November 16, 2023

At Hearing, Senator Warren Highlights Dangers of Crypto Scams for Seniors, Need for Legislation

Expert Witness: Digital Asset Anti-Money Laundering Act “Would Help Immeasurably” to Cut Down on Crypto Scams

Video of Exchange (YouTube)

Washington, D.C. — At a hearing of the Senate Special Committee on Aging, 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 the age of 60. Steve Weisman, Editor for and Senior Lecturer at Bentley University, explained that seniors are particularly vulnerable to crypto scams, discussed why crypto is a favored vehicle for scammers, and said Senator Warren’s legislation, the Digital Asset Anti-Money Laundering Act, would “help immeasurably” to cut down on these types of scams. The bipartisan legislation would give financial regulators the necessary tools to track suspicious crypto activity and shut down scammers.

Transcript: Modern Scams: How Scammers Are Using Artificial Intelligence & How We Can Fight Back
U.S. Senate Special Committee on Aging
Thursday, November 16, 2023

Senator Elizabeth Warren: Thank you and thank you Mr. Chairman and Ranking Member Braun for holding this hearing. Thank you all for being here – it’s a really important topic.

Crypto is a favorite for those who are 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 isn’t hitting all consumers equally. Last year, we saw a 350% increase in crypto investment scams targeting seniors. That is the biggest spike among all age groups. That added up to more than $1 billion that seniors lost in crypto scams. And because many victims don’t report their experiences – as some of you have noted – out of shame or fear, that $1 billion figure is almost surely an underestimate.

Mr. Weisman, you’re a nationally recognized expert on scams and cybersecurity. Why are older Americans particularly vulnerable to crypto scams?

Steve Weisman, Editor, & Senior Lecturer, Bentley University: Older Americans are susceptible generally because – anecdotally we say we have lost a little bit off the fastball, which I can attribute to, it’s not going as far, but there is a part of our brain dealing with skepticism that becomes less viable as we age. There have been studies done at Cornell as well as the University of Iowa that have shown this. Then you get into the issue of cryptocurrency itself and there’s this fear of missing out and it’s oh my goodness, this is going to be the best thing since the proverbial sliced bread. Seniors are susceptible to this, but it is even worse than that, Senator Warren, in the sense that, when a scammer will scam someone with a cryptocurrency scam – and there are myriads of them, from phony crypto, to using it as the funds that are in various other kinds of investment scams, they become scammed and then they give the list of the scammers – the scammers do – of their victims come out to other scammers who will contact the victims and say: we are from the federal government, we are from the Justice Department, and for a fee – apparently the Justice Department now charges fees – we will collect for you and they lose again. So fear and greed are two elements found in every kind of scam and, unfortunately, crypto just has captured the imagination of many people, particularly seniors. It has come back to bite us.

Senator Warren: Wow, well I really appreciate your work on this. As you said, crypto is used for all types of scams. Scammers claim to have embarrassing information about someone they’ll reveal unless the person forks over a crypto ransom. Scammers pose as friends and loved ones to encourage people to invest their life savings so long as the payment is in crypto. We now understand that scammers even set up fake investment platforms to trick people into buying crypto that, of course, they will never be able to get their money out of. 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 couple cryptocurrency and AI. AI will show you how to make guaranteed millions from crypto and the CEO of the company was there touting it. The CEO was not real. He was an AI generated avatar and anyone that put money into this thing lost it. So it is scary, the combination of AI and crypto and with the anonymity of crypto. That’s why the scammers love it so much.

Senator Warren: Right. Well, talk for just a second – why crypto? Why's it happening through crypto rather than, say, your bank account or some other transaction account?

Mr. Weisman: It is the new, shiny object catching our mind. We think there is something there – I cannot help believe that to a certain extent it is the emperor’s new clothes. Cryptocurrencies are legitimate, but the idea of making millions in investment in this –

Senator Warren: It is the new, shiny object. Anything else about crypto? The anonymity?

Mr. Weisman: The anonymity is terrific. You have people looking for the privacy and of course that is something with crypto mixers where your account gets mixed in with others and becomes very difficult to trace. One of the things the government did a great job was after the ransomware attack with Colonial Pipeline. They were able to trace those accounts and get it back, but once he goes into the mixers then you have problems. There is a legitimate privacy concern that people may have, but it does not come anywhere near to the scammers.

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 thing. In scams, it is often you have to act now. It is an emergency. We act immediately. I have had clients who have been scammed with a credit card fraud and managed to call and stop it. That is not happening with crypto.

Senator Warren: Yeah, and can’t. I think Americans are sick and tired of these crypto crimes, and it’s long past time that we get some regulation in place to deal with this. That’s why Senator Roger Marshall and I have introduced our bipartisan Digital Asset Anti-Money Laundering Act. This bill has the support of 14 other Senators – both Democrats and Republicans – and the Chair of our Committee here. It’s endorsed by the AARP. It would make it easier for financial regulators to track suspicious crypto activity and shut down scammers.

So I know I’m over time. Let’s do this as a yes or no. Mr. Weisman, would crypto legislation like ours help cut down on 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 this very thing. The law is always behind technology. The banks have the know your customer rule, which helps. You need to have the private sector and government working together. Your legislation is long overdue. It is a no-brainer in the sense that –

Senator Warren: I take that as a compliment.

Mr. Weisman: It is something that absolutely would help immeasurably.

Senator Warren: Good. Thank you very much. I appreciate it. We have no time to waste on this. These scams are happening every day. Thank you. Thank you, Mr. Chairman.