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Cybertrace’s expert analysts are issuing an urgent alert about a dangerous new cryptocurrency scam technique: mirror transaction fraud. Fraudsters using this method dupe victims into transferring Bitcoin or other crypto in the mistaken belief it will facilitate a movement of funds in the opposite direction. As such, it represents a 21st century crypto iteration of well-known advance fee frauds, such as the Nigerian prince scam. By using highly technical language, mirror transaction fraudsters seek to convince their targets they have to transfer Bitcoin into another wallet to “validate” it and “unlock” their funds. Let’s look at how this technique works in detail, so you can better protect yourself and your family. But first: what’s the difference between mirror transactions and mirror trading?

Mirror trading vs mirror transactions

Mirror trading has made a lot of headlines in recent times. Originally a legitimate strategy for newbie forex investors to copy successful traders, it has since been associated with money-laundering. Last year, investigators named South African-based firm Mirror Trading International as 2020’s biggest cryptocurrency scam. Mirror transaction fraud, as discussed in this article, is a slightly different but equally dangerous beast. It describes a technique used by all kinds of scammers to trick victims into believing that, to receive any funds they are owed, they must first send an equal amount of money to another Bitcoin wallet to “validate” it. Needless to say, there are no other funds, and the transferred money simply disappears!

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Making contact

We know from victims that mirror transaction fraud reaches them in a variety of ways. Having harvested their personal information elsewhere, scammers might email, text, call or contact them via social media. However, scammers ultimately want to get their targets on the phone in order to use their highly convincing sales tactics. In doing so, they present victims with a tempting opportunity to access a substantial amount of money. This could be money victims have themselves invested, “long-lost” Bitcoin accounts or unexpected windfalls such as lottery wins. For some unexplained reason, the fraudsters are unable to transfer these funds via bank transfer and have to use cryptocurrencies. The scammers appear convincing and persuasive, and pretend to represent an investment firm, forex broker, financial regulator or blockchain representative.

Mirroring transactions

Once they have them interested, scammers work hard to gain victims’ trust, often over the course of several phone calls. Having piqued their curiosity about what might unexpectedly lie in store, mirror transaction fraud then turns up the technical language. Using the jargon of mirror trading, they introduce related computing terminology, often with direct reference to IBM’s mirror method. While this certainly exists, it actually relates to IBM’s Customer Information Control System (CICS) and its distributed program link. While there is some interesting potential for how this could be used to eventually link real-world assets to the blockchain, it does not relate to validating individual Bitcoin transactions between different wallet addresses.

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Scamming victims

The mirror transaction fraudsters’ aim is plain and simple: they seek to bamboozle victims into believing there is a technical requirement for them to “mirror” the supposed transaction before they can access their funds. In practice, this means asking victims to first send the same amount of money they are eventually due to receive. This is nonsense: anyone can receive Bitcoin into their wallet without first needing to send their own funds! However, scammers use the blockchain’s transparency to deceive their targets by showing them their funds just “sitting” in a wallet. All victims supposedly need to do is “validate” and “unlock” it by sending an identical amount to the same wallet. Unfortunately, hoodwinked victims believe the scammers and send the requested amount, expecting to receive twice as much back in return. It’s only when the promised windfall fails to materialise that they realise that the scammers have duped them.

History of similar scams

Mirror transaction fraud is merely the latest, 21st-century version of a long line of similar advance fee scams. Reaching back to the 18th-century Spanish prisoner fraud, its most prominent exponent is probably the Nigerian prince scam. Referring to the relevant fraud section in the Nigerian criminal code, it also goes by the name 419 scam. It refers to any fraud that elicits upfront money or financial information in return for a supposed windfall gain. These days, “Nigerian” scams actually emanate from many different countries, but the iconic moniker has stuck. While the means may have changed from bank transfers to Bitcoin wallets, the ends remain the same. Scammers seek to gain your confidence, exploit your trust, take your money, and leave you broke!

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What can I do about mirror transaction fraud?

If the mirror transaction fraud hasn’t gotten you yet, beware of any unsolicited contact regarding unexpected windfalls. Remind yourself of the old adage: if it sounds too good to be true, it probably is! Also, remember to never transfer Bitcoin to another wallet if you are actually meant to receive it. Finally, ask people contacting you to put any information in writing, no matter how convincing they sound on the phone.

If, on the other hand, you have already fallen victim to mirror transaction fraud, don’t despair! Reach out to Cybertrace’s experienced investigators today to find out how we can help. Despite urban myths to the contrary, cryptocurrencies are eminently traceable and Cybertrace is the Australian pioneer in the field. Finally, please help keep our community safe by sharing this article widely and communicating your experiences in the comments below.

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6 thoughts on “Mirror transaction fraud: a new tactic for an old scam”

  1. In August 2020 CV Markets claimed to be offering training on crypto. Initially I transferred BTC, value at the time $500. They did their number on me and sent about $130 back to my Coinspot account.
    The next move was I was assisted to buy BTC with my credit card. This $2000 of BTC was transferred to them.
    In their site my account looked like it was growing. I was suspicious because they kept wanting more BTC.
    I tried to withdraw supposed profit. A very tedious process. Unsuccessful, the withdrawal never got beyond ‘pending’
    Time went by, and the phone calls began again. This time they were closing their private client section down so they needed to return the balance of my account.
    They have tried 3 times now, the latest attempt was last evening. They first claimed the funds would go to my bank account. This though wasn’t possible. My bank accounts are very small!
    They then had a look at a crypto exchange account. Had a good look, this account has zero. That too was no good.
    Then they tried Coinspot, the account they had originally been paid from.
    I have not upgraded my KYC so this too was not possible. They wanted to get on to Coinspot then an there and sort the problem. That’s how they stole the $2000 August 2020. The original $500 I was prepared to invest for a learning experience.
    I wasn’t learning anything. I was being confused.
    The purpose of all this is to advise that CV Markets UK are still scamming. I was initially hopeful they were going to repay what they received. But their tactic is this ‘mirroring ‘ I not giving them anything. I will contact Coinspot and advise them also.
    Thank you

    1. Thanks for the feedback and helping to warn others, Sue. These scammers are highly persuasive and run a sophisticated operation. Your approach of not giving them any more money, even if supposedly needed to get back your original funds, is definitely the way to go. They are just looking for opportunities for further rip-offs.

  2. I too are a victim of crypto scam. I lost $20000 and almost another $16400. Once I figured out it was a scam over the weekend I managed to send the $16400 back into my account. Come Monday phone call and she wanted to transfer the $16400 over to MetaTrader but I said I transferred it back as I had a car accident and wrote my car off.
    I said I need the $20000 back to pay for the other car in which she agreed but still got me to go to Binance first to transfer the $16400 over to MetaTrader then transfer the whole amount back to me.
    Once she found I had already transferred it back she told me go to MetaTrader and then she said ok they haven’t closed it yet I will call you back. 5 minutes and the MetaTrader was closed and funds were gone.
    I never heard from her again only some Skype messages saying I don’t answer my phone any more and the manager is trying to call you to transfer it. Few days later had call from manager. All so nice and was disgusted in her not getting back to me, I will fix it and transfer it for you. Have I ever heard of mirroring. No I said, ok I will guide you, open Binance and deposit the amount from my bank account. I said I’m not doing that. I don’t have any money anyway. He said well it’s no use talking to then and started to get nasty. So I returned serve and he started swearing at me telling me I’m a broke useless so and so. He still didn’t let up as I said I’m reporting him to the police. He said go ahead here is my number and name. I will call you back in 20 minutes which he did. So he tried again same tactic. Same response from me then he started with his name calling etc.
    I have handed all info over to a company that has good success rate in returning money though I doubt it very much.see what happens.
    I don’t know how these pieces of shit live with them selves

  3. Hi, i have been scammed too for 5000 euro by FC trading. https://Fctlive
    They did exactly the same as discribed above. Call you daily per whatsapp. Very friendly and helpfull. When i tried to withdraw some money 800euro. The needed to do a mirror transfer for 5000. After blackscreen where they had to connect to their bank…the money was changed into btc and then suddenly the btc were transfered to another wallet. I paniced and they neede 5k more which i refused. The website still shows my assets, but the btc adress I followed showed me the wallet was empty but transferred in total 62 btc…. they still call me weekly for another mirror-transfer to return my money. Already 6 different people called me with fake broker info from people out usa.

    Unbelieveble that nobody can stop these guys

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