Cryptographic romances, deceptions and reasonable diligence

Earlier this month, I received a call from a long-standing business partner, who had recently invested more than $ 700,000 in cryptocurrency. He is a renowned businessman in California who had built an important construction company. “I think I may have been defrauded,” he said.

Our businessman had met an online woman, who had proposed to associate with him on investments. Initial investments had given positive results, the woman seemed to be a qualified investor. The businessman was led to increasingly important investments. Its crypto portfolio has shown that its $ 700,000 investments increased more than two million dollars. He then tried to withdraw funds and could not do so. What was going on? What could he do?

Investment in cryptocurrency is no longer a niche market: a study by the Pew Research Center in 2023 estimated 17% of American adults had invested in the crypto. In addition, at the beginning of 2025, crypto investment was about to grow significantly. Several forces meet for such an increase: a new regulatory framework clarifying roles for banks and other market players, a new leadership at Securities and Exchange Commission and federal regulatory organizations, the adoption by President Trump of Crypto -Monnaies, the strong support of the congress and the proposal to create the creation of creation of President Trump of cryptocurrencies, the solid support of the congress and the proposal to create a Bitcoin strategic reserve fund.

For a timely perspective on the reasonable diligence necessary by our businessman and other investors in 2025, I turned to Mauro Wolfe and Vince Nolan, lawyer for Duane Morris LLP. Mr. Wolfe is a former principal lawyer for the application of the law of the dry, the former federal prosecutor in the doj in New Jersey, and a main partner of the Duane Morris digital group and Blockchain Group. The practice of Mr. Nolan’s dispute focuses on the financial industry, as well as on the dispute and the defense of the blockchain and the application of the crypto.

Crypto scams and other deceptions

The romantic scam involving our businessman is one of the most common in crypto. Nolan, whose customers have been taken in such scams, explains how these scams are often developing.

“At its base, the scam of cryptographic romance is when someone establishes a false identity, enters an online romance with a victim, then uses this emotional link to manipulate the victim to give money to the crook under false claims. The initial contact can occur in different ways, sometimes through false profiles on dating sites and applications or unexpected contact directly on other social networks or text. These contacts are a kind of survey, crooks looking for a vulnerable person.

“Once the contact has been established, the crooks then work to build a romantic relationship, often quickly quickly. The crooks are expert manipulators. They know how and when romance and how and when guilty the trip when they want the victim to send money. In one of our recent cases, the crook claimed to have recently managed to invest in cryptocurrency, and because the victim was special for them, they shared the investment strategy with them. The customer “invested” in the scam and has probably lost several hundred thousand dollars “.

The romantic scam is not unique at the crypto: it exists in the financial sectors. But the cryptography sector is a promising place, due to its limited regulations. Nolan adds,

“Everything that goes through a bank and, to a certain extent, the transfers of wire in the transactions denominated in dollars have a certain amount of conformity to the customer and to anti-flowage compliance. These compliance requirements are largely absent from the crypto.

“In addition, because crypto portfolios are anonymous, it is difficult to follow who owns or controls the crypto. Once the investment has hit the crook wallet, they transfer it and send it by a mixer like Tornado Cash and it can become impossible to find it. There are a whole world of cryptographic mixers who work to preserve anonymity and disrupt efforts to trace the crypto. »»

Reasonable diligence required by investors

Our businessman, who succeeds in other areas of activity, has failed to make the reasonable diligence necessary before investment. He did not adequately confirm the identity of the party commissioning to demand a person’s bond. It was misleaded by the apparent association of the investment platform with a legitimate crypto exchange, crypto.com.

Wolfe notes that other investment scams in the main crypto have elements similar to Romanesque scams. They also generally involve false identities, very generous yield claims, false links with legitimate cryptography sites. Wolfe recommends several forms of reasonable diligence before any investment.

“Cryptographic investors must be aware of the red flags when they invest in cryptographic projects. A red flag is the place where you are contacted by a complete unknown, often attractive, who seeks to start an online relationship and possibly investments in digital assets.

“Reasonable diligence begins by determining that the person approaching you is a real person in relation to an online account. Look for an online profile on LinkedIn, an online photograph, achievements or discourse or written articles. The type of online activity proves that someone is real. Be alert for all that is unusual, as recent online accounts with very few connections. »»

“Often, bad actors will try to associate their fraud with an organization which is also legitimate as a great exchange of legitimate American crypto. For example, the investment platform used by our businessman suggested an association with the main exchange of crypto, crypto.com. In fact, the association was false: the platform had no connection with Crypto.com.

Nolan’s recommendations start by never sending money to someone you haven’t met in person. If a person in person is not possible, plan a zoom call, but also on alert for disappointments and require other forms of identity confirmation, starting with forms available online. Nolan also notes the general rule of investment which is often forgotten with the crypto: if it seems too good to be true, this is probably the case. “Cryptographic scams attack the fact that people who arrived early on Bitcoin and other cryptocurrencies have made a fortune and which has legitimized something of a rapidly rich attitude in cryptographic space.”

In addition, as part of reasonable diligence, Wolfe and Nolan recommend the State government websites as well as the FBI website which identify the previous complaints of fraud. Research on allows them an investor to familiarize themselves with the rapidly evolving forms that fraud takes.

Remedies available for investors

For our businessman, Wolfe and Nolan stressed that he had to act quickly. “Movement quickly is important because the bad players will often move digital assets outside the United States as quickly as possible in order to make the convulsions of stolen or fraud assets more difficult,” explains Wolfe.

Potential remedies exist which can be taken through organizations responsible for the application of laws as well as private legal actions. Wolfe signals three options:

· Application organizations: collect all the files you have and report the case to the prosecutor general of the state or to the federal police. Many states now have Cybercrime units. There is no cost for the investor to report. Investors have been able to carry out financial recovery through government actions.

· Private legal action against the crook: finding a lawyer and determining whether private legal action against the bad actor is viable and financially useful. Tracking law firms in experienced crypto assets often have relationships around the world with foreign law firms and legal medicine experts in digital active space to trace fraud assets.

· Private legal action against a third party: private legal action can also be possible against individuals or entities that were not the bad actors themselves, but rather helped the bad actors to perform transactions. Cases against third parties can be difficult, however, and generally require significant legal and survey resources.

Our businessman has made initial requests to locate his investment, but so far has not been able to do so. He filed a complaint with the California Cybercrime General Unit as well as with the FBI. He envisages private action, although the costs are intimidating, taking into account his current financial situation.

Government regulations, cryptographic investment and individual responsibility

Earlier this month, Wolfe spoke of a panel in the annual meeting of the Banking Law Committee of the American Bar Association, on “digital assets and developments in the regulation of stablescoin”. Wolfe discussed new roles for the banking sector in investment in cryptography, and the potential withdrawal of the SEC 121 accounting bulletin on banking regulations. He also discussed lighter regulatory advice to reach a safer environment for investors.

While Wolfe believes that the new administration will bring such directives, he and Nolan emphasize the government can only do much. The government can never replace reasonable diligence with individual investors – helped by the diligence of family members, friends and colleagues. Wolfe himself is an investor in the crypto, while being an expert in the laws governing digital assets. He knows the dangers there.