The Rotterdam police, working with blockchain data company Chainalysis, have uncovered hundreds of cases of cryptocurrency fraud. The police identified 186 Dutch people who fell victim to “approval phishing,” in which perpetrators convinced victims to sign a document that lets the perpetrators help them set up a crypto wallet. But it also gives the perpetrators authority to withdraw their cryptocurrencies.
Since 2021, scammers have stolen 2.7 billion dollars through approval phishing, the Rotterdam police said on Tuesday. The authorities and Chainalysis identified hundreds of cases in Operation Spincaster. In some cases, the police were able to intervene before the theft happened.
“With one victim, we prevented 65,000 euros from being stolen from his crypto wallet,” Ruben van Well of the Cybercrime Team Rotterdam said. “It is an absolutely unique collaboration that is not directly aimed at catching criminals, but at making this form of fraud impossible.”
According to Van Well, the perpetrators approach victims on dating sites and social media and convince them they can get rich quickly by investing in cryptocurrencies.
The perpetrators often instill confidence in the victims through months-long contact on dating sites or social media and offer to help them enter the world of cryptocurrencies, Jesse Brobbel of the Rotterdam police said on the NOS Radio 1 Journaal. It often starts with a “crypto opportunity” in which the victim can invest 500 euros. “The scammer promises a high return and deposits a larger amount back from his own account,” Brobbel explained. This instills trust and makes it seem like a good investment.
In many cases, the scammer then sends a document with which the victim gives them authority to set up a crypto account on their behalf. But that document also contains an approval document that allows the scammer to withdraw the cryptocurrency. “If the victim then deposits the rest of their savings into the crypto account, such an approval becomes very bad. It is difficult to ever see that money again,” said Brobbel.
“We see damage amounts in the millions, with additional mortgages and loans taken out. Afterward, victims often lose everything they have. The criminals take the money from the crypto wallet, and victims have no idea how that could have happened,” Van Well said.
During Operation Spincaster, investigative services in six countries, Chainalysis, and cryptocurrency exchanges assessed over 7,000 leads and identified over 162 million dollars in stolen funds.
In the Netherlands, the police identified 186 victims, including two who had signed an approval document but whose money hadn’t been stolen yet. The police immediately informed them and froze their accounts to safeguard the money.
The authorities are also working on securing evidence and seizing the assets of fraudsters.
“A successful start in showing how easy this form of fraud can be to detect and prevent,” Ruben said. “Now we will look together at how we can recognize the form of fraud in real-time and intervene to prevent more people from becoming victims.”