Crypto Scammers Target Dating Apps

The man from the dating app Hinge has ticked all the boxes on Tho Vu.

He was a boyishly handsome architect from China who resided in Maryland on a long-term assignment. They’d never met in person — he was still waiting for his Covid-19 booster shot, he said — but they’d texted back and forth for months and she had fallen seriously in love. He called her his “little sweetheart” and told her he planned to take her to China to meet his family when the pandemic was over.

So when the man named Ze Zhao told Ms. Vu, who works in customer service for a security company, that he could help her make money by trading Bitcoin and other cryptocurrencies, she was intrigued.

“I had heard a lot about crypto in the news,” she said. “I’m a curious person and he was actually very knowledgeable about the whole trading process.”

But the man didn’t try to help Ms. Vu invest her money. He ensnared her in an increasingly popular form of financial scams, she said, one that combines the age-old allure of romance with the newer lure of overnight cryptocurrency wealth.

Within weeks, Ms. Vu, 33, had sent more than $300,000 worth of Bitcoin, almost her entire life savings, to an address that Mr. Zhao told her was connected to an account on Hong Kong cryptocurrency exchange OSL. The website looked legit, offered 24/7 online customer support, and was even updated to show that Ms. Vu’s balance changed as the price of Bitcoin rose and fell.

Mr. Zhao – whose real name could not be verified – had promised her that her crypto investments would help them get married and start a life together.

“We can make more money on top of OSL and go on a honeymoon,” he said, according to a screenshot of their lyrics that Ms. Vu shared with me.

But there was no honeymoon and no crypto windfall. Instead of going into an exchange account, Ms. Vu’s money went into the scammer’s digital wallet and he disappeared.

Now she struggles to understand what happened.

“I thought I knew him,” she said. “Everything was a lie.”

Romance scams — the term for online scams that fake romantic interest to gain a victim’s trust — have increased during the pandemic. So have crypto prices. That has made crypto a convenient entry point for criminals looking to separate victims from their savings.

According to agency data, about 56,000 scams, with total losses of $139 million, were reported to the Federal Trade Commission last year. That’s almost twice as many reports as the agency received last year. In a bulletin last fall, the Oregon Federal Bureau of Investigation office warned that crypto-dating scams were emerging as a major category of cybercrime, with more than 1,800 reported cases in the first seven months of the year.

Experts believe that this particular type of scam originated in China before it spread to the United States and Europe. The Chinese name roughly translates as “slaughter pigs” – a reference to the way victims are “fattened up” with flattery and romance before being ripped off.

Jan Santiago, the deputy director of the Global Anti-Scam Organization, a nonprofit that represents victims of online cryptocurrency scams, said that unlike typical romance scams – which generally target older, less technical savvy adults – to younger and more educated women on dating apps like Tinder, Bumble and Hinge.

“It’s mostly millennials who get scammed,” said Mr. Santiago.

Jane Lee, a researcher at the online fraud prevention company Sift, started investigating crypto dating scams last year. She signed up for several popular dating apps and quickly got in touch with men who tried to give her investment advice.

“People are lonely due to the pandemic and crypto is super hot right now,” she said. “The combination of the two has really made this a successful scam.”

Ms. Lee, whose company works with several dating apps to prevent fraud, said these scammers usually tried to move the conversation from a dating app to WhatsApp — where messages are encrypted and harder for businesses or law enforcement to track.

From there, the scammer bombards the victim with flirty messages until the conversation turns to cryptocurrency. The scammer, pretending to be a successful crypto trader, offers to show the victim how to invest his or her money for quick, low-risk gains.

Then, Ms Lee said, the scammer helps the victim buy cryptocurrency on a legitimate site, such as Coinbase or Crypto.com, and instructs them to transfer it to a fake cryptocurrency exchange. The victim’s money shows up on the exchange’s website and he or she starts “investing” it in various crypto assets, guided by the scammer, before the scammer finally runs off with the money.

What makes this particular scam so insidious is how much more elaborate it is than the Nigerian prince scam of yore. Some victims have described being redirected to realistic looking websites with charts and tickers showing the prices of various crypto assets. The names and addresses of the fake exchanges are often changed, and victims are often allowed to withdraw small amounts early on, making it easier for them to deposit larger amounts later.

“Scams like this are quite labor intensive and time consuming,” said Mr. Santiago of the Global Anti-Scam Organization. “They are very meticulous in their social engineering.”

Cryptocurrencies are especially useful for scammers, experts say, because of the relative privacy they offer. Bitcoin transactions are publicly visible, but because digital wallets can be set up anonymously, tech-savvy criminals can cover up the trail of money. And because there is no central bank or deposit insurance to make victims whole, stolen money usually cannot be recovered.

Niki Hutchinson, a 24-year-old social media producer from Tennessee, was the victim of a crypto romance scam last year. She was visiting a friend in California when she matched up on Hinge with a man named Hao, who said he lived nearby and worked in the clothing industry.

The two continued texting on WhatsApp for over a month after she got home. She told Hao that she was adopted from China; he told her that he was also Chinese and that he was from the same province as her native family. He started calling her “sister” and joked that he was her long-lost brother. (They video chatted once, she said — but Hao only partially showed his face and hung up quickly.)

“I thought he was shy,” she said.

Mrs. Hutchinson had just inherited nearly $300,000 from the sale of her childhood home after her mother passed away. Hao suggested that she invest that money in cryptocurrency.

“I want to teach you how to invest in cryptocurrency when you are free, bring some changes in your life and bring an extra income into your life,” he texted her, according to a screenshot of the exchange.

Finally, she agreed and sent a small amount of crypto to the wallet address he gave her, which he said was connected to an account on a crypto exchange called ICAC. Then – when the money appeared on ICAC’s website – she sent more.

She couldn’t believe how easy it had been to make money just by following Hao’s advice. Finally, when she had invested all her savings, she took out a loan and continued to invest more and more.

In December, Ms. Hutchinson began to get suspicious when she tried to withdraw money from her account. The transaction failed and an ICAC customer service representative told her her account would be frozen unless she paid hundreds of thousands of dollars in taxes. Her conversation with Hao fell silent.

“I was like, oh, God, what have I done?” she said.

Now Mrs. Hutchinson is trying to get her life back on track. She and her father live in their motor home — one of the few belongings they have left — and she teams up with the local Florida police to track down her crook.

Ms. Hutchinson does not expect to get her money back, but she hopes that other people will be more careful about strangers who promise to help them invest in cryptocurrency.

“You hear all those stories about people becoming millionaires,” she said. “It just felt like, well, cryptocurrency is the new trend, and I need to get in.”