Expert Witness: Digital Assets Anti-Money Laundering Law ‘Would Help Tremendously’ Reduce Crypto Scams
November 17, 2023 – Washington, DC — At a Senate Select Committee on Aging hearing, U.S. Senator Elizabeth Warren 
(D-Mass.) highlighted the prevalence and dangers of cryptocurrency scams — which stole a record $1 billion from seniors last year — among Americans over 60. Steve Weisman, editor-in-chief of Scamicide.com and senior lecturer at Bentley University, explained that older adults are particularly vulnerable to crypto scams, explained why crypto is a favored vehicle for fraudsters and said that Senator Warren’s legislation, Anti-Money Laundering Law on Digital Assets, “would help enormously” in reducing these types of scams. The bipartisan legislation would give financial regulators the tools to track suspicious crypto activity and stop fraudsters.
Transcription: Modern Scams: How Fraudsters Use Artificial Intelligence and How We Can Fight Back
US Senate Select Committee on Aging
Thursday November 16, 2023
Senator Elizabeth Warren: Thank you and thank you, Mr. Chairman and Ranking Member Braun, for organizing this hearing. Thanks everyone for being here – this is a really important topic.
Crypto is a favorite of those looking to defraud consumers. According to the FBI, in 2022, crypto scams were the leading cause of investment fraud in the United States. Using crypto, fraudsters stole a record $2.5 billion from consumers.
But crypto fraud does not affect all consumers equally. Last year, we saw a 350% increase in crypto investment scams targeting seniors. This is the largest increase among all age groups. That’s over $1 billion lost by seniors to crypto scams. And with many victims not reporting their experiences – as some of you have noted – out of shame or fear, that billion-dollar figure is almost surely an underestimate.
Mr. Weisman, you are a nationally recognized expert on fraud and cybersecurity. Why are older Americans particularly vulnerable to crypto scams?
Steve Weisman, Editor-in-Chief, Scamicide.com and Lecturer, Bentley University: Older Americans are generally sensitive because – anecdotally we say we’ve lost a little bit with the fastball, which I can attribute to, it doesn’t go that far, but there’s a part of our brain faced with skepticism which becomes less viable as we age. . Studies carried out at Cornell as well as the University of Iowa have demonstrated this. Then you get into the question of cryptocurrency itself and there’s this fear of missing out and it’s oh my God, this is going to be the best thing since the proverbial slice of bread. Older people are susceptible to this, but it’s even worse than that, Senator Warren, in the sense that when a scammer defrauds someone with a cryptocurrency scam – and there are myriads of them, from fake crypto to the use of it as funds that participate in various other types of investment scams, they get scammed and then they give the list of scammers – scammers do this – of their victims, they communicate to other scammers who will contact victims and say: we are from the federal government, we are from the Department of Justice, and for a fee – apparently the Department of Justice now charges a fee – we will collect it for you and they will lose again. So fear and greed are two elements present in any type of scam and unfortunately crypto has simply captured the imagination of many people, especially the elderly. It came back to bite us.
Senator Warren: Wow, well I really appreciate your work on this. As you said, cryptography is used for all types of scams. Scammers claim to have embarrassing information about someone that they will reveal unless the person pays a crypto ransom. Scammers pose as friends and relatives to encourage people to invest their savings as long as the payment is in crypto. We now understand that scammers even create fake investment platforms to trick people into buying cryptocurrencies from which, of course, they will never be able to withdraw their money. I’m sorry – go ahead, Mr. Weisman.
Mr. Weisman: I think my favorite was: On YouTube, there was an investment scam that was going to combine cryptocurrency and AI. The AI will show you how to make guaranteed millions through crypto and the company’s CEO was there to tout it. The CEO wasn’t real. It was an AI-generated avatar and anyone who invested money in this thing lost it. So it’s scary, the combination of AI and crypto and with the anonymity of crypto. That’s why scammers love it so much.
Senator Warren: RIGHT. Well, let’s talk for just a second – why crypto? Why is this happening through crypto rather than, say, through your bank or other transaction account?
Mr. Weisman: It’s the new shiny object that comes to mind. We think there’s something in there – I can’t help but believe that, to some extent, these are the emperor’s new clothes. Cryptocurrencies are legit, but the idea of investing millions in them –
Senator Warren: It’s the new shiny object. Is there anything else about crypto? Anonymity?
Mr. Weisman: Anonymity is great. There are people who are looking for privacy and of course this is something with crypto mixers where your account gets mixed up with others and becomes very difficult to trace. One of the things that the government did a great job of was after the ransomware attack on Colonial Pipeline. They were able to trace those accounts and recover them, but once it gets into the mixers, you have problems. There is a legitimate privacy concern that people may have, but it is nowhere near that of fraudsters.
Senator Warren: RIGHT. As I understand it, it’s fast so the money is gone.
Mr. Weisman: It’s extremely fast. And that’s the problem. In scams, you often have to act now. It’s an emergency. We act immediately. I have had clients who were victims of credit card fraud and were able to call and stop it. This doesn’t happen with cryptography.
Senator Warren: Yeah, and I can’t. I think Americans have had enough of these crypto crimes, and it’s high time we put regulations in place to combat this. That’s why Senator Roger Marshall and I introduced our bipartisan policy Anti-Money Laundering Law on Digital Assets. This bill has the support of 14 other senators – Democrats and Republicans – as well as our committee chairman. It is approved by AARP. This would make it easier for financial regulators to track suspicious crypto activity and catch fraudsters.
So I know I’m over my time. Let’s do this by yes or no. Mr. Weisman, would crypto legislation like ours help reduce crypto scams?
Mr. Weisman: Yes absolutely. I love it. Here’s the thing. My students at Bentley University were recently studying money laundering. We were talking about precisely this. The law always lags behind technology. Banks have a “know your customer” rule, which is helpful. The private sector and government need to work together. Your bill should have been passed long ago. This is obvious in the sense that –
Senator Warren: I take that as a compliment.
Mr. Weisman: This is something that would be invaluable.
Senator Warren: GOOD. Thank you so much. I appreciate it. We have no time to waste on this. These scams happen every day. THANKS. Thank you, Mr. President.
Source: Senator Elizabeth Warren
