Crypto Companies Team Up With Social Media Apps to Fight Romance Scam

5 months ago 2

ARTICLE AD BOX

In a significant move to combat online fraud, several prominent tech companies have formed a coalition named “Tech Against Scams.”

This group aims to tackle the rising tide of online scams, particularly romance scams, by fostering collaboration and sharing intelligence across industries.

How Tech Against Scam Plans to Deal With Romance Scam

The coalition includes major players such as Coinbase, Match Group (parent company of Tinder and Hinge), Meta, Kraken, Ripple, Gemini, and the Global Anti-Scam Organization. By joining forces, these companies aim to create a unified front against the sophisticated tactics used by scammers. Their efforts will focus on sharing best practices, threat intelligence, and strategies to educate and protect users.

Romance scams have become increasingly prevalent. Fraudsters use fake identities to build relationships with potential victims through text messages, social media platforms, or dating apps.

After establishing trust, scammers introduce the idea of crypto investments. Eventually, they persuade victims to transfer funds to accounts under the scammers’ control. This process is often referred to as “pig butchering,” highlighting the gradual, systematic exploitation of victims.

In response to these threats, Tech Against Scams plans to disrupt the tools and methods fraudsters use. This will make it harder for them to operate.

“Fraud schemes are becoming increasingly sophisticated, underscoring a greater emphasis on the importance of industry leaders coming together to tackle fraud and secure a safer digital environment for users. We are dedicated to disrupting emerging online scams through collaboration, information sharing, and enhanced consumer education,” Philip Martin, Chief Security Officer at Coinbase, said.

BeInCrypto reported a recent example of the impact of these scams on May 18. The US Department of Justice (DOJ) arrested two Chinese nationals, Daren Li and Yicheng Zhang, for orchestrating a romance scam that led to the laundering of at least $73 million.

The DOJ’s investigation revealed extensive coordination between the conspirators. This included communications discussing the scheme’s logistics and the use of various shell companies to facilitate money laundering. The scam involved converting more than $73 million into the USDT stablecoin and transferring over $341 million in virtual assets to a crypto wallet.

As cryptocurrency adoption grows, so does the ingenuity of related scams. According to a Chainalysis report, romance scams have increased eighty-fivefold since 2020. Losses from such scams are suspected to reach $374 million in 2023.