The Spanish Civil Guard has recently dismantled a criminal organization that allegedly scammed people worldwide of more than 100 million euros (US $110.5m) through investments in fake cryptocurrencies. The criminal group is believed to have defrauded more than 3,000 people across the globe.

The investigation began after receiving a complaint from a citizen in Álava, Spain, who claimed to have been a victim of a scam involving cryptocurrency investments. The Civil Guard traced the money transfers, ultimately identifying the recipient as a company based in Palma de Mallorca.

The organization lured potential clients through various marketing strategies, such as advertisements on well-known websites, phone calls, newspaper ads and text messages. The scammers promised high returns with minimal risks, and once they convinced their victims, they entered into contracts to invest in non-existent cryptocurrencies, typically ranging between 250 and 1,000 euros (between 270 and 1100 US dollars).

In financial crime, this scheme of fraud is labeled as investment scam.

How Does a Crypto Investment Scam Work?

A fraudulent investment scam in crypto is a type of financial fraud that specifically targets investors interested in cryptocurrencies. These scams are designed to deceive investors by making false or exaggerated claims about the potential returns on investments in cryptocurrencies.

To appear legitimate and gain the trust of their victims, the criminal organization had launched a website where victims could supposedly check the profits of their investments. The website was filled with falsified charts created specifically for this purpose.

Investors received constant calls from fake brokers informing them of the “huge profits” they were making and encouraging them to continue investing. When victims attempted to recover their investments, the phony brokers demanded more money for the withdrawal of funds, citing reasons such as tax payments or annual balance closures.

The operation was carried out by cybercrime specialists from the Civil Guard of the Basque Country, Balearic Islands, and the Technical Unit of Judicial Police in Madrid. 

How to Protect Yourself?

These types of scams can be difficult to detect because they often use sophisticated tactics to appear legitimate. However, there are some red flags that you can watch out for, such as:

• Unsolicited messages or emails that promise high returns with little or no risk
• Requests for payment to withdraw profits, in the form of cryptocurrency or wire transfer.
• Lack of information or transparency about the company, its founders or its investment strategy
• Pressure to invest quickly, without giving you enough time to do your own research or ask questions

Don’t give away your personal details to promises of fortune and felicity. The end goal of most scams is to retrieve a portion of your personal details, which may lead to the leaking of secret keys and the loss of digital assets.

Additionally, as the Civil Guard recommends, do not accept unsolicited investment offers and research the reputation and opinions of websites and projects before investing. In Spain, The official state and European regulators periodically publish lists of websites operating with irregularities and posing risks.

As cryptocurrencies become more prevalent, law enforcement agencies worldwide find themselves more engaged in financial crime cases involving cryptocurrencies and digital assets. Investigators play a crucial role in protecting victims and the integrity of the financial system and must continue to adapt and improve their investigative and analytical capabilities. 

Our blockchain analytics solutions are easy-to-use and assist law enforcement agencies in tracking suspicious transactions on the blockchain and allow them to quickly take action against criminals. By leveraging the power these cutting-edge tools, law enforcement can better protect investors and combat financial crimes involving cryptocurrencies. Learn more and start investigating crypto crime cases today with QLUE^TM.