guards.
The duo leveraged deceptive tactics like interchain swaps and cryptocurrency mixers to hide transactions and the true nature of their use of investor funds. The charges against Saffron and Mazzotta include conspiracy to commit wire fraud, obstruct justice, conspiracy to commit money laundering, and money laundering. Additionally, Saffron is accused of committing felonies while on pre-trail release.