mirror-transaction-fraud-bitcoin-investigation

Cybertrace’s expert analysts are issuing an urgent alert about a dangerous new cryptocurrency scam technique: mirror transaction fraud. Fraudsters using this method dupe victims into transferring Bitcoin or other crypto in the mistaken belief it will facilitate a movement of funds in the opposite direction. As such, it represents a 21st century crypto iteration of well-known advance fee frauds, such as the Nigerian prince scam. By using highly technical language, mirror transaction fraudsters seek to convince their targets they have to transfer Bitcoin into another wallet to “validate” it and “unlock” their funds. Let’s look at how this technique works in detail, so you can better protect yourself and your family. But first: what’s the difference between mirror transactions and mirror trading?

Mirror trading vs mirror transactions

Mirror trading has made a lot of headlines in recent times. Originally a legitimate strategy for newbie forex investors to copy successful traders, it has since been associated with money-laundering. Last year, investigators named South African-based firm Mirror Trading International as 2020’s biggest cryptocurrency scam. Mirror transaction fraud, as discussed in this article, is a slightly different but equally dangerous beast. It describes a technique used by all kinds of scammers to trick victims into believing that, to receive any funds they are owed, they must first send an equal amount of money to another Bitcoin wallet to “validate” it. Needless to say, there are no other funds, and the transferred money simply disappears!

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Making contact

We know from victims that mirror transaction fraud reaches them in a variety of ways. Having harvested their personal information elsewhere, scammers might email, text, call or contact them via social media. However, scammers ultimately want to get their targets on the phone in order to use their highly convincing sales tactics. In doing so, they present victims with a tempting opportunity to access a substantial amount of money. This could be money victims have themselves invested, “long-lost” Bitcoin accounts or unexpected windfalls such as lottery wins. For some unexplained reason, the fraudsters are unable to transfer these funds via bank transfer and have to use cryptocurrencies. The scammers appear convincing and persuasive, and pretend to represent an investment firm, forex broker, financial regulator or blockchain representative.

Mirroring transactions

Once they have them interested, scammers work hard to gain victims’ trust, often over the course of several phone calls. Having piqued their curiosity about what might unexpectedly lie in store, mirror transaction fraud then turns up the technical language. Using the jargon of mirror trading, they introduce related computing terminology, often with direct reference to IBM’s mirror method. While this certainly exists, it actually relates to IBM’s Customer Information Control System (CICS) and its distributed program link. While there is some interesting potential for how this could be used to eventually link real-world assets to the blockchain, it does not relate to validating individual Bitcoin transactions between different wallet addresses.

Internet Oplichten, Netherlands Nederland, due diligence, background checks, background check, cyber-fraud, social media harassment
Netherlands Nederland, due diligence, background checks, background check, cyber-fraud, social media harassment

Scamming victims

The mirror transaction fraudsters’ aim is plain and simple: they seek to bamboozle victims into believing there is a technical requirement for them to “mirror” the supposed transaction before they can access their funds. In practice, this means asking victims to first send the same amount of money they are eventually due to receive. This is nonsense: anyone can receive Bitcoin into their wallet without first needing to send their own funds! However, scammers use the blockchain’s transparency to deceive their targets by showing them their funds just “sitting” in a wallet. All victims supposedly need to do is “validate” and “unlock” it by sending an identical amount to the same wallet. Unfortunately, hoodwinked victims believe the scammers and send the requested amount, expecting to receive twice as much back in return. It’s only when the promised windfall fails to materialise that they realise that the scammers have duped them.

History of similar scams

Mirror transaction fraud is merely the latest, 21st-century version of a long line of similar advance fee scams. Reaching back to the 18th-century Spanish prisoner fraud, its most prominent exponent is probably the Nigerian prince scam. Referring to the relevant fraud section in the Nigerian criminal code, it also goes by the name 419 scam. It refers to any fraud that elicits upfront money or financial information in return for a supposed windfall gain. These days, “Nigerian” scams actually emanate from many different countries, but the iconic moniker has stuck. While the means may have changed from bank transfers to Bitcoin wallets, the ends remain the same. Scammers seek to gain your confidence, exploit your trust, take your money, and leave you broke!

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What can I do about mirror transaction fraud?

If the mirror transaction fraud hasn’t gotten you yet, beware of any unsolicited contact regarding unexpected windfalls. Remind yourself of the old adage: if it sounds too good to be true, it probably is! Also, remember to never transfer Bitcoin to another wallet if you are actually meant to receive it. Finally, ask people contacting you to put any information in writing, no matter how convincing they sound on the phone.

If, on the other hand, you have already fallen victim to mirror transaction fraud, don’t despair! Reach out to Cybertrace’s experienced investigators today to find out how we can help. Despite urban myths to the contrary, cryptocurrencies are eminently traceable and Cybertrace is the Australian pioneer in the field. Finally, please help keep our community safe by sharing this article widely and communicating your experiences in the comments below.

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