Thieves Drain Crypto Wallets in Sophisticated Phishing Scam

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[00:00:01] Bob: This week on The Perfect Scam.

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[00:00:04] Glen Fishman: I called my friend Matt, and I said, "Listen, you've always asked me in the past if there's any shady business with your crypto, emails, phone calls, give him a call first before I do anything." So I just called him quickly. I told him what had happened, and he immediately said, "Open your Coinbase account right now." So I opened it up and it was nothing but zeros. I could see everything had been drained. And then Matt just said, "Glen, I'm so sorry."

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[00:00:44] Bob: Welcome back to The Perfect Scam. I'm your host, Bob Sullivan. It seems like everyone is talking about cryptocurrency again. You've probably heard about the wild swings in value that crypto claims have gone through - up, down, way up, way down. Buying crypto remains a very risky proposition, but when the criminal element is factored in, well things get really dangerous as you'll see in today's story. Meet Glen Fishman from Denver, a real estate agent and a very early crypto enthusiast.

[00:01:21] Glen Fishman: I first heard about cryptocurrency in 2017, and I heard about it from a Meet Up group that I saw online, and the Meet Up group had a time and location to educate anybody that had an interest in learning about it. So I went to that meeting, met several people including the host that had been, that was very well versed in crypto, his name is Matt, and I've been in touch with him ever since I went to the meeting. And from that day forward, I don't remember the exact date in 2017, I started buying cryptocurrency.

[00:02:07] Bob: Okay, did you dip your toe in right away? Did you go full force? How did you get involved?

[00:02:11] Glen Fishman: I started off on the recommendation of Matt, the experienced crypto investor, investing in XRP, which is one cryptocurrency. I bought some Ethereum and those were the two that I purchased probably within two weeks of going to that meeting.

[00:02:37] Bob: And those early investments pay off nicely.

[00:02:42] Glen Fishman: Yeah, I had about $180,000 just in XRP.

[00:02:49] Bob: Wow, and it sounds like you probably bought it several different times, right? How much money did you think you put into it?

[00:02:54] Glen Fishman: Yes. I probably put about $60,000 into it during that time.

[00:03:01] Bob: So you turned $60,000 into $180,000.

[00:03:04] Glen Fishman: Yes.

[00:03:05] Bob: Over 6 or 7 years.

[00:03:09] Bob: Let me jump in here and say that Glen's experience, tripling his money like that in a few years, is not typical, but it does happen in stocks and in crypto just as it's true you've heard from friends that go to Atlantic City one night and turn $500 into $5000 at a poker table, but I'm sure you know plenty of folks also turn $5000 into $500 at that poker table and they rarely talk about that, so you don't hear those stories as much. Anyway, still Glen's crypto haul was really important for him.

[00:03:43] Bob: So that's a lot of money, $180,000.

[00:03:45] Glen Fishman: It's a lot of money. Yeah, for me, it's a lot of money. Absolutely. Especially in the real estate market because the market's been down for a couple years now.

[00:03:55] Bob: So this money meant security to you, it meant early retirement to you. Tell me how, what that amount really meant to you.

[00:04:02] Glen Fishman: Both, both. Security, early retirement. The ability to purchase my own home because I sold off a lot of my real estate. I had 14 different properties with two ex-wives. And two divorces later and economic conditions caused me to sell the real estate because I need the money to live on. Yeah, so as a realtor, I've been renting for the past couple, three years, waiting to generate enough money to purchase my own home again.

[00:04:36] Bob: So this was a down payment for a nice house.

[00:04:38] Glen Fishman: Absolutely, yeah. Yeah, it represented a lot of things. It represented the down payment for a house, financial security, and I'm on Social Security, so the combination would have helped give me the option to at least semi-retire which was my goal.

[00:04:56] Bob: It's never just a pile of money, it's always something more; freedom, safety, the chance to live life on your own terms, and that's why when Glen gets a call from the firm that holds his $180,000 in crypto, well, he sits right up.

[00:05:15] Glen Fishman: November 21st, of last year, I was here with my girlfriend and I'd opened up my phone to check my Coinbase account just to see what the assets were doing, and it was locked. And it had been locked before, I'd been with Coinbase a long time and there was usually some logical reason. But it was locked, and as I was just literally trying to figure out, well, why would it be locked again? About 40 seconds later my phone rings, and I looked at the phone and it said, Coinbase Support.

[00:05:54] Bob: His account is locked. You've probably experienced this yourself, if you enter the wrong password into a financial account too many times, for example. And the call from Coinbase comes just moments after he tries to get into this locked account, and that makes sense to Glen.

[00:06:12] Glen Fishman: I answered the call, it was a guy by the name of David Jones who said he was with Coinbase Support, and he said he realized that I was trying to get into my account. And so many accounts had been locked recently because of a massive data breach, and Coinbase was instructed to reach out to their clients that had accounts with Coinbase and offer an explanation as to why the account was locked, and in this case, it was a major hack from some European country, I can't remember offhand. And then he said, "And the purpose of my call was just to let you know why it was locked, and because we've had so many, so many of our clients that had been locked out of their accounts, we've decided to do what we normally don't do and reach out to our customers via phone and give them the option to have us help them unlock it as well as just explain to them why their account was locked." And so the guy didn't put any pressure on me. He said, "This is a complete option, no pressure. This is just a service we're offering you. Management has asked us to do this because the breach was so large and the amount of accounts were so vast that were locked, that were locked," it all made sense to me. And he asked me if I, if he, while we were on the phone, would I like to have him to help me walk me through unlocking the account? And I decided, sure. Let's do it. Sounded completely legitimate.

[00:07:46] Bob: Let's do it. But, well, Glen isn’t 100% sure this is a good idea.

[00:07:53] Glen Fishman: I was a little bit nervous, and I said, "Listen, before we get started, can you send me an email showing me that it's, this is legitimate, that it's you, that it's from Coinbase, I can see all their information, their phone number, their email," and he said, "Sure, not a problem." He sent me out, out an email, a picture of his business card, a picture of him on the business card as well as Coinbase Support and an email address and a phone number that added up. So then I felt even more comfortable. And then we proceeded to walk through unlocking my account.

[00:08:31] Bob: So David Jones asked Glen for all the things you normally need to have an account unlocked. A picture of a government ID, an email, two-factor authentication information; it all seems to go smoothly enough...

[00:08:44] Glen Fishman: He said, "It's going to take 24 hours for your account to be unlocked," and he said, "I'll give you a call back tomorrow and confirm that it's been unlocked." So I gave him the information he needed to get into my account and have control over it. Now I couldn't do anything for 24 hours 'cause the account had to be unlocked. So he called back like he said he would do after the account was opened and let me know, "We've got your account open and I'm glad I could help."

[00:09:15] Bob: And you think this is good news, right? Great, my account's unlocked.

[00:09:17] Glen Fishman: Yeah, yeah, it sounded all legitimate to me.

[00:09:20] Bob: So I'm guessing the first thing you do is open your account, right?

[00:09:22] Glen Fishman: The first thing I would normally do would be to open my account, but what I did was I called my friend Matt, and I said, "Listen, you've always asked me in the past if there's any shady business going on with your crypto, emails, phone calls, give him a call first before I do anything." And so I just called him quickly. He answered. I told him what had happened, and he immediately said, "Open your Coinbase account right now."

[00:09:54] Bob: Open your Coinbase account right now. Even as the words come out of Matt's mouth, Glen's heart starts to race.

[00:10:02] Glen Fishman: So I opened it up and it was nothing but zeros. I could see everything had been drained.

[00:10:07] Bob: That sounds horrible.

[00:10:09] Glen Fishman: Matt said to me, he goes, "Glen I'm," and we did it on Zoom. So we just opened it up on Zoom so he could see my account. And he just said, "Glen, I'm so sorry."

[00:10:19] Bob: Nothing but zeros. It looks like someone has drained Glen's account, all 6 or 7 years of his investing returns just gone. It's all a bit confusing at the moment. Glen hopes there's some kind of explanation or maybe some way to get his money back.

[00:10:38] Glen Fishman: And so then he, then I asked him, I said, "Man," I was just in a panic. I said, "Would you be willing to call this guy and just have a conversation with him? Even though it appears that my crypto is lost, could you just have a conversation with him and," and I was just hoping that there was some way to reverse it. And there's some information he could get from this David Jones...

[00:11:04] Bob: So they call him together.

[00:11:08] Glen Fishman: This David Jones answered. Matt proceeded to say, "Hey, listen, I'm somewhat interested. I've had my account locked on Coinbase, and maybe having your help unlock it." And he goes, "Let me just ask you a few questions." He goes, "My buddy here, Glen Fishman, has just been working with you for the past 24 hours, and we opened up his crypto, his Coinbase account, and all his crypto is gone. And you apparently drained it. Why did you do that, and where is his crypto?" And the guy just hung up. And that was the end of it. He hung up. And then Matt just said, "Glen, I'm sorry."

[00:11:52] Bob: David Jones just hangs up. David Jones, or whoever he really is, doesn't work for Coinbase. He's just using stolen information to persuade people like Glen to divulge all the additional information he'll need to break into these victim's crypto wallets, and Glen realizes his money is gone, stolen.

[00:12:14] Bob: But can you just give me an idea of what's going through your mind when you see all those zeros?

[00:12:18] Glen Fishman: Yeah, I was stunned, embarrassed, full of fear, and full of shame, 'cause I'd been accumulating that crypto since 2017. So it was a long-term investing, it was hours and hours of listening to promoters online, influencers online that I trusted, that was talking about the assets I had, so I was really believing that this was going to retire me.

[00:12:49] Bob: It's all so painful to Glen that he doesn't even want to talk about what happened.

[00:12:53] Glen Fishman: The impact, when it finally sunk in that I had made a huge mistake and given up my log in information, my account information to my hacker, lost my money, I was, I was so preoccupied and stunned by that with all the other emotions of guilt, shame, embarrassment, I didn't even really want to talk about it. Yeah, that devastated me. My girlfriend was here, I let her know what happened. It was right before Thanksgiving. It ruined Thanksgiving. I had trouble sleeping. It's all I could think about was how stupid I was to fall for that. But I had to give myself some grace for the way it went down. But anyway, yeah, no, I was, I would just say I was very preoccupied with that incident. It was nothing I felt like I could share with a lot of friends or close... I did share it with a few close friends, but at the time I didn't feel there was any value in even talking about it because I was so embarrassed by it.

[00:13:58] Bob: And many of these friends probably knew that you had done well with crypto, right?

[00:14:02] Glen Fishman: Yeah, exactly. I had three friends that were also accumulating the same assets as myself, and they knew I had 100,000 XRP, for example.

[00:14:14] Bob: So facing them would have been really hard.

[00:14:16] Glen Fishman: Yes.

[00:14:18] Bob: So Glen starts looking for options.

[00:14:21] Glen Fishman: I called Coinbase Support right away. And I filed a complaint against Coinbase that your security was lacking and there was a breach in your security. How else would they know that they were in my account when I opened it? And they basically said they, they just stuck to, "Listen, regardless of all that, we've told all our clients multiple times that Coinbase will never call the client." That's what they defaulted back to. "We're sorry for your loss, but Coinbase never calls the client. You should have never taken that call."

[00:15:02] Bob: Man, they just said there's nothing they can do.

[00:15:05] Glen Fishman: Yes. Yes, that's what they said. And they said file a police report. My friend Matt said file a police report. And I did that with the Denver Police Department, that was my, the first thing I did. And they were really receptive. They said, "We're going to go ahead and transfer your case," they opened up a case, "We're going to transfer this to our Stolen Asset Department with the FBI."

[00:15:32] Bob: The FBI. Now you know if you've listened to The Perfect Scam, that often there's nothing even federal agents can do after crimes like this, but sometimes victims get fortunate.

[00:15:46] Glen Fishman: And literally, the next day I got a phone call from an FBI agent by the name of Eric, who was real sympathetic and asked me exactly what you're asking me, how did this whole thing go down? Shared the whole situation with me. And then, and then we proceeded to get, he proceeded to ask for all the documentation I could possibly give him, like a screenshot of my Coinbase account, the address that all the crypto went to, because he believed he could trace it and try to find out where it was.

[00:16:24] Bob: So this FBI agent gives Glen a glimmer of hope, but at the moment, it's just hope. But, not long after, the agent calls back with both good news and bad news.

[00:16:38] Glen Fishman: He was able to trace it. He found it, the $180,000 was split between 5 different accounts on Tether, an exchange that's now in El Salvador. So he said, "Unfortunately, two of the accounts are comingled with other funds," he goes, "It's just too hard to prove that it's your money in that account when it's comingled." He said, "But the other three accounts just have your money," which is about 50%, which is about $90,000.

[00:17:11] Bob: So the agent had found half the money, getting it back, well that's another story we'll get to in a moment. But first, I just want to share something about the way crypto works. Half of Glen's money was stolen and untraceable because it was comingled with other crypto. Comingled. Just imagine a bunch of people agreeing to throw 1 penny into a bucket and then take out a different penny. It would make that original penny untraceable, disconnected from the original owner. There are services which do this for cryptocurrencies. Tumblers or mixers, they're sometimes called, they make crypto even more anonymous. Mixers and tumblers also make life much easier for criminals and harder for law enforcement. Hey, I told you this was a bit complicated. Okay, so half of his money is untraceable, but the other half is sitting in a wallet at an exchange where the FBI might be able to retrieve it --might. But there's a process.

[00:18:11] Glen Fishman: And he said, "I'm going to, I'm going to go through the motions right now. I'm going to submit all your information that you've shared with me, screenshots, all the documentation." He asked for a little bit more information. He submitted that to Tether and Tether had enough information where they agreed to lock the account for 90 days so nobody could get into it, including the hacker. And then they were giving the hacker 90 days to come forward and dispute the freeze and prove that it was his assets, it was his money.

[00:18:47] Bob: So Glen has to wait three months to see if the criminal makes a counter claim on the funds.

[00:18:53] Glen Fishman: And then I had to live in that fear and live in that shame and guilt for months, and just praying that I'd get my money back, praying that the FBI would be able to convince Tether to release the funds. I wasn't worried about the, the individual that hacked me and took the funds. I wasn't worried about him getting the money once the account was frozen. But I was worried about Tether who is a foreign exchange located in El Salvador releasing the money back to the US.

[00:19:28] Bob: Yeah, the FBI has no jurisdiction over Tether, right?

[00:19:30] Glen Fishman: No, they don't, no. They apparently have a pretty good working relationship, but they have no jurisdiction.

[00:19:36] Bob: Not surprisingly, the criminal never makes a claim, so everyone involved agrees it's Glen's money, however, that's not the end of it.

[00:19:46] Glen Fishman: About months had gone by; I was just hopeful that I'd get that money back and the US Marshal's office as well as the FBI were in touch with somebody at, the right people over at Tether, and Tether agreed to release the funds and transfer them back to the US Marshal's Office here in the United States, and started the process of getting that $90,000 back to me. So initially, I was told by, I was transferred to another FBI agent here in Denver, it was a woman, very pleasant, very sympathetic. She said, "Glen, I have good news and bad news. The good news is we have your money. The bad news is because of the logistics; it could take a year to a year and a half before you get your money back."

[00:20:37] Bob: A year to a year and a half!

[00:20:39] Glen Fishman: A year to a year and a half is what she told me.

[00:20:41] Bob: Oh my gosh.

[00:20:42] Glen Fishman: She said, "That's," she goes, "there's a lot of red tape, it's a long process."

[00:20:47] Bob: Remember, this is money Glen hoped he might use to buy a home or to retire. And now he's being told he'll have to wait maybe 18 months to get his money back from a financial institution in El Salvador.

[00:21:02] Glen Fishman: I said, "Is there anything I can do to try to fast-track this process?" And she said, "You might want to reach out to your local congressperson and see if they can get involved and try to expedite the recovery or the return of your crypto, or of your money."

[00:21:20] Bob: And once again, well Glen is fortunate.

[00:21:24] Glen Fishman: So I reached out to Diane--, Diana DeGette, who's a local congresswoman here in my district, and she was receptive. She got onboard. She interacted with the FBI and I think because of her, I wound up getting the funds back to me, to my wallet, transferred to my wallet within 90 days. Actually correction - it was about 60 days.

[00:21:50] Bob: Wow.

[00:21:51] Glen Fishman: Yeah.

[00:21:52] Bob: okay, so that was incredibly effective.

[00:21:53] Glen Fishman: Incredibly. Yeah, I was, needless to say, ecstatic.

[00:21:58] Bob: But, but also to say the obvious, one of my specialties, it took an act of Congress for you to get your crypto back.

[00:22:04] Glen Fishman: It did.

[00:22:06] Bob: So Glen, with help from the FBI, the US Marshals, Coinbase, and a member of Congress, gets half his stolen money back after a few months. And well, his good luck streak continues after that.

[00:22:21] Bob: So where's the $90,000 now?

[00:22:23] Glen Fishman: So the $90,000 I did reinvest and it's doubled since I reinvested it.

[00:22:28] Bob: So does that mean you're back up to 180,000?

[00:22:30] Glen Fishman: Close, probably about 140,000.

[00:22:32] Bob: But you're almost whole from when this started.

[00:22:34] Glen Fishman: Yes. Correct.

[00:22:35] Bob: Well that's a happy ending, right?

[00:22:36] Glen Fishman: Very happy ending. Yeah, very happy ending.

[00:22:39] Bob: A happy ending, yes, but not completely. All that time Glen's crypto was in limbo, well crypto was on one of its big upswings and...

[00:22:49] Bob: What's not being said is since you didn't have the funds all that time, you missed out on all those gains, right?

[00:22:55] Glen Fishman: Correct.

[00:22:56] Bob: So how much do think that is?

[00:22:58] Glen Fishman: And so I would say probably, I would have been up to probably half a million dollars.

[00:23:05] Bob: Oh, that's a punch in the gut.

[00:23:06] Glen Fishman: Yeah, it really is. It is. I just had to put it in perspective and life happens to us. And we've just got to get through it. Yeah, I, I have a lot of faith, and so I was able to put it in perspective and talk about it with several people and just analyze it and understand it happened and I've got to move on. And I did.

[00:23:30] Bob: Remember when Glen was full of shame and didn't even want to tell his closest friends what happened? Well after a little time passes and he really analyzes and begins to understand everything that happened, he decides it's time to share his story to help other people. And that's why he's talking with us too.

[00:23:48] Bob: So you went from, I don't, I don't want to tell my friends, to yes, I'm going to go on TV and help other people.

[00:23:53] Glen Fishman: Yeah.

[00:23:53] Bob: Well how did you make that leap?

[00:23:55] Glen Fishman: Um, I just wanted to be of service to other people. I just felt it was the right thing to do.

[00:24:01] Bob: And perhaps you won't be surprised, after he goes public, other victims of the same crime start reaching out to him. He's a real estate agent so he's pretty easy to find.

[00:24:14] Glen Fishman: I had one individual call me from Florida that lost 750,000.

[00:24:19] Bob: Oh my god.

[00:24:20] Glen Fishman: Yeah. And the FBI agent said, "Listen, there's, there's well over a million plus in lost assets from similar scams."

[00:24:30] Bob: Wow.

[00:24:30] Glen Fishman: So.

[00:24:31] Bob: I'm sure it was a fantastic helpful experience to have these other victims talk to you and for the two of you to share, but yeah.

[00:24:38] Glen Fishman: Yeah, yeah, it felt good. It, it felt good for me, and I know it felt good for them. They were grateful. We exchanged phone numbers with the intention of staying in touch if we could be of help to each other. And yeah, I felt a lot better being able to talk to other victims, many of which had been in this, in the crypto space for long periods of time like myself.

[00:25:03] Bob: So crypto account takeovers, cryptocurrency exchange impersonation scams like bank impersonation scams, they are now very pervasive, and...

[00:25:14] Bob: This guy had so much information about you, it was incredibly persuasive, right?

[00:25:20] Glen Fishman: Oh incredibly persuasive. And how he knew I was in my account is still baffling to this day.

[00:25:29] Bob: It was the timing that mattered the most, it was the fact that you...

[00:25:31] Glen Fishman: The timing is what was so convincing, yes.

[00:25:34] Bob: Yeah, you opened the account, it was blocked, and you got a call, and that was very persuasive.

[00:25:39] Glen Fishman: Very. And this individual presumably had been doing this over and over again and was just smooth and slick as possible. Had all the answers for why he was calling, really had all, it completely made sense.

[00:25:53] Bob: As Glen thinks about everything that's happened, there is one element to this story that he said he'd really like to stress, and something we can all learn from.

[00:26:03] Bob: So you had a phone a friend situation where you could have called someone before you did anything.

[00:26:10] Glen Fishman: Absolutely.

[00:26:11] Bob: Instead, instead you called right after. You were probably calling for sort of affirmation, "Matt, could you tell me I did the right thing?" And...

[00:26:17] Glen Fishman: Yes.

[00:26:18] Bob: And that's, so one of the things we talk about on this podcast, is so often the criminals count on victims not reaching out to anyone else because e--, even the telling of a story, before your friend or loved one reacts, often the word coming out of your mouth kind of makes sense what's going on a little bit better. Can you just talk to me more about why you didn't reach out until after it all happened instead of before?

[00:26:45] Glen Fishman: Sure, no, very valid question. The reason I didn't reach out ahead of time was because it was, it seemed 98% legit.

[00:26:56] Bob: Glen's friend, Matt, had given him an open invitation to call in case anything strange was ever going on, and he did call, but not until after he had interacted with the criminals. And that 2% of doubt in his mind, he didn't listen to it until it was too late. I hope you'll remember Glen's story and always listen to that 2%, and always phone a friend, or phone AARP's Fraud Watch Network.

[00:27:25] Glen Fishman: It would still make sense to call somebody and bounce it off somebody if you're uneasy, even if they weren't that educated, you'd get some opinion, and it would allow you the ability to pause.

[00:27:37] Bob: Yeah, the pause is so important.

[00:27:39] Glen Fishman: The pause is so important, no, you're absolutely right, Bob.

[00:27:43] Bob: The pause is so important. I can't stress that enough. So to help me with that and to talk a little bit more about the wild west of cryptocurrency, well, it should all give you pause. We have Molly White here. She's an outspoken voice in the crypto world, a very public skeptic, but a reasonable skeptic with a very interesting background.

[00:28:06] Molly White: Yeah, so I started out as a software engineer, and then I was working on web software, and I became interested in crypto in 2020 or so, 2021 when there was this enormous hype cycle that emerged around it where everyone was promising that if you get into crypto you're going to get rich overnight. And they were even promising that cryptocurrency and blockchains would solve a lot of problems beyond just financial issues, but that it would democratize the web and it would create solutions to any intractable problem you can think of. And people started talking about this concept of Web 3, which was this sort of broader application of blockchain technologies to web problems. And so that really interested me at the time because I was so involved in web software and I became learning more about it, but ultimately, realized that a lot of the promises that were being made by the cryptocurrency and blockchain industry really didn't hold up to scrutiny, and that there wasn't much attention being paid to the downsides of cryptocurrency and the number of people who were being hurt through scams and frauds and other sorts of malfeasance in the crypto world which was being very poorly overseen by regulators. And so that was when I started to pay attention to it just on my own tracking some of these disasters that were happening in the crypto world, and ultimately it turned into my full-time job.

[00:29:37] Bob: So you transitioned from being a developer into a publisher, right?

[00:29:42] Molly White: Right, yeah, these days I am basically a full-time independent writer, publishing my own media publication.

[00:29:48] Bob: So Molly writes and talked full-time now about crypto and related tech issues, and because she has a software background, she's in a better position to ask the right questions than many people. And many of those questions lead to some pretty stark answers.

[00:30:04] Molly White: Unfortunately, what happened to Glen is incredibly common in the cryptocurrency sector where phishing scams are everywhere. People are constantly being hit with attempts to gain access to private information about them, and then gain access to their cryptocurrency wallets where they can then take control of the digital assets and transfer them to their own accounts.

[00:30:32] Bob: One of the things that made Glen's criminal so persuasive was that Coinbase and its customers have been hit by a variety of hacking attacks through the years. A few months after Glen's incident, for example, in early 2025 Coinbase issued a public statement that criminals had bribed customer service agents to hand over private details on a small number of its customers; details like names, address, partial SSNs, government issued IDs. And then these criminals tried to extort Coinbase for $20 million. The firm says it didn't pay, but it did see sophisticated phishing attacks using that information and agreed to refund impacted customers.

[00:31:11] Bob: How much more persuasive is it when someone can contact you and has all of this detail about you?

[00:31:17] Molly White: It's way more convincing when someone calls you up and they know that you have an account with the financial institution. They know specifics about maybe where you live, or your full name, or your account number, anything that really you would expect only an employee of that company to have access to can be used by phishing scammers to build trust with their victims because they think there's no way that anyone else knows that, and so therefore this person must be from Coinbase as they claim.

[00:31:51] Bob: So in, in this case, he tried to log in and was locked out of his account and got a call moments later, so whoever did this to him had really high-level access to something about him.

[00:32:03] Molly White: Yes, or there are efficient scammers that have learned that there are ways to cause these types of events to happen. So, for example, if someone is trying to convince someone that there's a problem with their accounts, and that they need to verify their identity before they can be, you know, before they can regain access to that account, they might do something like try to log in a bunch of times with improper information causing the security systems to lock out that account. So, you know, if they know your email, and they enter the wrong password five times and Coinbase says, that looks suspicious to us, so we're going to lock the account, then when the victim goes to confirm that there's an issue with their account, they will see that they're locked out, and it will actually add credibility to the scammer's story.

[00:32:50] Bob: So almost anyone can force someone's account to be locked, right?

[00:32:54] Molly White: It very much depends on the institution and the types of security processes that they have in place, but it is very common for especially sensitive accounts to lock people out on failed logins or for various other reasons and phishers learn this and then use that to their advantage.

[00:33:14] Bob: Yeah, I think that's good advice, even if we're not talking about crypto scams here that getting a note saying you've been locked out of your account could mean a whole bunch of things.

[00:33:24] Bob: So Glen's scam in once sense is a fairly typical account takeover crime. Criminals persuaded him to provide all the details they need to hack into his account, but because it involved crypto, the stakes were much higher and the consumer protections, well...

[00:33:40] Bob: This doesn't sound too much different from a pretty traditional bank impersonation scam. Somebody could call up and say they were from Bank of America and persuade me to give them my login credentials and the next thing they're into my bank. Why does the fact that this was crypto make this more dangerous?

[00:33:57] Molly White: So you're right, that it is a very common tactic that's used broadly, whether it's crypto or a traditional financial institution, but it can be more difficult to handle after the fact in the crypto world because crypto can be more challenging to trace in some ways, especially for very sophisticated attackers. You know how to essentially launder cryptocurrency in a way that it's challenging to trace and challenging to freeze. There is no undoing a transaction in the crypto world in the ways that sometimes traditional financial transactions can be reversed if it's determined that there was a scam or something that happened. That is not possible in the crypto world as a result of the design that is actually generally considered to be a feature by a lot of crypto enthusiasts that these transactions are irreversible, but it is extremely challenging when it comes to scams. And then the protections that are in place for consumers who choose to put money into cryptocurrency are very different than what you might expect from a bank or even a financial technology company where there's usually some requirement that they provide recourse for scam victims if they are, if their money is stolen from them. So it can be very challenging if you're scammed in the crypto world to recover those funds, whether it's through law enforcement getting involved and the bank getting involved or some sort of consumer protection requirement coming into effect and requiring an institution to reimburse you. Law enforcement is also often unfamiliar with cryptocurrency crime comparatively when it comes to financial crime, and ill-equipped to trace or try to recover those funds. And so a lot of people will report the theft to law enforcement and not get much of a response because there just isn't much in the way of resources for law enforcement sometimes when they're trying to trace these types of things.

[00:36:06] Bob: And also, federal regulations have protections designed to help consumers when these kinds of crimes occur, like the credit card dispute process, for example. Well, these things don't really exist in the crypto world.

[00:36:18] Bob: So first of all, if this money in a savings account at Bank of America there, there's a dispute process that's established by federal regulations in the US as opposed to this man ended up being at the mercy of Tether which is in El Salvador. That's a very different leverage situation if you're trying to dispute a transaction with a financial institution, right?

[00:36:39] Molly White: So people do try to go to either the cryptocurrency exchange where the theft happened and get some help from them, or sometimes they try to go to the actual issuer of the token. Tether, for example, issues a type of cryptocurrency token and can sometimes freeze those tokens if they are alerted that there was a crime that happened. But there really isn't much in the way of requirements around consumer protection, even for companies that are based in the United States like Coinbase. Consumer protections are very limited. A lot of the traditional consumer protections that apply to financial technology firms, whether it's Venmo or Cash App or something like that, do not apply at this point to cryptocurrency firms. And so you're really at the mercy of the company in whether or not they feel like helping you. And a lot of the times they say it was your fault. You allowed someone into the account and we have no responsibility for this. And that's the end of the conversation.

[00:37:44] Bob: Luckily for Glen, well his theft wasn't the end of the conversation. A lot of people helped him get some of his money back.

[00:37:53] Molly White: And frankly, this person was extremely lucky that happened at all because in the majority of cases the funds are not frozen, the assets are not recovered, and certainly a congressperson doesn't step in to try to speed up the process. And so people often have no recovery whatsoever or recovery is extremely protracted, or a small fraction of the assets that they lost are ultimately recovered.

[00:38:22] Bob: There is an element in crypto baked right into its nature, which makes it more susceptible to theft of large amounts of money. In a way, it's kind of built for that.

[00:38:35] Bob: We all know that it's not just passwords that protect people's financial accounts in the US, that there's magic software that monitors transactions, particularly credit card transactions, but all transactions, and if somebody shows up and moves $178,000 suddenly out of an account, a red flag would pop up. We all have to trust that financial institutions are good at this, some aren't, but should I trust that crypto exchanges are good at this? Would I have any reason to believe that?

[00:39:03] Molly White: Again, it really varies based on the company, but I would say that broadly in crypto, there's actually a lot of resistance to the idea of placing limits on the types of transactions people can make and the amounts that people can transfer. The same types of limits that prevent someone from having their bank account drained by a bad actor or sometimes seen in the crypto world as an unfair infringement on your right to do what you please with your assets. And so there's this sort of fragile balancing act that these companies have to take where they don't anger their customers who feel like they should have access to the entirety of their accounts at any time, while also trying to prevent some sort of bad actor from completely draining the account. And so I would say that generally speaking, a lot of these programs in crypto exchanges are not as robust as in banks and other financial firms partly for that reason, partly because these companies are in some cases just less sophisticated, and then there's also the issue where not everyone stores their crypto assets in a centralized account at an exchange like Coinbase or any of the various competitors that can impose those limits. And if you are storing your crypto assets in a wallet that is fully under your control and not at a third-party company, then there is no limit whatsoever on who can transfer the funds or to where or in what period of time, and there is absolutely no protection of that kind.

[00:40:40] Bob: That kind of transaction monitoring is basically against the whole ethos of cryptocurrency, right?

[00:40:46] Molly White: For many people it is. I think that as crypto has evolved and become more popular, we are seeing more people who appreciate the types of intervention by these third party exchanges or institutions that do add some degree of customer protection, but a lot of people do believe that ultimately these are my assets, I should be allowed to do anything I want with them, to transfer them immediately in any amount without anyone stepping in the way and saying, no, you're not allowed to do what you want with your money. This is very sort of libertarian ethos that underlies a lot of the crypto philosophy where people really don't like the idea of anyone getting in the way of them and their money, whether it's a government or a bank or some sort of compliance system or transaction monitoring. And so you have this sort of social opposition to these types of things as well as the limits that these companies are willing to go to to impose these types of systems.

[00:41:47] Bob: I think this is a really important point that I want to drive home for listeners, because okay, it's one thing if you're a tech person, you're a libertarian, and go to a casino on the weekends for all I care, and you can invest in crypto for all I care, but when regular people who aren't sophisticated, as we're now in the next type cycle of this, become more and more involved in crypto, and they, they go to websites that might resemble a financial institution that they're used to, and they might just presume there are protections around the transactions; I think that's, that would be normal. I think it's important to stress to them that they're out on their own when it comes to crypto. Can you talk about that a little bit?

[00:42:23] Molly White: Absolutely. This is something I really try to drive home for people because I think, especially in the US, we've become very comfortable with some amount of protection around the financial activities that we engage in whether it's banks offering depository insurance or transaction monitoring in our financial institutions, or oversight from securities regulators making sure that the stock exchange is a fair place to, to buy and sell assets. We become used to it and we begin to expect it everywhere, especially if the place we're looking at really resembles a bank or a stock exchange or something like that. But ultimately, those protections are not there in crypto despite the similar appearance. We saw a really stark example of this in 2022 when a company called Celsius collapsed, and that was a crypto brokerage that had been advertising itself to customers as better than banks and providing services that banks would normally provide but describing themselves as the alternative, the superior alternative to a bank. Ultimately, it turned out that there was a lot of shady business happening at that company. The company collapsed and went bankrupt, and a number of customers wrote letters to the bankruptcy judge explaining how it had affected them. And I read multiple letters throughout that bankruptcy process that explained that: I didn't think this could happen because this company was based in the United States, I thought US regulators were making sure everything was above board. Many people said they thought they had FDIC insurance on their assets in those accounts even though that type of depository insurance is not available in the crypto sector. So people thought that they were taking on a lot less risk than they actually were, and ultimately it destroyed some people's lives. And this is really an issue throughout crypto where people just become used to these types of protections and they can't fathom the idea that there is this total wild west financial sector that is advertising to everyday people, promising them the world, but there is really no safeguards there.

[00:44:44] Bob: Okay, so I hope you're getting the message that if you invest in crypto, well you're kind of on your own. And that's okay if you do so with your eyes wide open. But there's something else about crypto that's important to understand; there's just a lot of crime that travels across the network.

[00:45:01] Molly White: Crypto has become the choice for criminals doing any sort of cybercrime essentially. It has, because of its traceability challenges for law enforcement and others, because of the irreversibility of transactions, it's a perfect asset for criminals, and now you never see ransomware, for example. Those attacks never happen outside of crypto. It's always demands for Bitcoin or some other type of crypto asset because it's just the perfect asset for that. We're seeing increasing numbers of investment scams where people are being told that they can make a fortune overnight because it'll go into Bitcoin or some other crypto asset that people have heard about and they've heard about people getting rich off of that, and they think maybe this is plausible. I think there are a ton of different reasons that criminals use it, but it has been very popular for cyber criminals, and if you look at the proportion of crime that happens using cryptocurrency, it is enormous compared to the number of people who are actually using crypto, investing in crypto; criminal activity is a substantial portion of that. And so I think it's really been a boon for criminals, and it has caused this situation where everyday people who are using crypto or putting money into crypto have to be on high alert at all times because scams and hacks and frauds are just a part of the ecosystem. People who are enthusiastic and knowledgeable about crypto talk about the scams as though they're just a normal day-to-day thing. It's the cost of doing business. Pretty much everyone who has used crypto a substantial amount will, will admit they've been scammed at some point. So it's really a free for all out there right now.

[00:46:52] Bob: I do sometimes wonder, is there's so much fraud in crypto that maybe it wouldn't exist or wouldn't exist and it's, weren't encouraging cybercrime.

[00:47:00] Molly White: Yeah, it's hard to say. I think it's hard to say at that alternative scenario, but a substantial amount of activity in cryptocurrency is criminal. We are seeing more adoption of crypto broadly, and it's clear that these days there is some institutional demand for crypto, there's certainly been the retail enthusiasm around it, and so I wouldn't say it's fair to say that all of cryptocurrency is criminal activity or criminal behavior, but it certain is a shocking amount of it. And when you see crypto ATMs, you're right, that is an enormous conduit for crypto thefts. There was a 99% increase from 2023 to 2024 with fraud involving cryptocurrency ATMs according to the FBI. $250 million was reported lost just in 2024, mostly from victims who are over the age of 60. And it was good to see that there has been a little bit of action coming out against these crypto ATM operators. There was recently a lawsuit against a major ATM operator coming out of the Attorney General for the District of Columbia explaining that the fraud protections are completely insufficient and that these crypto ATM companies are profiting off of thefts a lot of the time. They are taking large chunks from these transactions in which people are being scammed. That is how they are making their money. And there has been some attention to it, but I would say it has not been nearly enough.

[00:48:29] Bob: So I covered tech stocks during the dot com bubble, and I wrote a lot about the housing market during the housing bubble that proceeded The Great Recession, and I'm here to tell you, people who are making a lot of money really hate people who throw cold water on their investment bubbles. I still remember some of the hate mail I got. Well, Molly is in the midst of that right now.

[00:48:52] Bob: You're a lone voice out there, one of the few voices. What is that like?

[00:48:55] Molly White: It's a strange world. It's certainly not a popular thing to do if you're a crypto enthusiast. People don't particularly like what I do. But I think it's important to, to say, look, this technology, this financial asset has very serious issues, and that everyday people are suffering as a result of it, and there has not been sufficient enforcement or regulation around cryptocurrency, and we really need to be careful around this type of asset class. I am not opposed to crypto existing. I support anyone's right to put money into cryptocurrency or speculate on the price of whatever token they're interested in. I think that's fine if people do so with all the facts, they have proper information to make informed decisions about what they're doing with their money, and that they can trust that even if those assets go up or down in price, they will still be there tomorrow. But that is not the state of crypto at this point in time. At this stage, people not only have to understand that they're taking on risk when it comes to the inherent volatility of most crypto assets, which are they go up and down in price quickly and dramatically. They also have to worry about the tokens that they're putting money into being scams themselves. We've seen entire new words created for rug pulls and the types of other crypto crimes where people will create crypto assets and promise people the world for them, and then just take off overnight with all the assets and leaving the investors with nothing. And then finally, there's the concern that, you know, even if you do have these crypto assets and you're willing to take on the risk with the volatility, you may lose access to those assets through some sort of scam or the company might go bankrupt and you'll be left with nothing. We've seen that happen over and over again. And I think just an unacceptable level of risk to ask people to take on. There's a serious issue with information being available to investors to make informed decisions. And frankly, everyday people who are being encouraged to get into crypto are being brought in with an extreme disadvantage, and ultimately, end up often serving as exit liquidity for someone who is more sophisticated and potentially engaged in criminal activity.

[00:51:18] Bob: Okay, I need you to slow down on that last set of sentences there, 'cause I think that's really important. Exit liquidity, tell me what you mean by exit liquidity.

[00:51:25] Molly White: So if you launch a cryptocurrency token and you want to scam somebody, you can't actually make any money off of it unless you convince someone to buy it. And so that's really what I'm referring to with exit liquidity is, you know, these people who are told that this is the hot new token and you buy it now you're going to get in early and then make a ton of money. They are often exit liquidity, meaning that once they buy in, the person who created the token sells all of the tokens and takes off with their money essentially. It causes the tokens that these people purchase to go to zero so they can no longer get out of those positions, and the person who created the token makes a lot of money.

[00:52:08] Bob: But you also said before that, that the retail investors are at a severe information disadvantage, especially in this situation. Can you talk about that a little bit more?

[00:52:16] Molly White: So a lot of the regulations that exist in the financial system that we're used to when it comes to securities or commodities or various forms of investments that people make beyond just holding currency, a lot of those regulations come down to making sure that everyone is on a fairly level playing field, that you understand the risks that you're taking on. If you choose to say buy a stock, every stock that is issued on the public stock exchanges have this whole literature that is published on a regular basis that explains how the company's doing, and the outlook for their future business, and the risks that are involved and the people who are running the company, and you know a lot about them and their background. That type of information is not available in crypto. Oftentimes, cryptocurrency projects are run by anonymous people, you don't know even who is running the company that you're being told to, to get involved with. You don't know anything about who's backing these companies. You don't know about their business practices. You don't know anything about whether they will continue to stay in business or what type of business they plan to do. It's really just marketing. You get to read their marketing materials. There is no even oversight really to ensure that their marketing materials are accurate, and so it is just a breeding ground for scams because people can anonymously launch a cryptocurrency, promise people that it will be, it'll change the whole system, and it'll make billions of dollars, and then just take off with the money, and there's really no oversight or enforcement stopping them.

[00:54:03] Bob: So I realize I'm invoking a legal term, and we're not the law, we're not a legal podcast, but that sure sounds like a Ponzi scheme to me that the early people make money and the less, people at the end are left without a chair. Why is this or not like a Ponzi scheme?

[00:54:19] Molly White: Many of these are Ponzi schemes. Just plainly speaking, crypto Ponzi schemes are a huge amount of the crypto fraud that we see. I would not say that crypto itself is a Ponzi scheme, but it is a vehicle for Ponzi schemes and we see many of them.

[00:54:36] Bob: As the person who is with the pins for the bubble, somebody's going to blame you when the bubble bursts or when people lose money. Have you had that experience?

[00:54:44] Molly White: Absolutely. Yeah, people really don't like it when you rain on the parade, but ultimately, I think that any asset should be able to speak for itself, and if you have to threaten people not to be critical of your asset, then there's probably something seriously wrong. And like I said, a lot of the issues in this sector rely on, or stem from people not having adequate information about the token that they're investing in or the company or the person behind the company. And so the more people are trying to hide that information, the more skeptical I get that something might be going on here that's not aboveboard. But it's very common unfortunately in the crypto world for people to attack those who are critical or skeptical, or even just asking questions about a project because so much of crypto's value comes from the perception that this is an exciting token or an exciting project and, you know, the second that someone introduces doubt there, it can cause prices to go down.

[00:55:50] Bob: Okay, so all this skepticism, all well and good enough, fear, warnings, all that, but I have a friend who 7 years ago invested $1000 in X and he just bought a boat, so why shouldn't I do this? What do you say to a person who comes to you with that?

[00:56:06] Molly White: Yeah, I hear that a lot, and you could say the same thing about someone who invested in a Ponzi scheme or any sort of scam. There are people who make money from scams, that's why they exist. And sometimes it's not the people who started the scam, sometimes it's just people who got in early. But that does not mean that every person who, who buys in is going to be the winner, and in fact, it is fairly rare for that to happen. When it comes to crypto, there are certainly cryptocurrencies that are not scams. I'm not trying to claim that every crypto asset is inherently a scam, but there is an enormous amount of risk that people are taking on. And you can make a similar statement about oh, I know someone who bought Apple stock decades ago, and now they're a billionaire. It happens. People sometimes choose the right token or the right stock or they get in at the right time. But you do need to pay attention to the sort of overall odds and the likelihood that will happen again. These days, a lot of people who are purchasing crypto assets are actually getting in pretty late. Many of the times they are getting in when the hype is at an all-time high, which often correlates with prices being at all-time highs. And so as more and more people get excited, they buy the marketing around how they can get rich just like some early investor, they often are buying at fairly high prices and ultimately, crypto goes through these boom-and-bust cycles where we see it go from tens of thousands of dollars to a fraction of that amount. And oftentimes that is when people lose serious amounts of money. We saw it happen in 2022; now crypto prices are back up, and I suspect it's only a matter of time before we see it happen again.

[00:57:55] Bob: So I want to mention that this story today is about investing in crypto, but Perfect Scam listeners know that crypto is often a supporting actor in almost every kind of scam story; romance scams, job scams, and so on. Often the criminals eventually ask for money to be sent via crypto. Because it's so common, there are increasing efforts by law enforcement to recover stolen crypto and, as in this story, sometimes it does work. We recently had former prosecutor, Erin West, on the podcast to talk about her new website and non-profit, Operation Shamrock, which brings together a bunch of experts who are good at chasing down stolen crypto. It does work ... sometimes. And if you've been the victim of stolen crypto, you should reach out to law enforcement and Operation Shamrock immediately, because maybe they can help. The faster you ask for help, the better the odds at recovery. We don't want to leave you with the idea that stolen crypto is an entirely hopeless situation, but, and this is a big but, there's still a lot of luck involved, and your big takeaway today should be; if you try your hand at crypto investing, know there are many, many ways your hand can get burned.

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[00:59:08] Bob: For The Perfect Scam, I'm Bob Sullivan.

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[00:59:18] Bob: If you have been targeted by a scam or fraud, you're not alone. Call the AARP Fraud Watch Network Helpline at 877-908-3360. Their trained fraud specialists can provide you with free support and guidance on what to do next. To learn more about the Fraud Watch Network volunteers and the fraud survivors they've helped, check out the new video series, Fraud Wars, on AARP's YouTube channel. Our email address at The Perfect Scam is: theperfectscampodcast@aarp.org, and we want to hear from you. If you've been the victim of a scam or you know someone who has, and you'd like us to tell their story, write to us. That address again is: theperfectscampodcast@aarp.org. Thank you to our team of scambusters; Associate Producer, Annalea Embree; Researcher, Becky Dodson; Executive Producer, Julie Getz; and our Audio Engineer and Sound Designer, Julio Gonzalez. Be sure to find us on Apple Podcasts, Spotify, or wherever you listen to podcasts. For AARP's The Perfect Scam, I'm Bob Sullivan.

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