“In the conflict between the crook and the fool, the sympathies of humanity are always on the side of the crook.”
H. L. Mencken
Interest in cryptocurrencies is growing exponentially in today’s world, and it’s hard to find anyone who hasn’t heard of bitcoin. Bitcoin is also a payment system, but one that uses its own currency for transactions. The word “bitcoin” is derived from “coin” and “bit” (a unit of information). Bitcoin (ticker: BTC) was the first cryptocurrency whose issuance is not controlled by any official financial institution, and it is not tied to the GDP of any state. At the same time, bitcoin performs the basic functions of money: it can be used to buy and sell goods and services, and as a store of value and a medium of exchange. Bitcoin has no physical form — you can’t hold it in your hand. In essence, it is program code, a string of symbols. The currency is traded on exchanges, where its exchange rate against traditional and other digital currencies is set based on demand. Bitcoins are transferred between network participants on a “peer-to-peer” (P2P) basis — meaning only two parties are involved in a transaction, the sender and the recipient, with no third party having any influence over the exchange. The very first transaction involving cryptocurrency took place in mid-May 2010 on the BitcoinTalk forum, when someone using the handle “laszlo” said he wouldn’t mind two pizzas in exchange for ten thousand bitcoins (worth around $30 at the time). One user took him up on the offer, and the deal was struck — giving the cryptocurrency its “ticket to life.” The world’s leading powers have since acknowledged bitcoin as a new reality. The chief concern for financial regulators remains the anonymity of payments and the potential for bitcoin to be used for criminal purposes: money laundering, tax evasion, and financing banned organizations.
Interest in mining and cryptocurrency appears to be approaching its peak, as indirectly evidenced by the numerous complaints from citizens about fraudsters offering to carry out various bitcoin-related transactions on their behalf. Among the most common: phone-based investment offers, hacked e-wallets, and purchases through brokerage firms. For now, cryptocurrencies remain a murky space where fortunes can be made just as quickly as they can be lost. Such conditions are a magnet for fraudsters of every stripe, who benefit from the privacy coins offer and the almost total absence of government oversight — and, above all, from the heightened public interest in cryptocurrencies paired with low awareness of how they actually work. As a result, young people hoping to make quick and easy money without much effort often end up among the victims of fraud. Various fraudulent schemes can lead to significant financial losses and, at times, criminal prosecution for the person who has fallen into a skillfully laid trap. In this article, we describe one case in which we were able to help an unfortunate student avoid criminal liability for a reckless decision he made.
Client Story: Meeting an Attractive Blonde Online
Our firm’s client in this case was a young man — let’s call him Alex — a third-year economics student at a large German university. From the very start of our conversation, Alex struck us as an educated, well-rounded, level-headed person. That, however, did not stop him from falling victim to fraudsters. He shared his sad story with us and asked for legal help in a genuinely difficult situation. It all started with the notorious online meeting and correspondence on a popular platform with a young, attractive blonde woman — let’s call her Anastasia. At the time, Alex was looking for part-time work or a side job he could combine with his studies; finding work in his own field hadn’t panned out yet. He readily chatted with fellow job-seekers on social media, exchanging tips on writing a good resume and doing well at interviews. That is how he met Nastya, who won him over almost instantly. From the start, she actively set about helping our client find a job, offering valuable tips on improving his resume and contacts for potential employers. Their conversations grew increasingly personal — Nastya took an interest in Alex’s progress, gave him advice, and told him about her own interesting job. All of this, of course, only made Alex trust her more and more — mistakenly, as it turned out…
One evening, during a Skype call, Anastasia offered her friend a chance to earn some extra money. It didn’t seem like much was being asked of him: simply provide the details of his bank account, into which no less than €10,000 was due to arrive. With that money, he was to buy bitcoin, transfer it to the company Anastasia worked for, and, for these “quite straightforward operations,” receive a 10% commission on the turnover. In any other circumstance, Alex might have approached such a “tempting” offer more cautiously — but with Nastya, he let his guard down.
"Easy Money": €10,000 From an Unknown Company
The young man quickly browsed the website of the company Anastasia claimed to work for, and on whose behalf this “tempting” offer had been made. The company was involved in investments across various sectors of the economy, and everything seemed serious enough. Alex provided his bank account details, and, sure enough, the previously promised sum of €10,000 soon arrived. Our client noticed that the money had come by transfer from a legal entity registered in Germany, as prepayment for some goods — not from Russia, where Nastya’s company was supposedly registered. Once again, though, she dispelled his emerging doubts, explaining it away as a partner company through which all financial settlements were routed.
As initially agreed, Alex fulfilled his end of the deal. He bought bitcoin with the €10,000 he had received and, that same day, transferred it to the account details given to him by his new acquaintance. Unfortunately, instead of the promised 10% commission on the deal, Alex soon received a formal complaint letter from a company registered in Germany, as well as a summons to be questioned by the police. He came to our law firm in a state of complete confusion, hoping our lawyers could help him sort out this misunderstanding.
Hacking the Accounting System: How Alex’s Account Became the Drop Point
Having heard our client out, we immediately requested his case file. As it later turned out, the German supplier company from which the money had arrived in our client’s account was supposed to receive payment for certain goods. Fraudsters, however, using specialized software, had managed to divert the payment so that when the accountant processed it, the money went to Alex’s account instead of to the actual supplier company awaiting payment. Needless to say, the expected goods were never delivered. Alex’s account was identified, and the relevant materials were forwarded to the police, who in turn passed them to the public prosecutor’s office — which soon brought charges of fraud and money laundering against the young man. Naturally, no one doubted that, the moment trouble started for Alex, all trace of Anastasia online instantly went cold. The young man tried to find her at the company where she claimed to have worked for years, but no one there had ever heard of anyone by that name in the marketing department.
The Lawyer’s Work: Preparing a Petition to Close the Case
Fortunately for the young man, he sought legal help from professionals in time. Our firm’s lawyer is currently preparing a detailed petition to the public prosecutor’s office, together with a full set of supporting documents. On this basis, we have solid grounds to expect that the case will soon be discontinued for lack of sufficient grounds. We sincerely hope this incident will serve as a valuable lesson for the young man going forward.
Conclusion
In closing, it’s worth noting that elaborate fraudulent schemes have existed for a very long time. For instance, for a long time, the value of a coin was equivalent to the amount of metal it contained. This created a problem: fraudsters would shave small amounts of metal off the edges of coins, later melting them down to mint new ones. The solution to this problem was found by Isaac Newton, who, among his other roles, worked at the British Royal Mint. His idea was simple: cut small grooves around the entire edge of a coin, so any shaved-down edges would be immediately noticeable. This ridged edge is still applied to coins today and is known as “reeding.” Over time, fraudulent schemes have only grown more sophisticated. The moment ordinary people stop falling for one fraudulent scheme en masse, cunning fraudsters quickly devise more elaborate ones, fueled by demand for various goods, services or financial products. We wish our readers to never lose their vigilance and never fall for fraudsters’ tricks — and, in doubtful cases, to seek a consultation with qualified lawyers with years of experience behind them. A professional consultation, which needn’t cost much, can save a great deal of money and nerves. Once again, we urge our clients and readers to keep a “clear head” and a “cool heart” in everything related to business and investments. You surely remember the old truth that still holds today: unfortunately, the only free cheese is in a mousetrap.
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