Changing face of cyber frauds: Paper wallets, crypto exchanges are new tax havens

Govt has directed close monitoring and coordination between law enforcement agencies

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Off shore Swiss bank accounts or Caribbean tax havens may soon be a worry of the past. Digital transactions move on to the next level where new forms of money laundering threaten to stash away black money through crypto exchanges that can be hidden in the form of a paper wallet anywhere. The presence of such crypto currency assets can go almost undetected and no seizures can be made unless the private key is recovered.

The new arena of cyber fraud does not have the legal or technological framework to counter it yet, which is why law enforcement agencies have started brainstorming over the challenges posed by crypto currencies and the impact of the shift towards Central Bank Digital Currency which is expected to determine the future of digital economy. 

Apart from framing of government regulations and guidelines, law enforcement agencies are brainstorming over various kinds of crypto frauds and scams coming to light from different states, where the modus operandi in each case is being analysed and shared to create a robust financial system that can beat the technical challenges while investigating financial frauds. 

A recent report shared with security agencies points towards the threat of crypto platforms becoming easy platforms for hawala transactions, money laundering through cryptos and tokens and emergence of hundreds of businesses every month claiming to innovate on blockchain and cryptocurrency with intention of cheating investors. 

Fake exchanges, fake wallets, mining companies are the most common theme, says the report, as individuals are unable to differentiate between the real and fake ones. A security official said many cryptocurrency wallet companies are positioning themselves as ideal wallet to keep crypto currency by alluring investors with hefty return but running away with customer funds or being hacked. 

There is growing worry over the use of social media platforms where many people are taking up offers of trading and losing investments. Agencies have flagged multi level marketing schemes as a growing threat as they provide a novel opportunity for scams involving use of cryptocurrency mining, cloud mining, coins, wallet and exchange accounts. 

“Mining has caught the attention of people as it allows creation of new cryptocurrency and due to limited technical knowledge, investors are easily falling victim to mining scams from their mobile phones,” says the report.  

The changing face of cyber crimes and digital frauds has prompted the government to ask for close monitoring and coordination between central agencies and cyber divisions of state police forces. 

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