A cryptocurrency scam that used the Coinbase Wallet led to $66.3 million in lost

Jenkins isn’t some greenhorn fresh to the world of money and crime. In fact, if anyone shouldn’t have been duped in a scam, it’s him — a 57-year-old retired cop from outside Atlantic City, who prides himself on his law enforcement wiles. He even used to direct security at a casino, his eagle eyes spotting the shady types who would take the house for a ride.

But over a months-long slow play — led by an attractive woman and fueled by a spate of confidence-winning gestures — Jenkins slowly gave his money to the crooks. He has little hope of ever recovering it.

As cryptocurrency investment in the United States skyrockets, Jenkins’s story is no longer a rarity. Scams are rapidly multiplying in the lightly regulated province of crypto, experts say, each boosted wallet and disappeared dollar underscoring just how mainstream the thievery has become. The Federal Trade Commission estimates that Americans lost $750 million to crypto scams in 2021, and the number could rise this year.

Law enforcement has been slow to rise to the challenge. The Justice Department recently announced a new task force focusing on cryptocurrencies, but it’s still very new and it remains to be seen how many scammers it can investigate, let alone arrest.

No one agency seems to have latched onto the scam that snatched Jenkins’s money, even though a Washington Post analysis of the blockchain records available suggest it is truly of staggering dimensions — with likely more than 5,000 victims in multiple states and $66.3 million stolen since August. The FBI did not respond to a request for comment.

Victims interviewed by The Post say, despite numerous attempts to alert law enforcement, they’ve yet to be contacted by authorities, leading them to believe no agency is even aware of the scam, let alone investigating it. Instead, they have organized on their own, in Reddit and Facebook groups, to commiserate and strategize.

Meanwhile, regulators and Congress have yet to develop a robust set of rules that would impose strict standards of behavior and enforcement. And the companies involved — in this case, the large crypto platform Coinbase and the currency Tether — have basically told the victims “buyer beware.”

“This is really, really hard because crypto is so thinly regulated and folks are used to picking up the phone and calling 911,” said Joe Rotunda, the enforcement director of the Texas State Securities Board, which investigates investment scams. “Oftentimes, the law enforcement agencies deal with violent crimes or street crimes. They simply don’t have the resources necessary to prosecute a case like this and don’t know where to turn.”

Jenkins says that when he went to his local police station, they didn’t understand what he was talking about. He tried contacting both the FBI and Securities and Exchange Commission via their websites but never heard back.

Like so many crypto investors who’ve been scammed, Jenkins tells a particularly American story, one in which a shiny new financial tool dangles the prospect of middle-class stability — but also lures criminals eager to take advantage of its anonymity and baffling complexity.

Jenkins thought he was savvy enough to use his crypto investments to swing a little extra money to supplement his income from his pension. Instead, he wound up losing some of that, too.

“American history is filled with episodes of fraud where a lot of people you wouldn’t expect to get taken in do,” said Edward J. Balleisen, a Duke history professor who explored scams in his book “Fraud: An American History from Barnum to Madoff.”

He cited “commodity-pool” scams from late 19th century that had Americans sending their money by mail to invest in “can’t-miss” wheat futures. Those scams also took place “at the frontier of economic innovation,” he said, where criminals find they can exploit the combination of consumer enthusiasm and government confusion.

“It would appear that’s what we’re living through now,” he said.

The scam that ensnared Jenkins unfolded on an app made by the cryptocurrency exchange Coinbase. It involved a niche crypto area known as “liquidity mining” and took the form of what activists have come to call “pig-butchering” — because the victim’s wallet is fattened before the slaughter.

Jenkins lives in Absecon, N.J., a sleepy, family-oriented town eight miles from the seductive lights of Atlantic City. Much of his time, and money, are occupied with taking care of his 3-year-old nephew.

Crypto was the furthest thing from Jenkins’s mind, when he first met “Alice”…

Read More: A cryptocurrency scam that used the Coinbase Wallet led to $66.3 million in lost

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