A Valentine’s Nightmare? Romance scams leave a $1B honeypot for criminals
Valentine's Day is about love, but the annual event is a reminder that those looking for love are victims of fraud.
Online dating is big business, with the industry expected to generate $3.1B by 2024. Statista estimates that there will be 440 million online dating users by 2027.
A February 14th report from Binance's security and compliance department revealed that love scams have been noticed by security and analytics firms on the rise in recent months.
Citing data from Norton's 2023 Cyber Security Insights Report, 1 in 4 adults surveyed globally have been victims of an online dating or romance scam.
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The United States Federal Trade Commission In 2016, there were 11,235 dating and dating scam complaints. That number has since ballooned, to 70,000 by 2022, with a reported $1.3 billion lost to unsuspecting love seekers.
While a recent report from the US Treasury Department suggests that cash is still the king of global money laundering, cryptocurrency payments account for 34% of reported losses on the love fraud platform.
Binance cites 2023 internal data and estimates that dating scams will account for 2% of total reported cases. A conservative estimate still puts the average loss per victim at $14,000.
Exploitation of faith
Tigran Gambaryan, head of financial crime compliance at Binance, reflects on his experience as a former US IRS investigator on the comparison between dating fraudsters and financial fraudsters.
“Reflecting on my experiences as a special agent, these scams are no different than the tactics I've seen when selling lies to get their hands on your money. The essence of their approach is the same: exploiting trust and creating relationships to achieve their deceitful goals,” explains Gambarian.
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Binance's global head of intelligence and investigations provides a handful of cases the team has been involved in. One user lost $100,000 to a scammer who used Tinder to make an initial connection before slowly draining the victim's money.
Perhaps another individual who met a cryptocurrency trader on a social media platform has more to say. Within a few months, the scammer built trust with direct messages and phone calls. The victim eventually sends $500,000 worth of cryptocurrencies to the scammer before the connection is terminated.
In this case, Binance helped law enforcement agencies and was able to recover $200,000 of the victim's money.
Pig farming is still a trend
Killing pork has been identified as an increasing trend online by various security organizations and law enforcement agencies.
Sophos released its own study on the issue in January 2024, which found that pork butchering is one of the fastest-growing online scams, with US victims losing billions of dollars in fraudulent cryptocurrency-related investment schemes.
Fraudsters are using DeFi decentralized applications and protocols to fleece victims after building trust.
The platforms allow fraudsters to bypass existing barriers, such as requiring victims to wire money. Victims just need to link their Web3 wallet to a malicious contract where they can lose their money.
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