Oh, for the Love of Crypto!
The Key to Your Heart is Not in Your Hot Wallet
The Story
This story of intrigue, love, crypto and a scam artist begins at a card game amongst friends. A group of doctors, all male, gathered together in Odessa, Texas regularly, to play cards and chat about their practices and lives. One doctor, who was a well-liked cardiologist, was also a serial entrepreneur in a bunch of medical device startups. He dabbled in investing in some of these startups too. He did pretty well, financially, because of these investments. So, during one of the card games, one of his friends, who was not doing as well financially, asked the cardiologist about whether he could invest alongside in one of the startups.
Unfortunately, that particular investment was not successful and they both lost their money. While the cardiologist was able to afford the loss, it was not so fine for his friend who became emotionally distraught.
Sometime a little later, the cardiologist was at work. As was typical for a day in the office, he moved from appointment to appointment seeing old and new patients. Near the end of the day, the cardiologist knocks and then enters a patient’s room. He was looking forward to this appointment since it was his friend from the card game. Maybe they could grab a beer afterwards.
Unfortunately, his friend had other plans in mind. Within seconds, he shoots the cardiologist dead and then turns the gun on himself.
Because of the circumstances of this particular murder-suicide, and how well-known and liked the cardiologist was, the news makes the papers. It was reported that the cardiologist had two children, a son and a daughter.
Several years later, the now 25 year old son, Jerry, is dating on Tinder where he begins an online relationship with a woman, named Divya. Because it is 2021 and the world is still in a global pandemic, he is lonely, bored and looking for something positive in his life. The woman, Divya, takes their relationship from Tinder over to WhatsApp. She tells him that she has been trading cryptocurrencies and how exciting it is. Divya makes a lot of money trading cryptocurrencies. She asks Jerry if he has thought about it?
Jerry hasn’t but he is intrigued. He decides to give it a try but quickly loses his money and so he complains to Divya. Divya tells him to let her try on his behalf, just like she does for a bunch of other people.
Now, you see, Jerry’s father, the cardiologist, left a sizable estate. His widow controls the accounts, but Jerry convinces his mother to let him send some money to Divya. Jerry sends her $10,000 to start.
We are at a point in this story that I have to break in with, really? $10,000? If you remember, at the time, Bitcoin was edging its way closer to $60,000, so maybe that seems reasonable. But what isn’t reasonable is that this happened within the first month of meeting Divya. That seems really fast to build this type of trust or maybe Jerry is just super wealthy so $10,000 to him is nothing? Hmmm. Let’s continue….
Showing Jerry how successful that first investment was by transferring proceeds to his bank account, Divya tells Jerry that he could make so much more. So, a few days later, Jerry wires $86,000 and then $100,000. Oddly, Divya asks him to wire it to accounts held by people who were not Divya. At least, we don’t think they are Divya because those accounts were under different names. But maybe Divya isn’t who she says she is. Divya convinces him that these accounts were held by her “trading partners.” Completely undeterred, Jerry then wires another $200,000.
If you are counting, that is $396,000 in a matter of days. Clearly, Jerry is quite wealthy and that estate money is quite large.
So how did Divya build so much trust with Jerry so fast? It’s because Divya was sending proceeds to Jerry’s Chase account. As soon as he invested money with Divya, he could check his account and see that money was being deposited. For the first several months, he was able to withdraw about $30,000 per month. That’s a pretty good return.
Jerry was super happy and proud of himself for trusting Divya. So, that’s when Divya went in for the kill. She told Jerry that she owned a crypto trading platform. It looked like a legitimate company. It had a website.
Jerry dove in with an initial investment of $3,000,000. Then he put in another $3,000,000. He was withdrawing earnings from the investments at about $60,000 to $70,000 per month. It was great!
Until all of a sudden, he wasn’t able to withdraw earnings. The earnings stopped hitting his account and Divya’s “firm” was telling him he had a large tax bill to pay. He couldn’t withdraw or have access to his money until these taxes were paid. The horrifying sneaky suspicion that this was a scam started to dawn on him. He started to read about cryptocurrency scams.
As he started to take a step back and assess the situation, he realized he had never spoken to Divya on the phone, only through WhatsApp. He had never met her in person and he didn’t know if her Facebook account was real.
He was faced with the very real possibility that he had just lost millions of his family’s personal wealth.
So he filed a lawsuit. Do you know how he filed the claim on Divya? Her served her through WhatsApp to which she responded, “LOL” and then she deleted her account.
The Lessons Learned
Now, I tricked you a little telling you this story. I flipped genders. Divya is actually Jerry and Jerry is actually Divya. Why? Because several months ago, I wrote about a woman claiming that she was assaulted in Facebook’s Horizon World and that post received some pretty disturbing responses about groping women. Gender is not the focus of this post. However, you need to know that this is a true story.
On reflection, I have three questions. First, is using cryptocurrency in scams really viable anymore? Second, are the courts prepared to handle cryptocurrency scams based on current case law? Third, is romance in the Metaverse real, already?
To address the first question, let’s look at this scam. Apparently, this scam is called “pig butchering,” a term that is used to describe a scam where the trust is built by first fattening up the account before wiping it clean. It is also a romance scheme, although it does not seem that Divya’s heart was broken. At least, not that she has been willing to disclose. I think we can all safely assume that Jerry is doing just fine.
So, other than the concern for Divya’s heart and mental wellness, I am fascinated about the cryptocurrency part of the scam. I have to wonder at the chances of her getting her money back? Can they trace it?
The story I told here left out some other critical details (admittedly, I used this article as my source). According to the lawsuit filed, Divya did not wire $6,000,000 to Jerry so that Jerry could turn it into cryptocurrency. Instead, Divya opened a Coinbase account, bought cryptocurrency and then transferred that cryptocurrency (presumably giving her keys) to Jerry. According to the lawsuit (which is a preliminary injunction, so not the full claim), blockchain analytics traced Divya’s cryptocurrency to cryptocurrency wallet addresses under Jerry’s control.
So, clearly Jerry was trying to be very clever. He kept his identity hidden by asking Divya to wire money to accounts under other people’s names. Clearly this should have been a red flag. He also only communicated with Divya over WhatsApp, which should have been another red flag. Did Divya really never Facetime or video chat with Jerry? Why was Divya so ready to buy into Jerry’s preference for anonymity?
I don’t know about you, but I believe that there is a lot more to this story because I don’t believe that even a fool would wire someone $6,000,000 who they never met in person, did not have a cell phone, was not tied to a legitimate investment firm, etc. Clearly, there was some additional manipulation that I am sure Divya is embarrassed about. Perhaps some gaslighting.
But can she get her money back? As we have explored before, cryptocurrency transactions can be obfuscated via off-chain services, but they are traceable unless you really know what you are doing. In Divya’s lawsuit, it makes clear that they traced the cryptocurrency to Jerry’s wallet. It will be interesting to follow this case, if it develops, to see whether Divya is able to recover her stolen cryptocurrency.
On to my second question, upon reading the injunction, I am flabbergasted that Jerry seems to still be able to use Divya’s cryptocurrency i.e. the courts are not stopping him.
Divya has had to file two injunctions, both of which, so far, have been denied. The first one was denied, because Divya and her counsel did not prove that they served notice on Jerry. That was pretty hard to do considering she only had his WhatsApp, but, luckily, the second court found notice via WhatsApp sufficient since she did not have a legitimate name, address, phone number etc. I guess Jerry’s “LOL” response was probably his mistake because it proved receipt.
For the second injunction, she was denied because she failed to seek equitable relief, which is a bit more legally technical. I am not a litigator, but it seems her attorney should have also sought equitable relief for an “account of profits” which, as this website explains, “When someone with a fiduciary duty to the complainant is found to have breached that duty, the court may order the fiduciary to return to the complainant all the money they lost, or all the profits illegally gained by the fiduciary.” For this to work, she would have to prove Jerry was acting as a fiduciary, which I think he was. But my point is that to grant a temporary restraining order to freeze financial assets of a defendant, you must seek equitable relief. It’s a procedural technicality that is buying Jerry time.
My last question on this whole story is about the Metaverse. I believe this situation shows you how close to the Metaverse we really are, and I am not talking about the Ready Player One version. Relationships have traditionally been built on trust that is built over time through in-person interactions, conversation and shared experiences. In this story, Divya never met Jerry in person, not even over video or virtual reality! Apparently you don’t need to be in the same city, see each other in person or know the sound of each other’s voice or what each other looks like to comfortably be in a relationship. Texting is enough.
That’s weird to me.
But it also shows me that the Metaverse, at least when it comes to romance, is already here.
You’re the best,
Caroline
P.S. There is some suspicion that Divya was targeted because the story about her father was well-known and so was the fact that he was wealthy and left a large inheritance. Maybe we will see this in the court case, if it proceeds.
P.P.S. Don’t share your wallet key with anyone, especially if you don’t have a contract with that person. Even more especially if you don’t have anything but that person’s WhatsApp.
About the author: Caroline McCaffery is a co-founder at ClearOPS, which stands for clear operations in privacy and security. ClearOPS is a third party risk management platform for buyers and sellers streamlining the due diligence process. She is a frequent blogger and speaker with over 20 years of experience as a lawyer working with tech startups. You can connect with her on Linkedin.
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