QUADRIGA INITIATIVE
CRYPTO WATCHDOG & FRAUD RECOVERY PLATFORM
A COMMUNITY-BASED, NOT-FOR-PROFIT
$390 000 USD
DECEMBER 2021
UNITED STATES
NONE
DESCRIPTION OF EVENTS
"Niki Hutchinson, a 24-year-old social media producer from Tennessee, was visiting a friend in California when she matched on Hinge with a man named Hao, who said he lived nearby and worked in the clothing business." "As a way to make new friends before moving to California, Hutchinson began to use the online dating website "Hinge." She said she met a man who called himself "Hao" and they became friends."
"The two continued texting on WhatsApp for more than a month after she returned home. She told Hao that she was adopted from China; he told her that he was Chinese, too, and that he hailed from the same province as her birth family. He started calling her “sister” and joking that he was her long-lost brother. (They video-chatted once, she said — but Hao only partly showed his face and hung up quickly.)"
“I thought he was shy,” she said.
"Ms. Hutchinson had just inherited nearly $300,000 from the sale of her childhood home, after her mother died. Hao suggested that she invest that money in cryptocurrency." "After losing her mom, 24-year-old Nicole Hutchinson inherited her mother's house which she sold and split the proceeds with her father. The $280,000 she inherited was supposed to go toward helping her family and building a life in California."
“I want to teach you to invest in cryptocurrency when you are free, bring some changes to your life and bring an extra income to your life,” he texted her, according to a screenshot of the exchange.
“You hear all these stories about people becoming millionaires,” she said. “It just felt like, oh, well, cryptocurrency’s the new trend, and I need to get in.”
"I'm like, 'I've never invested in my life.' I don't know anything about cryptocurrency either. So I was very skeptical," she said. Hutchinson said that Hao reassured her that this was an area he knew well.
"Eventually she agreed, sending a small amount of crypto to the wallet address he gave her, which he said was connected to an account on a crypto exchange named ICAC. Then — when the money appeared on ICAC’s website — she sent more."
"Hutchinson said Hao told her to create an account on a legitimate site, Crypto.com. Then she said he sent her a link and told her to transfer money to the new link, to what he said was a cryptocurrency exchange platform."
"She couldn’t believe how easy it had been to make money, just by following Hao’s advice. Eventually, when she’d invested her entire savings, she took out a loan and kept investing more."
"He just kept saying things of, like, 'Look at this money that can help support your family.' Obviously that's what I wanted to do," she said.
"When her account began showing profits, she suggested to her father that he invest too and so he did."
"By December, their accounts showed a combined balance of $1.2 million, and Hutchinson decided it was time to cash out." "Ms. Hutchinson started to get suspicious when she tried to withdraw money from her account. The transaction failed, and a customer service agent for ICAC told her that her account would be frozen unless she paid hundreds of thousands of dollars in taxes. Her chat with Hao went silent."
“I was like, oh, God, what have I done?” she said.
"I messed up my life. I messed up my dad's life," Hutchinson said.
"When she tearfully told her father about the scam, he comforted her."
"All I could do was just hug her and tell her 'It's okay. It's okay.' And it was hard. It was hard. It was, we lost everything," Melvin Hutchinson said.
"Now, Ms. Hutchinson is trying to pull her life back together. She and her father live in their R.V. — one of the few assets they have left — and she is working with the local police in Florida to try to track down her scammer."
"Ms. Hutchinson doesn’t expect to get her money back, but she hopes that other people will be more cautious about strangers who promise to help them invest in cryptocurrency."
"I just hope others don't have to fall for it. So if me sharing this story helps that, then I'm so grateful for that opportunity," she said.
"Romance scams — the term for online scams that involve feigning romantic interest to gain a victim’s trust — have increased in the pandemic. So have crypto prices. That has made crypto a useful entry point for criminals looking to part victims from their savings."
"About 56,000 romance scams, totaling $139 million in losses, were reported to the Federal Trade Commission last year, according to agency data. That is nearly twice as many reports as the agency received the previous year. In a bulletin last fall, the Federal Bureau of Investigation’s Oregon 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 this particular type of scam originated in China before spreading to the United States and Europe. Its Chinese name translates roughly as “pig butchering” — a reference to the way victims are “fattened up” with flattery and romance before being scammed."
"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 tech-savvy adults — these scammers appear to be going after younger and more educated women on dating apps like Tinder, Bumble and Hinge."
“It’s mostly millennials who are getting scammed,” Mr. Santiago said.
"Jane Lee, a researcher at the online fraud-prevention firm Sift, began looking into crypto dating scams last year. She signed up for several popular dating apps and quickly matched with men who tried to offer her investing advice."
“People are lonely from 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 that these scammers typically tried to move the conversation off a dating app and onto WhatsApp — where messages are encrypted and harder for companies or law enforcement agencies to track."
"From there, the scammer bombards the victim with flirtatious messages until turning the conversation to cryptocurrency. The scammer, posing as a successful crypto trader, offers to show the victim how to invest his or her money for fast, low-risk gains."
"Then, Ms. Lee said, the scammer helps the victim buy cryptocurrency on a legitimate site, like Coinbase or Crypto.com, and provides instructions for transferring it to a fake cryptocurrency exchange. The victim’s money appears on the exchange’s website, and he or she starts “investing” it in various crypto assets, under the scammer’s guidance, before the scammer ultimately absconds with the money."
"What makes this particular scam so insidious is how much more elaborate it is than the Nigerian prince scams of yore. Some victims have described being directed to realistic-looking websites with charts and tickers showing the prices of various crypto assets. The names and addresses of the fake exchanges are changed frequently, and victims are often allowed to withdraw small amounts of money early on, making them more comfortable depositing larger sums later."
“This kind of scam is quite labor-intensive and time-consuming,” Mr. Santiago, of the Global Anti-Scam Organization, said. “They’re very meticulous in their social engineering.”
"Cryptocurrencies are particularly useful to scammers, experts say, because of the relative privacy they offer. Bitcoin transactions are publicly visible, but because digital wallets can be set up anonymously, technically sophisticated criminals can obscure the trail of money. And because there is no central bank or deposit insurance to make victims whole, stolen money usually can’t be recovered."
"Rich Sanders investigates cryptocurrency scams as co-founder of the company Cipherblade. When he looked at Hutchinson's transactions, he described it as a "pig-butchering scam."
"The name really comes from the fattening up before the slaughter," Sanders said. "In Hutchinson's case, he found her money started in those legitimate cryptocurrency accounts but the links the crooks told her to transfer the money to were digital wallets belonging to the scammers."
"Cipherblade's review found additional fake accounts the company says appear to be linked to the same scammers. The company told CBS News that the scammers may have stolen more than $20 million."
"Sanders said that the money likely went to an organized ring of scammers operating out of Asia who prey on inexperienced victims."
Niki Hutchinson knew nothing about cryptocurrency, and decided based on the advice of someone she met online named Hao to invest her money on a platform named "ICAC". The platform purported to be generating her profit, and so she invested more money. Finally, when she went to withdraw, she was informed of owing a very large tax bill of $380,000. She was unable to get any of her money out of the platform and has gone public on multiple news outlets about her story.
HOW COULD THIS HAVE BEEN PREVENTED?
Always perform research on potential platforms to use.
Woman loses $390K in crypto from Hinge romance scammer (Sep 22)
Crypto Scammers Target Dating Apps - The New York Times (Apr 13)
Woman on dating app Hinge loses $390K in crypto scam after meeting man (Apr 14)
Woman loses $390,000 in online crypto dating scam: "I messed up my life" - CBS News (Apr 20)
Cryptocurrency Scams to Avoid In 2023 - TechResearcho (Apr 20)
Ethereum Transaction Hash (Txhash) Details | Etherscan
(Apr 20)
Ethereum Transaction Hash (Txhash) Details | Etherscan
(Apr 20)
