April 19, 2024
Valentine's Nightmare, $1B Romance Scams
Latest Cryptocurrency News

Valentine’s Nightmare: $1B Romance Scams

Valentine’s Day, traditionally associated with love, also serves as a stark reminder that those seeking romance may fall prey to scams, particularly in the realm of online dating. With the online dating industry anticipated to generate $3.1 billion in 2024 and an estimated 440 million users projected by 2027, the prevalence of romance scams has become a concerning trend.

Binance’s security and compliance department shared insights on February 14, shedding light on the escalating occurrence of romance scams identified by security and analytics firms in recent months. Drawing from Norton’s 2023 Cyber Safety Insights report, the data revealed that 1 in 4 adults globally reported falling victim to online dating or romance scams.

The United States Federal Trade Commission reported 11,235 dating and romance scam complaints in 2016, with a staggering increase to around 70,000 reports in 2022, resulting in losses totaling $1.3 billion for unsuspecting individuals seeking love. Notably, cryptocurrency payments constitute 34% of reported losses in the romance scam domain. Binance, referencing internal data from 2023, estimated that romance scams constituted 2% of total reported cases.

Even with this conservative estimate, the average loss per victim was noted to be $14,000. Tigran Gambaryan, Binance’s Head of Financial Crime Compliance and former U.S. IRS investigator, drew parallels between romance scammers and financial fraudsters, emphasizing the shared strategy of exploiting trust to achieve deceitful objectives. The global head of intelligence and investigations at Binance highlighted anecdotal cases, including one where a user lost $100,000 to a scammer who initiated contact through Tinder and gradually extracted money from the victim.

Another case involved a victim who met a cryptocurrency trader on a social media platform, resulting in the loss of $500,000 to the scammer over several months. Binance collaborated with law enforcement to recover $200,000 of the victim’s funds in the latter case. Pig-butchering, identified as a rising trend in online fraud, has gained attention from various security firms and law enforcement agencies. Sophos conducted research in January 2024, revealing pig-butchering as one of the fastest-growing segments of online fraud, with U.S. victims losing billions to fraudulent cryptocurrency-related investment schemes.

Scammers are increasingly leveraging decentralized finance (DeFi) applications and protocols to exploit victims. These platforms enable scammers to overcome previous obstacles, allowing victims to connect a Web3 wallet to a malicious contract without the need for fund transfers, putting them at risk of potential losses. As the online dating industry continues to thrive, the increasing frequency of romance scams underscores the importance of vigilance and awareness, with both traditional and cryptocurrency-related scams posing significant risks to individuals seeking companionship in the digital age.

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