Scammed – A tale of Crypto crime
Note the figure mentioned here are fractions of a crypto coin so 200 UDST = 0.086 of 1 ETH coin. The author has these figures so that there are not so many 0’s and it may make it easier to understand.
It started about 18 months ago in the middle of New Zealand’s winter. It was early morning and I was driving on the desert road just as the sun came up. Mount Ruapehu was covered in snow and it was glistening in the early sunlight. I stopped and took a few photos and posted them on my Instagram and Facebook accounts.
I checked a couple of days later and there were a few likes from my family and my friends. There was also a like and a comment from someone I did not know. Their comment was simple – what a great photo – where is the mountain. I replied saying where it was, which road I was on and the approximate time it was taken. I also put a link in to the Whakapapa and Turoa skifields.
About a week later there was a request to like a picture he had posted. It was a city scape, so I put a question in the comments asking where it was. It was Bangkok and some of the buildings looked impressive.
A short while later the weather in the Coromandel had been atrocious, and the sea had been quite rough, I took photos and posted them and again the person came back and asked me where I was etc., this was followed with a friend request. I just clicked on yes and I also became a friend of them.
Six months went by clicking on each other’s photos and occasionally we exchanged information on email or Telegram. (Telegram is an app similar to texting). We discussed the weather, what it was like to live in semi-rural NZ and he described Bangkok and that his family owned a large hotel in Bangkok and one in Phuket. He worked in those hotels.
He introduced himself so I now had a name. Then one day he said he was coming to New Zealand and would like to meet. He also wanted to see Mount Ruapehu etc. He was staying with an elderly aunt in Auckland and she wasn’t taking him anywhere. I was travelling to Wellington the next week and offered to meet him for coffee and if we got on well, I would give him a lift.
Unfortunately, my plans changed, and the trip was delayed a week. This meant he couldn’t travel down the country with me as he was returning to Bangkok on Thursday.
Another couple of months passed and then one day he posted a picture of him and four friends having a meal. It looked like an expensive meal – crayfish, steak and champagne etc. He explained that they were celebrating their Crypto currency transactions and that they had made a considerable amount of money, I simply replied, ‘Oh that’s good.’
About a month later he asked me if I would like to join his group investing in Crypto. I had worked in IT all my life and I know how the internet and apps etc. worked. I knew the very basics of Crypto, but I had never had a wallet or bought any bitcoin. He offered to teach me.
I suggested that instead of texting back and forwards, we should use video conferencing so I could see him and he could see me. He agreed. So, before we went any further, I thought I was dotting as many I’s and crossing as many t’s as possible.
Over a period of about a month, he instructed me how to create a wallet, how to put money into the wallet and buy bitcoins and how to transfer them between wallets.
Then he showed me how he made money by investing in liquidity mining. STOP! Before I would do that, I had to read about liquidity mining and how it worked. It looked legitimate so okay, let’s go ahead.
To start liquidity mining I had to buy some crypto. It was suggested 200 USDT (USDT is a crypto currency linked to the USA dollar this means 1 USDT = 1 USD) so I had to spend about $350 NZ plus transfer fees etc. I went to use my credit card for this but before it went through my bank called me to make sure that I knew what I was doing. Then they approved the transfer.
This was put in my wallet and mining started. Each day I would check and it was growing by between 1.5 and 2.2 USDT per day.
After a couple of weeks, he suggested I should raise it to 2000 USDT which I did and again for about a month it grew at a rate of 15 to 20 USDT a day.
About then I said, “How do I get it back into NZ Dollars?” So that week we created a New Zealand wallet. We transferred 250 USDT into it and then moved that into my bank account. I received about $400 (note earnings from crypto are classed as taxable income).
He then showed me his wallet and he had nearly 400,000USDT in it which he explained he had built up over a two-year period. It then seemed logical to increase the crypto in my wallet to a greater amount and we thought 10,000 USDT would be reasonable.
My bank wouldn’t move that amount for me, so I had to use a “coin merchant”. The coin merchant was selected by the wallet providers. I moved the money and it appeared in my wallet and then the mining returns were substantial. Theoretically, I would double my money every 100 days or less.
This carried on for some time and I was extremely happy. Then he suggested that we could lock the money into the blockchain for a predetermined time (14 days) and we would receive an even better rate of return. This was called staking and again I researched it.
I said I would give this a try and would stake my 10,000USDT. The next screen appeared but it said I would deposit 100,000 USDT (about $160,000 NZD). I thought there was a mistake but, on the screen, I couldn’t find a way back to change it. He appeared shocked and explained that the 14 days would not start until 100,000 had been deposited and if I didn’t achieve that within a certain period, I would lose my 10,000.
Then I noticed that not only had my 10,000 disappeared but so had the interest and it was all in the staked amount. He explained that the staking would take everything that was in my wallet until I hit 100,000 USDT. I told him that in no way could I invest 100,000, but he pushed me that if I could make 30,000 USDT he would put in 70,000 and we could split the profit 30/70.
I was not happy but there didn’t seem to be a way back or any other way of moving forward.
I moved more money into crypto via the coin merchant and sure enough, as soon as it arrived in my wallet, it went straight into the staking. His 70,000 arrived and we hit 100,000 and the 14 day countdown began.
At the end of 14 days nearly 200,000 USDT arrived back in my wallet (wow over $300,000 NZ!).
So, I started the process of moving this into my NZ wallet. I did this because he created a wallet with the same NZ company and it would not cost anything to move his 70% if we were with the same company.
The sending wallet said – “funds transferred”, the receiving wallet in NZ said “funds received” but nothing arrived in my wallet. I contacted the NZ receiving wallet provider and they confirmed that ‘Yes, a transfer had taken place’ but nothing had been in the transfer. The sending wallet help desk said that we needed to leave some coins in the sending wallet to pay for the transfer, but they wanted an amount equal to the amount we were transferring. (This turns out to be incorrect, yes the transfer needs to be paid for, but it’s only a dollar or two.)
So where were the coins – where was my money???
The New Zealand wallet holder was very helpful. The idea of the blockchain is that everything is recorded and nothing can be lost. They traced back all the transfers and the daily interest was false, there was nothing being transferred. The transfer to the staking was false as was his 70,000 USDT. My money had gone in, but to another wallet. I didn’t know where that wallet was.
My total loss was about $50,000 NZ
I filed a police report and one of their fraud team checked out the passport. It had never come through immigration even though he had said he was in Auckland. The photo on it was the person who was on the video conferences. Closer inspection showed that it was missing a stamp on page three and the expiry date wasn’t very clear suggesting it had been altered.
I got a visit from our local police who knew very little about the blockchain and crypto but suggested that I shouldn’t be doing it; also the amount I had lost was so small (!!) that it wasn’t worth chasing up and they would not deal with a country that still had the death penalty.
He still clicks liked on my pictures but has only mentioned he lost 70,000 a couple of times. He still says he can’t understand how we came to lose it and if we could raise another 300,000 NZ we might be able to get it back.
The bank has been very interested because I kept screen shots of every screen over the 6-month period (680 pages), but because I approved the credit card transfer it was at my risk. There is a faint possibility they may get the coin dealers transfers back because they went bank to bank, but I am not holding my breath.
Part Two next week – ‘Stolen and Fleeced’