Boston, MA – The FBI is issuing a public service announcement to warn US citizens of a cryptocurrency scam using an investment strategy called Liquidity Mininga in which scammers exploit cryptocurrency owners, typically Tether and /or Ethereum.

The scammer establishes a business or personal relationship with the victims over a few days to a few weeks, gives purchase instructions if the victims do not already own cryptocurrency, and entices them to participate in cash mining by guaranteeing a return on investment of one to three percent per day. Scammers convince victims to link their cryptocurrency wallet to a scam cash mining app. The crooks then wipe out the funds of the victims without any notification or permission from the victim.

Since January 2019, according to the FBI’s Internet Crime Complaint Center (IC3) and open source, this scam has been responsible for more than $70 million in combined losses for victims.

How it works is that scammers approach potential victims through an unsolicited direct message on social media, dating apps or messaging services such as Facebook, Instagram, Twitter, LinkedIn, WhatsApp, etc. find out who is unwittingly scammed on the same platform. Scammers do not distinguish between people who own cryptocurrency or not, directing victims who do not already own cryptocurrency to create an account with a wallet service and buy cryptocurrency. The scam does not require a minimum investment, allowing victims to “invest” any amount they wish.

In the DM approach, scammers send unsolicited messages to potential victims via social media or messaging services. The scammer engages in conversation with the victim and tries to initiate a personal or professional relationship, establishing a climate of trust over a period of a few days to a few weeks. During this period, the scammer will discuss the topic of cryptocurrency investment opportunities, including liquidity mining. The scammer states that he has been using this technique for a long time and has seen an incredible return on investment. The scam is not immediately apparent since the overall conversation is two people trying to get to know each other.

In the word-of-mouth approach, victims who have invested in cash-mining scammers see the alleged returns first, creating a false sense of security that encourages victims to continue buying and “invest” additional cryptocurrency. The first victim then tells their contacts about this lucrative investment opportunity, bringing more victims into the scam. The crooks then proceed to empty the wallets of the victims. This approach can be more effective since fraudulent platforms are recommended by a trusted person rather than an unknown party.

Regardless of the initial contact method used, victims who express an interest in investing receive a link to the scam cash mining app. To start investing, the victim must link their cryptocurrency wallet to the app. Scammers instruct victims how to connect their cryptocurrency wallet to the liquidity mining operation by clicking a button to receive a so-called mining certificate, voucher or node, in exchange for a small fee. A pop-up designed to mirror the interface of the wallet app presents a list of permissions it is supposed to request. By clicking on the link and agreeing to the permissions presented, the victims unknowingly allow the crooks to withdraw unlimited amount of funds from their cryptocurrency wallets without permission or notification.

In the cash mining scam, victims move cryptocurrency from their wallet to the cash mining platform and view the purported returns on a fake dashboard. Believing that their investments are successful, victims buy additional cryptocurrency. The crooks eventually transfer all stored cryptocurrencies and investments made to a wallet controlled by the crooks.

Once the victim’s money is stolen, the victim usually contacts their wallet provider or the customer service portal on the scam app. People claiming to be customer service representatives for the scam may present one of many explanations as to where the money went and why it is no longer accessible, culminating in the claim that the victim must deposit additional funds in order to get their money back. Victims cannot recover their funds even if they add additional funds as instructed.

Actions to protect yourself
– Be aware that investors in legitimate liquidity mining operations deposit funds into the platform and then withdraw the original funds along with the returns generated. Reconsider pools that deviate from this procedure. In a legitimate liquidity mining process, returns are usually tied to cryptocurrency market fluctuations in the specific cryptocurrency or cryptocurrency pair being used.

-Be vigilant when discovering investment opportunities through online research. Scam websites or apps are usually not advertised online and are not allowed to be indexed by web crawlers from search engines such as Google and others. Check the spelling of web addresses, websites, and email addresses that seem trustworthy but may be imitations of legitimate websites.

-If you are concerned about the legitimacy of the domain, do not connect your cryptocurrency wallet.

-Don’t send a payment to someone you’ve only talked to online, even if you think you’ve established a relationship with that person.

– Authenticate all links sent by known and unknown contacts before clicking.

-Periodically use a third-party token allocation checker to determine if you have inadvertently allowed any sites or apps to access your wallet.

If you believe you have been the victim of a cash mining scam or other fraudulent scheme, please file a report with the FBI’s Internet Crime Complaint Center at www.ic3.gov. If possible, include the following:

-Identifying information about individuals, including name, phone number, address, and email address.

-Financial transaction information such as date, type of payment, amount, account numbers involved (including cryptocurrency wallet), name and address of receiving financial institution, and addresses receiving cryptocurrency.