Down the Bitcoin Funnel: The Tech Firms Driving Investors to Ruin with Fake Celebrity News
03 Dec 2020

By Dada Lyndell, OCCRP, 1 December 2020

OCCRP — Ingrid Hernvall was scrolling through Facebook when she saw exciting news.

It was a story — laid out just like an article in a proper newspaper — featuring two of Sweden’s biggest television personalities. The two men spoke of a fantastic new Bitcoin investment opportunity that was almost certain to make you rich.

Her daughter had seen the same “article.” Both women trusted the TV stars, Fredrik Skavlan and Filip Hammar, and were intrigued by the prospect of making so much money. Hernvall, 57, is a ceramic artist in Stockholm, while her daughter had spent long stretches out of work due to illness.

When her daughter clicked through and quickly started to make money — at least virtually — Hernvall was convinced. She took the plunge and invested the proceeds of the sale of her house, which represented her life’s savings.

It took her four months to realize she’d been duped. By then, she had lost over US$300,000.

The “news story” she’d seen was one among hundreds of thousands of fabricated advertorials claiming celebrity endorsements of get-rich-quick schemes that do not exist.

Those drawn in by the familiar faces and promises of wealth are redirected to brokers. Some of these are licensed, but many are questionable, and in some cases they are downright criminal, harassing their victims until they agree to pay up.

This is what happened to Hernvall. Entering her contact information on a website earned her a call from a smooth-talking salesman, who kept insisting the story about Bitcoin was true and she’d make a fortune — if she just kept sending him money.

“You know the whole time that everything is wrong,” she recalled. “But it goes so fast and you don’t have time to stop and reflect.”

While the flood of these fake stories is already documented and the subject of regulatory warnings in many countries, the business continues to boom.

Now an investigation by an international consortium of reporters, led by OCCRP and Swedish daily newspaper Dagens Nyheter, drawing on a cache of 800,000 leaked advertisements analyzed by OCCRP’s data team, can sketch out the ecosystem around these fabricated news stories for the first time.

The ads are targeted to local markets: British readers may see the face of business mogul Elon Musk, while the French get football star Kylian Mbappé. Marketing firms then exploit loopholes on Facebook and Google to get them in front of users’ eyes.

They direct excited readers to sites in their own languages touting “crypto robots” or “crypto trading bots” — supposedly computer programs that use a cutting-edge algorithm to automatically trade cryptocurrencies.

In reality, these pages are just marketing tools that make lavish promises to entice users to hand over their contact information. Once they do, would-be investors are funneled towards a variety of online investment brokers who have purchased their contact details.

Some are offering legitimate, if extremely risky, investments. But others represent a darker world of fraud, where users are badgered into making deposits, then adding more and more funds, sometimes under extreme pressure. They never get them back.

What makes this so confusing for users — and hard to crack for anti-cyber-crime investigators — is that the online world of crypto-robot portals is so multifaceted. Even Bitcoin Revolution, one of the best known “brands,” has a multitude of different web addresses run by different people.

“This very protean character is important to understand,” Claire Castanet, an official at France’s financial regulator, told OCCRP partner Le Monde.

“If there is an evolution in scams, it is this permanent agility. Before, it was forex, then it was the investment diamond, today cryptocurrencies. … It is formidably effective.”

The websites tend to use similar tactics and, at a glance, might appear legitimate.

At the top of a “crypto robot” page, the visitor will usually be greeted by a video including short clips from well-known figures extolling the virtues of Bitcoin. A range of fake testimonials about their money-making successes usually follows, as well as other unsubstantiated claims about how the robot works.

Read more at OCCRP

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