You can’t touch or see cryptocurrency. You don’t deposit it in a bank. But digital currency can be used to buy, sell or invest.
Bitcoin, Ethereum, and thousands of other cryptocurrencies are the driving force behind a growing digital payment system. Even gas stations have dedicated machines turning your cash into virtual currency.
“It’s the popularity of the coins that make them rise in value,” said cybersecurity expert with Brookfield’s Sikich, Kevin Bong.
“Why are they becoming so popular?” Consumer Investigator Kristin Byrne asked Bong.
“Because people who were early adopters have gotten rich off of it,” he said.
There can be a dark side to these digital coins. Cole Barg has seen it.
“I was led astray through an ‘investment program,'” he told Byrne.
Barg said he lost $500 in what he says ended up being a Ponzi scheme.
“Having that experience has it made you not want to invest in it again?” Byrne asked Barg.
“No. Not at all. It’s made me want to invest again because I still think there’s growth potential,” he said.
Christopher Leach, an attorney with the Federal Trade Commission says since October of 2020, consumers reported losing more than $80 million to cryptocurrency investment scams.
Read more about ways to protect yourself from cryptocurrency scams here.
“If there’s somebody promising you a particular rate of return that is high, say double or triple your money guaranteed, that is definitely a red flag for a scam,” Leach said.
“When it comes to prosecution, and law enforcement going after these con-artists, is it just hard to trace when you have cryptocurrency involved?” Byrne asked Leach.
“I don’t think I can really get into whether it’s more or less difficult,” he answered.
Leach did highlight a recent case the FTC was involved in where the federal agency was able to recover nearly half a million dollars for consumers who fell victim to a cryptocurrency investment scheme.
Both Leach and Bong agree these digital coins are the currency of choice for criminals.
“There’s no other way for attackers to again completely, anonymously, and almost instantaneously transfer that much money,” Bong said.
Bong’s company, Sikich, handles computer security breach investigations. He said local companies in Southeast Wisconsin have had hackers attack their systems and ask for ransomware in the form of cryptocurrency.
“Usually when you get hit with a ransomware attack you come in Monday morning, all of your computers are encrypted and there’s a message right there on the screen, send so many bitcoin, or whatever coin they like to this address and we’ll send you the decryption code,” Bong explains.
Bong admits, at times these companies, fearful their data will be leaked, pay up.
Leach warns consumers too can get taken if this is the preferred payment.
“There are perfectly legitimate uses and perfectly legitimate opportunities to use and purchase cryptocurrency,” Leach said.
Still, investors need to do their research.
“If somebody is saying you can only pay for this in bitcoin or in some other cryptocurrency that should be a red flag,” Leach said.
“In the past, it was wire transfers, or purchasing gift cards, people are now turning to cryptocurrency in part because largely those transactions can’t be reversed.”