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Bitcoin Scams Steal at Least $11 Million in Virtual Deposits From ­nsuspecting Customers

By SM­ News

January 29, 2015

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Fraudulent schemes have scammed at least $11 million in Bitcoin deposits from unsuspecting cyber customers over the past four years, according to Southern Methodist University (SMU) researchers. They found culprits used four different types of schemes through authentic-looking Web-based investment and banking outlets to lure customers and heist deposits.

"Our calculation of $11 million is almost certainly at the low-end," says SMU's Marie Vasek. "The amount of Bitcoin that depositors have lost to these scams is probably many millions more."

The researchers say the scams succeed by exploiting people's greed, the urge to get rich quick, and the inability to judge the legitimacy of Web services to decide which financial sites are good or bad.

"Because the complete history of Bitcoin transactions are made public, we have been able to inspect, for the first time, the money flowing in and out of fraudulent schemes in great detail," says SMU professor Tyler W. Moore.

The researchers identified 41 scams occurring between 2011 and 2014, in which fraudulent sites stole Bitcoin from at least 13,000 victims. They identified the scams by running a Structured Query Language database dump of all pertinent Bitcoin transactions, and then analyzing the Bitcoin addresses of both victims and the siphoning transactions of scammers.

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