FinCEN finds strong correlation between COVID-19 and digital currency scams

Kenneth Blanco, director of the Financial Crimes Enforcement Network (FinCEN), says that FinCEN has noticed an increase in coronavirus related digital currency scams and exploitation.

According to FINCEN, there have been over 70,000 cases of digital currency-related fraud reported to their agency since 2013. Blanco noted at CoinDesk Consensus event that even if cyber criminals were not using digital currency to directly defraud investors, that virtual currency companies are a resource that criminals use to launder money.

“FinCEN has observed that cybercriminals predominantly launder their proceeds and purchase the tools to conduct their malicious activities via virtual currency,” said Blanco. “FinCEN has provided priority information on typologies of illicit virtual currency use to financial institutions through our advisory and FinCEN Exchange programs. FinCEN is also sharing cyber indicators of compromise to help the financial sector detect, report, and defend against cyber activity that may be connected with illicit financial activity.”

Many people believe digital currency is more anonymous than fiat, therefore, there are instances where criminals try to hide their paper trail by using digital assets. In a recent statement, the Financial Action Task Force (FATF) noted an increase in the “misuse of online financial services and virtual assets to move and conceal illicit funds.” This may be because there is a correlation between COVID-19 and cybercrime.

Coronavirus has led to an increase in financial crime

According to the FATF report, since the COVID-19 pandemic began, financial crimes have been on the rise. Due to pandemic, many local businesses have closed their doors, including offices. This has caused people to spend more time than usual online, which makes the internet a perfect attack vector for cybercriminals looking to extort unsuspecting individuals.

As a result, government agencies like FinCEN have been releasing educational materials that make people aware and help them avoid digital currency-related scams. This is not limited to government agencies in the United States; recently, the New Zealand government published a press release warning their citizens of digital currency-related scams.

It never hurts to remind our audience to do their own research and be aware of any suspicious activity or solicitation where unknown individuals or companies are requesting that you send them money—because more often than not, instances like these are a scam.   

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