CoinDesk reporter Leigh Cuen is joined by attorney Preston Byrne, a partner at the Washington, D.C., office of Anderson Kill, to talk about schemes, scams and constitutional rights.

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This episode is sponsored by ErisX, The Stellar Development Foundation and Grayscale Digital Large Cap Investment Fund.

“There is really very little difference, at least in the point of origin...whether something is a scam,” Byrne said, regarding inaccurate blogs and representations of software projects. “Take Ethereum, for example. Ethereum had all manner of promises that were made...the statements coming from the Ethereum Foundation were somewhat more measured.” 

Regardless of whether any particular project is an attempt at fraud, it’s likely that online money schemes of every variety will become more common during this coronavirus crisis. According to Thomas Papageorge, head of the Consumer Protection Unit at the San Diego District Attorney’s office, there’s a “clear pattern” of more white-collar crimes since the recession began. 

“The rate of incidents, the amount of fraud, does increase dramatically during an emergency situation like this,” Papageorge said. “I’ve heard about new types of scams that involve cryptocurrency … investment scams and bogus advice about protecting your savings or bitcoin.”

Bitcoin evangelist Andreas Antonopoulos tweeted that fraudsters were impersonating him to offer unemployed people fake jobs, identity thieves looking for personal information. Likewise, CoinDesk impersonators are also targeting people across the sector.

See also: Why the Dollar Has Never Been Stronger or More Set Up to Fail

According to Carnegie Mellon University economics professor Sevin Yeltekin, the financial stressors people are experiencing today make them “more vulnerable to those scams.” However, there is a silver lining, she said, because businesses that survive the current recession will do so because they reimagined how they operate, including “risk management.”

Even tech-savvy people like Lisa Gus, startup investment lead at the Government Blockchain Association and co-founder of the startup WishKnish, can be vulnerable to fraudsters in such stressful times. Gus said she spent several weeks being led on by a scammer impersonating a Binance employee before her startup’s security solution MetaCert identified a phishing domain behind the fraudster’s email account, support@communitybinance.org. 

“About LinkedIn, I’m not the only one being inundated with fake [investment] offers...the amount of propositions I’ve been getting [is up],” Gus said. “Especially for larger companies, it’s impossible to track profiles that are associated with them.”

With regards to this instance, a LinkedIn spokesperson recommended members “take precautions” in these trying times and “report any messages or postings they believe are scams to us so we can investigate."

Larger companies often charge early-stage blockchain projects for working together, whether it’s cited as marketing costs or listing fees. In Gus’ case, the fraudster had due diligence paperwork and non-disclosure contracts, which made the scammer’s request for a bitcoin deposit less suspicious. 

As for retail users, ShapeShift CEO Erik Voorhees has “definitely seen more phishing attempts” since early March. Likewise, a Binance spokesperson said so far in 2020 the company saw an average of 180 scam reports per month, which dwarf the unreported instances. So the exchange offers a public verification tool to check whether websites, phone numbers, emails, Telegram and WeChat handles are actually affiliated with Binance. 

That’s why the blockchain explorer Etherscan launched the “EthProtect” program in April, to tag wallet addresses reportedly used for fraud. Etherscan CEO Matthew Tan said the company uses internal “circuit breakers” to minimize false positives and aims to provide users with “actionable data” to make “informed choices” about who they transact with. 

See also: Udi Wertheimer on Cypherpunk Myths and Bitcoin in Real Life

As for the attorney Byrne, he said in some cases cryptocurrency projects may run afoul of consumer protection issues, even if they are not considered unregistered securities, frauds or scams. 

“There’s a range of representations of things, what you can say about things, that aren’t necessarily true but aren’t fraudulent,” he said. 

The fact is, cryptocurrency now exists. People will use it unethically, the same way they do with all other forms of money. But there are lawful and constructive ways to use the technology as well. 

“You can operate a bitcoin business in a regulatory compliant fashion,” Byrne said. “However, it requires a lot of work and advice and design to do that correctly.”

Want more? Read my article about how the University of New Hampshire Law School is capitalizing on demand for blockchain expertise in the legal industry.

For daily insights and unique perspectives listen or subscribe to the CoinDesk Podcast Network with Apple Podcasts, Spotify, Pocketcasts, Google Podcasts, Castbox, Stitcher, RadioPublica, IHeartRadio or RSS.