Original title: Crypto Scams (Full Episode) | Trafficked with Mariana Van Zeller | Nat Geo
Original source: National Geographic, Youtube
Original translation: TechFlow
Dubais Shadow: Confessions of a Scammer
In a luxurious villa on Dubais Palm Island, a mysterious man was interviewed. The villa rents for $15,000 a week, and the sun shines through the floor-to-ceiling windows on the $250,000 worth of jewelry he wears. He said lightly, This is a legal way to steal. There was a disturbing sense of pride in his tone. The cryptocurrency scam operator who calls himself Mr. X calmly describes how to design a scam that can defraud tens of millions of dollars in just 15 minutes, as if he is talking about something that is very ordinary.
Mariana Van Zeller, host of National Geographic Channels Trafficked, reveals the little-known side of the crypto world through this exclusive interview - the scams that defraud billions of dollars from ordinary investors every year. From the designers of the scams to the victims who have lost their fortunes to the FBI agents who are committed to combating such crimes, this show presents a panoramic view of the cruel reality behind an era of digital wealth that is almost unregulated.
Highlights from the interview
Mr. X (Scam Operator)
Its a legal way to steal. Its a legal way to make money.
“A successful marketing campaign, with multiple KOLs promoting it, could easily earn around $69 million.”
“In Dubai, we know privileged people who can get us out of trouble. There are no lawsuits here, so we can get away with a lot of things.”
Thats because they are weak-minded. Dont invest money you cant afford to lose, understand? Who would do that?
“If you’re going to put your life savings into a token and don’t even do a five-minute Google search, I think they’re the dumbest people on the planet.”
“How can we get caught? Who will catch us? The crypto police? No one will help those investors.”
Robert (crypto victim-turned-vigilante)
“When the dust settled, I was left with $86. It was an indescribable feeling, emotionally devastating.”
“We’ve probably saved thousands of people and millions of dollars in losses. But it hasn’t been easy. We’ve even received death threats.”
“We monitor newly launched tokens for signs of suspicious activity. For example, when you see a token drop 85% in 24 hours but only drop 3% in the last hour, that’s usually a sign that someone is selling heavily.”
“A legitimate project will go to great lengths to prove to investors that their funds are safe, rather than avoiding the issue.”
“When developers on a project get defensive when questioned, or simply remove the questioner from the chatroom, it’s almost certainly a sign of a scam.”
Xavier (Cryptocurrency enthusiast)
Its amazing how many people can do this and get away with it. I personally know people who have lost their life savings because of this.
“I’ve been scammed 7 or 8 times myself. The first time I invested $500, and the second time I lost almost $10,000.”
“People don’t like to read, they don’t like to research, they just blindly follow the trends and influencers on social media.”
“In the world of decentralized finance, there are no rules and no protections. When you get scammed, you just have to blame yourself and there’s no way to get your money back.”
FBI Representative
“We do hear a lot about how there are a lot of gray areas and undefined areas in crypto, that it’s not money, so the rules of currency don’t apply. But when individuals invest with the understanding that certain promises are made, and those promises are not delivered, that’s fraud. Fraud is fraud.”
“We often find that new technologies are often first adopted by predatory individuals. Over the past year, we have seen an exponential increase in cryptocurrency-related fraud.”
“It’s often said that the FBI will catch their targets, today or tomorrow. Those who seek to harm our systems should always be vigilant, because we are watching.”
The Basics of the Pump and Dump Scam
Mariana: Can you explain how the “Rug Pull” scam works?
Xavier (cryptocurrency enthusiast, the person who initially explained the scam to host Mariana on the show):
Let me explain how this scam works with the example of margaritas. When we launch a token, lets say its a scam token, the scammers have already bought a large amount of this token at a very low price. As people start buying and the price goes up, the liquidity and value of the token also increases. More investors will come in and promoters on social media will continue to promote the product.
The average novice investor sees this and thinks, I have to jump in now, it looks great, it keeps going up, everyone is buying it. And just when the popularity of the token reaches its peak, the scammers will rug pull - sell all their holdings and let the price crash. This is the rug pull scam.
Its amazing how many people can do this and get away with it. I personally know people who have lost their life savings because of it.
Mariana: How important is it for ordinary investors to understand this scam?
Xavier:
Extremely important. I myself have been scammed 7 or 8 times, the first time I invested $500, and the next time I lost almost $10,000. This is the problem - people dont like to read, they dont like to research, they just blindly follow the trend and invest according to the KOLs on social media. However, in the world of decentralized finance, there are no rules and no protection measures. When you are scammed, you can only blame yourself and there is no way to recover your funds.
Insiders Note: A Conversation with Mr. X
Mariana: Have you ever been a victim yourself?
Mr. X:
Yes, every crypto trader has experienced a Rug Pull. So I thought, since this happens, I might as well figure out how they did it and how to make money like them.
Mariana: Why are you interested in this?
Mr. X:
Because this is easy money. This is Easy Money.
Mariana: How much can you earn from one scam?
Mr. X:
A successful marketing campaign, promoted by multiple influencers, could easily earn around $69 million.
Mariana: Dont you think this is stealing?
Mr. X:
No, that is a way of “legal stealing.” It is a legal way of making money.
Mariana: If this is legal, why are you wearing masks? Why not do this publicly?
Mr. X:
This is because my face is recognizable to a lot of people. This is my promoter (Shiller), who has hundreds of thousands of followers and connections to celebrities. If recognized, it would end our way of life.
Mariana: What is your lifestyle like?
Mr. X:
Luxury. We rented six villas in Dubai, each for $15,000 a week. We traveled with a group of 20. I wore jewelry worth more than $250,000. We drove luxury cars worth hundreds of thousands of dollars and lived in the most expensive area of the Palm Island. Here (Dubai), we knew privileged people who could get us out of trouble. There were no lawsuits, and we could get away with a lot of things.
Mariana: Do you feel guilty for those who lost everything? We heard that people committed suicide because of such scams.
Mr. X:
Thats because they are weak minded. Dont invest money you cant afford to lose, understand? Who would do that?
If youre going to invest your life savings into a token and cant even do a 5 minute Google search, I think theyre the dumbest people on earth.
Mariana: Arent you worried about getting caught?
Mr. X:
How to get caught? Who will catch us? Crypto police? No one will help those investors.
We dont worry about the law catching up, its impossible. Its almost impossible to detect where we are and its impossible to track us.
Mariana: What do you spend your money on?
Mr. X:
Investments, bank accounts, family accounts, people with legitimate businesses, shoes, clothes, designer brands, jewelry. I feel great, its a feeling of freedom.
The story of a victim-turned-vigilante
Robert (crypto scam victim turned vigilante):
A few years ago, I was diagnosed with cancer, which gave me more time to slow down and focus on my life and investments. One day, my son came to me and said, Hey, Dad, take a look at cryptocurrencies. I started researching and invested some money, which made a good return.
One day, I was involved in a token launch. It had been delayed several times, and the developers were young and not fully public. On the launch day, the developers sold their entire holdings in what looked like a giant “Rug Pull”. When the dust settled, I was left with only $86. The feeling was indescribable and emotionally devastating. Knowing that others were going through this, I decided that something had to happen, and it had to start with me.
We now pay bounties to encourage people to report suspicious activity. In the last 30 days, we paid out about $17,500 in bounties. This money comes from our own tokens and is used to fund our mission.
We have probably saved thousands of people and millions of dollars in losses. But it has not been easy, and we have even received death threats.
Mariana: How do you spot a scam?
Robert:
We monitor newly launched tokens for signs of suspicious activity. For example, when you see a token drop 85% in 24 hours, but only 3% in the last hour, that usually indicates that someone is selling heavily. We go into their online discussions and AMAs and ask direct questions.
When a projects developers get defensive when questioned, or simply remove the questioner from the chatroom, its almost certainly a sign of a scam. A legitimate project will go to great lengths to prove to investors that their funds are safe, rather than evading questions. We once received a request from an investor who had invested money in a project we confirmed to be a scam, and we later helped him avoid even greater losses.
What law enforcement agencies think
FBI Representative:
The FBI has seen many cryptocurrency scams. We do hear a lot about how there are a lot of gray areas and undefined areas in cryptocurrency, saying its not money, so the rules of currency dont apply. But when individuals invest with the understanding that certain promises are made, and those promises are not fulfilled, thats fraud. Fraud is fraud.
We often find that new technologies are first adopted by predatory individuals. Over the past year, we have seen an exponential increase in cryptocurrency-related fraud.
Fraudsters who engage in “Rug Pull” scams must have an internal reason to justify the actions they take. It could be a belief that the victim should have been more cautious, or a belief that this is how the technology works and it’s their fault that the victim doesn’t understand.
The same argument would say, “Because I can get into your house, I can rob you.” They are criminal enterprises trying to defraud others of their hard-earned money. We will ensure these actors are brought to justice.
FBI Representative:
It is often said that the FBI will always catch their targets, today or tomorrow. Therefore, those who seek to harm our systems should always be vigilant, because we are watching.
Future trends and warnings
Mariana:
By mid-2022, cryptocurrencies had lost more than $2 trillion from their highs the previous year in what became known as the “crypto winter.” Predictably, investors became cautious, which meant that pump scams were harder to pull off.
However, as the market recovers periodically, the scammers are likely to return. As Mr. X said, people are still investing in new tokens, and the scammers will continue to steal their money, continue to scam people, and continue to squander their ill-gotten gains on gold and diamonds.
Xaviers advice:
Before investing in anything, you need to do in-depth research.
Mr. Xs suggestions:
Dont invest money you cant afford to lose.
Key Insights
The allure of cryptocurrency scams lies in the promise of getting rich quickly, attracting investors who don’t understand the complexities of the space (“I missed out on Google. I missed out on Apple. So I didn’t want to miss out on this.”)
Social media and celebrity promotion play a key role in spreading fraudulent programs, including celebrities such as Kim Kardashian, who were fined nearly $1.3 million for not disclosing promotional expenses.
Scammers are often tech-savvy young people who are blind to the moral implications of their actions.
The “Wild West” nature of decentralized finance makes scams particularly difficult to track and regulate
Even during market downturns, scammers can still find victims, proving human greed and the constant desire to get rich quick.
No matter how the cryptocurrency market develops, one clear fact is that without full understanding and careful investment, investors will continue to face significant risks. As repeatedly emphasized in the show: Do your research and Dont invest what you cant lose.
