Key Takeaways
A group of tech and crypto giants are joining forces to battle online fraud. Coinbase , Meta, Ripple, Kraken, Gemini, the Global Anti-Scam Organization (GASO), and Match Group, which owns dating platforms Tinder and Hinge are now part of the Tech Against Scams coalition.
This collaboration spans across various sectors, with a unified goal to tackle online fraud and financial scams and in that way, potentially help some of its members evade accusations from the United States Securities and Exchange Commission (SEC).
For instance, Coinbase is contesting charges from the SEC, which says it has operated without proper registrations since 2019. The SEC claims that Coinbase’s failure to register its trading platform and staking services as securities exchanges, brokers, and clearing agencies undermines necessary investor protections. Unlike Coinbase, Kraken chose to settle with the SEC by ending its staking services in the US, aligning its operations with the SEC’s current regulatory framework and avoiding prolonged legal disputes.
Tech Giants Form Coalition to Combat Online Scams Across Industries
The coalition aims to enhance safety across technology platforms by pooling resources and sharing knowledge to address the pervasive challenge of online scams.
Coinbase announced the formation of the Tech Against Scams coalition. It expresses pride in uniting with industry leaders to address the widespread issue of scams across the tech sector. The coalition aims to help groups across the tech sector work together to protect and educate users.
The coalition will concentrate on telling users about various scam tactics and how to prevent them. Additionally, the coalition aims to exchange best practices and threat intelligence to improve consumer safety and stop online scammers.
Coinbase Promotes User Protection
Coinbase acknowledges that while less than 0.5% of crypto transactions are linked to illicit activities, the repercussions for victims can be severe. Annually, consumers around the world suffer financial losses of approximately $1.4 trillion due to scams. Coinbase says it is committed to maintaining the highest standards of security. However, no platform can completely eliminate the risk of its users encountering scams, regardless of the sophistication of its security measures.
According to the company, it’s crucial to remain vigilant and recognize early indications of potential scams. Daily-use platforms like messaging apps, social media, dating sites, and e-commerce marketplaces are all places where scammers often first contact potential victims.
To safeguard yourself, Coinbase says you should:
- Avoid Third-Party Apps: Refrain from downloading unfamiliar applications.
- Be Cautious with Assets: Never transfer your assets to someone you haven’t met in person.
- Discuss with Trusted Individuals: Share potential investment opportunities with friends and family for their perspectives.
- Use Reputable Platforms: Stick to well-known and trusted crypto wallets and exchanges, and keep your private keys and seed phrases confidential.
- Stay Informed: Continuously educate yourself about the tactics scammers use.
Surge in Crypto Investment Scams, Victims Lose $3.94 Billion in 2023
According to the FBI’s 2023 annual report on internet crime, Americans lost $12.5 billion to online fraud last year. Of these losses, approximately $3.94 billion were attributed to crypto fraud.
Since 2021, reported losses from investment fraud have more than tripled, largely driven by social engineering tactics such as “pig butchering” scams. In these schemes, victims are led to believe they have a personal connection with a scammer who then convinces them to make fraudulent cryptocurrency investments. Many of these scams originate in Southeast Asia and are part of highly organized operations that exploit forced labor.
The FBI issued a warning that scammers are increasingly using custodial accounts at financial institutions for cryptocurrency exchanges or third-party payment processors. They also manipulate people into sending funds directly to these platforms, which can disperse money quickly.
It said :
“With these increased tactics of funds going directly to cryptocurrency platforms and third-party payment processors… it emphasizes the importance of leveraging two-factor or multi-factor authentication as an additional security layer.”
Crypto Exchanges Navigate SEC Regulations Amid Legal Battles
In light of recent SEC lawsuits, major cryptocurrency exchanges like Coinbase are trying to avoid further SEC scrutiny. This coalition, which aims to enhance financial transparency and user security, could potentially mitigate some of the SEC’s allegations.
Coinbase, for instance, has been accused for operating as an unregistered securities exchange, broker, and clearing agency since at least 2019. The SEC’s allegations say the exchange failed to register its services and staking-as-a-service program.
Following these charges, Coinbase has pushed back against the SEC’s claims. Coinbase’s lawyers have expressed concerns that the SEC’s focuses solely on enforcement without providing clear rules. This, they say, harms both the industry’s competitiveness and hinders companies’ attempts to comply with US laws.
Meanwhile, Kraken settled with the SEC by discontinuing its staking services in the US.
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