I Just Lost $3,500 in a Cryptocurrency Scam, and There's Nothing I Can Do

"Treasures gained by wickedness do not profit." - Proverbs 10:2

Since 2011, more than 980,000 Bitcoins (which would be worth about $7.2 billion at current prices) have been stolen from hacked exchanges, according to Reuters. And it's well-chronicled that many initial coin offerings (ICOs) are fraudulent.

But these are mere statistics, often dismissed in intellectual circles as an inevitable cost of financial innovation. After all, humans previously used seashells as money, and they undoubtedly lost some of it when the shells broke apart or were stolen by birds. 

I had essentially the same attitude about cryptocurrency fraud and loss, until I got taken myself just last week.

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In the case of Telegram's upcoming $2 billion ICO -- the biggest ICO over -- greed (and haste) got the best of me. The popular messaging app should make investors a lot of money, since crypto-coin prices usually go higher after their ICO. But there's a lot of disinformation on the web, and misled by inaccurate websites, I mistakenly believed that Telegram's ICO was set for January when in fact it's slated for March.

When I searched for "Telegram ICO" on Google with the idea of getting in ahead of the ICO and reaping the quick rewards, the website https://ton-telegram.org/ was among the top three results returned. The site looked legitimate, and it even published Telegram's ICO whitepaper detailing its plans and personnel, which had been leaked. What's more, the site was offering a 40% token bonus if you bought in the next couple of days.

As payment, I sent in my three Ethereums, then valued at $3,500 (with the recent drop in prices, it would now be worth about $2,400) to an Ethereum address they provided (ICOs usually ask for payment in cryptocurrencies since it's easier). And following the scammers' instructions, I sent a follow-up email to eth@ton-telegram.org in order to confirm my purchase. Everything took less than a minute, and I didn't do any more research because I was convinced that Google wouldn't show a fraudulent site so prominently as one of its top search results.

A few hours later, Gmail sent me notifications that they couldn't deliver my email to the address provided. (Thanks for letting me know, Google!) And a couple of days later, the website vanished with no sight of the robber barons, thus confirming my suspicions that I had transformed from enthusiastic investor to dejected fraud victim. With cryptocurrencies, when what you own is gone, it's completely vanished, and there was nothing else I could do. 

Years ago, my poker buddy bought an online movie for 50 Bitcoins, an amount that would be worth more than $350,000 even at today's depressed prices. This knowledge helps me to endure adversity in this new Wild West.