Is it my destiny to meet you? Uncovering the crypto scam hidden in romantic encounters

A friend request suddenly appeared on Ms. Li (pseudonym)'s WeChat. Although she didn't know who the other party was, the man in the unfamiliar avatar looked gentle and elegant, so Ms. Li accepted the application without hesitation.

It was February 2023, and she had no idea that just three months later, she would be defrauded of more than one million yuan, most of which came from credit cards, online loans, and borrowing from friends.

Meeting is fate

The other party called himself Mr. Wang (pseudonym). While running a business, he would also investigate and invest in various places. "Coincidentally," Ms. Li also had some investment resources, so the relationship between the two became closer as they chatted more and more frequently. Mr. Wang would send Ms. Li photos of himself investigating and investing in various parts of the country, and the photos were inadvertently mixed with a few selfies. In the photos, he drove a luxury car and wore a famous watch, looking like a successful, handsome and wealthy man.

One afternoon in April, Ms. Li expressed her envy to him: all her friends lived in villas with yards and lived a comfortable life, but she was impatient and could not make money. Wang consoled her: "Don't worry, with me here, some things can be done easily. It's not easy to do business now, and meeting each other is fate. There is a sharing meeting at the Eight O'Clock Business School, you can go and listen."

This was the first time Ms. Li heard about the "Gao Rui Business School" project from him. At the meeting, she learned that this was a blockchain investment project. Participants needed to purchase Tether (hereinafter referred to as USDT) on their own to subscribe for shares. After maturity, they could obtain high returns including principal and interest.

You make money for yourself, you know?

Mr. Wang said that the Gaorui Business School project has high returns even for short-term investments, and he has participated in several rounds of investment. Under his encouragement, Ms. Li followed suit and invested in one round, which did yield returns. When he heard that Ms. Li's mobile phone was old, Wang even took the initiative to buy her the latest model of mobile phone in order to gain her trust, which moved Ms. Li even more and made her mistakenly think she had met her true love.

Seeing that the time was ripe, Wang persuaded Ms. Li to open a studio at Gaorui Business School and take charge of regional promotion. He promised that the funds for opening the studio would be reimbursed by the company at the end of the month, and offered an olive branch, "Once the studio's performance reaches the target, I will take you to the Hong Kong head office to attend the event." At the same time, he launched an emotional offensive, blaming Ms. Li for her doubts and making her very sad. After a series of combined punches, Ms. Li decided to make additional investments. In the end, she bought and invested more than one million yuan worth of USDT through borrowing from everywhere, and also brought in friends around her to participate.

She can't get her money back.

Just as Ms. Li was immersed in the joy of establishing the studio and her fantasies about the future, Mr. Wan, who had always cared for her, suddenly disappeared from the Internet. She could not withdraw her investment funds, and she did not know how to track them as she did not understand encryption technology. Faced with the huge debt and the disappointment of relatives and friends, Ms. Li collapsed.

In early May, several victims who were deeply trapped in the "Gao Rui Business School" scam like Ms. Li came to Bitrace for help. Based on the information provided by the seekers, a sinister encrypted funds laundering path slowly unfolded before us.

According to incomplete statistics, the "Gao Rui Business School" scam has defrauded USDT worth about RMB 14.87 million. Bitrace's on-chain analysis shows that:

• The initial handling fee used by the fraud gang to receive investors' subscription funds comes from casinos. Most of these casinos are located in Southeast Asia, which are difficult for domestic law enforcement agencies to supervise. The related business is not legal in China, and it is even more impossible to control the encrypted funds in and out of them, and it is often difficult to further track the stolen money.

• Subsequent funds are quickly split and transferred to avoid tracking. This means that for fraud activities that generally last for several months, when the victim finds out that he has been defrauded, the funds have often been laundered;

• Part of the funds are cashed in exchanges. The OTC market of centralized trading platforms is also a common place for black and gray industries to cash out;

• Part of the funds went into the underground water room. After this batch of encrypted funds entered the water room, the corresponding legal currency assets would be remitted to the bank account of the fraud gang. The fraudsters used this method to realize cash and asset laundering across borders.

For months, Ms. Li has been sending messages to "Mr. Wang" in desperation, begging him to return the funds. But for the victims in this case, it may be a long way to go to recover the lost assets.

How to identify cryptocurrency investment scams from the chain

Bitrace believes that cryptocurrency investment scams are not difficult to detect. As long as you master the basic on-chain analysis capabilities, even a novice can identify cryptocurrency investment scams from the chain through the following points:

1. Observe the rules of fund transfer. Professional exchanges often assign independent deposit addresses to users. If not, there may be risks.

2. Observe the movement of funds in the deposit address. If the funds are transferred to multiple other addresses shortly after being transferred, there is a greater risk;

3. Observe the interaction of the associated addresses. If the number of transactions is small, it does not meet the business characteristics of a general trading platform.

4. Use a professional blockchain browser to review the funds of the relevant addresses (such as Bitrace). This type of tool will mark online gambling, fraud, gray and black industries, and money laundering addresses.

Finally, if you have already experienced cryptocurrency fraud, please feel free to contact #Bitrace and we will provide you with basic data analysis and loss recovery services.