In recent years, cryptocurrency and blockchain have gained immense popularity. However, there has also been a rise in crypto scams which have led to significant losses for investors and enthusiasts, both financially and emotionally.
This blog post aims to shed light on the often-neglected aspect of the crypto world – the impact of scams on the victim’s mental and emotional health. It is essential for all stakeholders involved, including investors and service providers, to understand the psychological and emotional effects of these events to enhance safety measures and response strategies.
The Victim’s Perspective: Emotional and Psychological Impacts
To comprehend the depth of a crypto scam victim’s experience, we must look through their eyes. The realisation that one has been swindled often comes with a cocktail of emotions—anger, betrayal, shame, and an overwhelming sense of loss. For many, the financial hit is not just a loss of money but a loss of hope and trust in systems that they had hoped to leverage for their future.
Crypto scams can cause emotional distress, including anxiety, depression, and PTSD. The complexity of blockchain and digital transactions, along with the stigma of fraud, can compound these impacts on victims.
Common Psychological Tactics Used by Crypto Scammers
Crypto scammers are not just financially savvy; they are also disturbingly effective at exploiting the psychology of their targets. Understanding these tactics can help potential targets recognize the early warnings signs of a scam. Common psychological tactics include:
- Building Trust: Scammers work to establish trust through fake credentials, fabricated success stories, and tactics that inspire a false sense of security.
- Creating Urgency: Scammers use pressure and urgency, convincing victims that they’ll miss out on opportunities if they don’t act quickly, to compel hasty decisions.
- Engaging the Victim’s Greed: By appealing to the desire for high rewards and leveraging the natural inclination to get rich quickly, scammers manipulate victims into irrational decision-making.
Supporting Victims: Resources and Recovery Strategies
Supporting victims of crypto scams is a multifaceted task. Financial restitution is often the focus, but just as crucial is the provision of psychological support. Victims need to know they are not alone, and there are resources to help them cope and recover.
Psychological Support
Therapists experienced in dealing with fraud victims can provide a safe space for discussing the emotional toll of a scam. Support groups also play a vital role in helping victims connect with others who have lived through similar experiences.
Legal and Financial Guidance
Navigating the legal and financial implications of a scam is daunting. Victims require assistance in understanding their rights, potential recourses, and the best pathways to financial recovery.
Learning from Mistakes: Interviews with Scam Survivors
In the aftermath of a scam, reflecting on what went wrong is important. Learning from mistakes, even if they appear glaring in hindsight, can fortify one against future scams.
Victim Interviews
Marijonas, who is over 40, lives alone, has a well-paid job and a seasonal business, and has been investing for nearly two decades, now finds himself starting from scratch with zero in his account, after falling victim to the pig butchering scheme – a fast-emerging type of online scam that combines romance and business.
Survivors of similar crypto scams are doubtful about the possibility of getting their money back, but let’s examine whether the situation is as bleak as it seems, or if there might be a glimmer of hope.
The pig butchering scam is a new breed of romance scam that involves fake online lovers, fake investment platforms, fake brokers, and real-life losses. Its name comes from the Chinese “sha zhu pan,” meaning “pig butchering,” as it resembles the process of slaughtering a pig.
The scammer initiates contact with their target (“the pig”) on dating apps, social media platforms, or via “wrong number” text messages. They gain the victim’s trust, create the illusion of a relationship, and lure them into fake crypto investments that cannot be withdrawn. Ironically, the majority of pig butchering scam victims are intelligent and tech-savvy people.
The first step in the scheme is “Finding the Pig.” Romance scammers often pose as attractive, wealthy, and successful businesspeople looking for serious relationships. They approach victims on dating apps or social media and start intimate online relationships. Marijonas, a victim of the scam from Lithuania, matched with a jewelry maker named Irina on Tinder, who seemed legitimate and trustworthy.
Irina claimed that she earned 70% of her income from investments and shared an investment account with her brother, a financial analyst. He made successful leverage trades based on insider info that his boss, Nikolay, shared with them for a 23.5% quarterly fee. Marijonas decided to try it out and registered an account on the Aplore investment platform, which had no online history, transferred €10K to buy Bitcoins on the Huobi exchange, and transferred them to his Aplore trading account.
The next step is “Fattening the Pig.” Once the victim is hooked, pig butchering scammers increase the pressure to invest more and more. Obstacles impede every attempt to retreat. Nikolay and his team encouraged Marijonas to trade with higher leverage, which is available for accounts above €50K.
Marijonas transferred another €40K but was then told that capital above €50K must be insured from high-leverage risks. An additional 30% of the amount must be transferred in three days, or he would be locked from trading. Transactions were halted each time
Marijonas tried to move assets out of his trading account, and the platform’s support blamed the smart contract, which would only re-activate after a deposit worth 29% of the account’s total value.
The final step is “Butchering.” The crypto romance scammers continue coming up with new arguments about why additional funds need to be added to the victim’s trading account, until the scammer’s sentiment changes, and they start blaming the victim, requesting fees, and finally cutting off all contact.
After three months of investing with Irina, Marijonas was pressured to deposit even more money, and take quick credits, and then the platform disappeared, and nearly €150K was lost.
Emotional Reflection
Scam survivors often feel the need to reflect on their emotional state and decisions leading up to the scam. By doing so, they can cope with past mistakes and develop a healthier approach to investing and decision-making.
Building Resilience: How to Mentally Prepare Against Scams
Preparation is often the best defense. It’s critical to understand the common tactics used by scammers and to adopt a mindset that is skeptical yet open to learning.
Education and Awareness
Remaining up-to-date with the latest types of crypto scams and being aware of the red flags can be the first line of defense. Continuous education about investment opportunities and the associated risks is crucial.
Developing a Discerning Mindset
Approaching crypto investments with a mindset that questions the legitimacy of information and requests until it’s verifiable can drastically reduce the chances of falling for a scam.
Community and Support Networks: Finding Help and Guidance
In the world of cryptocurrency, the community can be both a source of danger and a source of comfort. Knowing where to turn in times of need is essential to a victim’s recovery.
Online and Offline Support Groups
There are numerous online forums and support groups where victims can share their stories and receive support from others. Local community groups can also be valuable in linking victims with relevant resources and assistance.
Seeking Professional Assistance
Engaging with professionals, be it financial advisors, lawyers, or mental health experts, is crucial for moving forward. These individuals can provide personalized guidance and support tailored to the victim’s specific needs.
In conclusion, the psychological impact of crypto scams cannot be overstated. It’s an aspect of this digital world that needs more attention, research, and support. By sharing stories, providing resources, and amplifying collective wisdom, we can begin to reduce the prevalence of these scams and provide a more supportive environment for victims. Remember, in the world of crypto, knowledge and community are your best defense.
