For the last six months I have been scammed by cryptocurrencies. I just retired and lost $243,000 that I don’t think I’ll ever see again. I reported the company to the FBI, the Federal Trade Commission and a few others. Some of the money came from a SEP IRA. Is there anything I can do at tax time so I don’t have to pay taxes?
When I started “investing”, the person who helped me showed how easy it was to get the money back, which we did. This became “interesting” when I was told that if I contributed a total of $150,000 I would begin VIP treatment and receive tax avoidance help, among other things. The company does not allow me to withdraw the money I paid.
I was helped by this person to invest in crypto futures. The person “helped” me by adding $40,000 here and $40,000 there to increase my ability to make money. Last time I added another $100,000. It’s a long story but in a nutshell this is the “help” I received. I tried to withdraw money and the cryptocurrency company said the government thinks I’m laundering money.
Now they say I have to shell out $150,000 – 15% of my “profit” – to pay taxes. The company said this would be refunded so you don’t lose any money. I stopped right there and contacted the FBI and FTC. Now the cryptocurrency company is saying that if I don’t pay the money soon my account will be frozen! I didn’t answer.
The website looked legitimate
I met this “friend” through Instagram META,
We moved from Instagram to Whatsapp, which I now also see as a no-no. I needed help with photography, and after a few weeks, the conversation turned to investing. Initially, the money went to what appeared to be a real site and was sent to an external account called Cryptonex.com.
I should have done my homework because the real company is actually Cryptonex.org. The fake website looked legitimate to me. It also looked great on the phone, where all transactions were made. (On the computer, the header was all messed up. (I’ve done HTML and SQL programming and it would have been an easy fix.) The rest of the page looked pretty good.
It appears the company has maintained a great track record of my installments. I’m still not sure if this is a scam or not. I have not yet received any communication from the FBI Cybercrime site. I filed a complaint for both elder fraud (I’m 62) and computer crime. It’s really unfortunate that these people prey on the elderly.
It’s not like we want to go back to working minimum wage for the rest of our lives just to put food on the table. I’m especially upset because I think I’m a pretty educated guy. My financial advisor said one of his clients lost $2.7 million in one of these types of scams. I’ve read that they can track wallets and that there are all kinds of “companies” that help for a fee.
What can I do now?
Scammed
Related: ‘I want to do what is right’: My father died without a will. His wife moved abroad and let me pay the mortgage.
“When you start to suspect that something might not be right, you learn to suspend disbelief. It’s a horrible cycle that goes against all logic.”
MarketWatch illustration
Dear scammed,
Once a scammer has gained your trust, it is difficult to betray that trust.
When you begin to suspect that something might not be right, you learn to suspend your disbelief. It’s a vicious cycle that goes against all logic and, in many cases, against everything we’ve been taught to watch out for: strangers approaching us online, “too good to be true” offers, and requests to throw money away later. money. . When our trust fails, fear and desperation take over. It may seem easier to keep the illusion alive than to admit to ourselves that we have been deceived.
This is probably why you are still not sure whether or not it is a scam, even though the fake Cryptonex.com site no longer exists. A spokesperson for the real Cryptonex says they have issued a warning about situations like this. The warning says: “Don’t rush: scammers often create the illusion of urgency. Please verify the accuracy of the information provided. Do not share personal information. Cryptonex will never ask for payments or personal information.”
Such confidence tricks are known as “pig slaughter.” It’s a bad term for a bad business. Scam artists scour social media sites, public records and dating sites for signs. It is called “slaughtering pigs” because they spend their time fattening their earnings, establishing trust and gradually providing the victim with information promising bigger and better earnings. Slowly, the victim compromises their instincts with the excitement of a big payday. And then they dry out.
“The scammer’s goal is not to ask you for money, but to convince you to invest in a fake site or trading platform that will show you a fake balance with lots of profits,” according to this warning from the Georgia Secretary of State. They allow you to withdraw profits early so you can invest more. “They might even ‘lend’ you money so you can do bigger trades.” Impostor websites are one of the most popular methods. You can read more here.
Limitations on Tax Loss Claims
It is difficult to claim a tax loss on such scams. The Tax Cuts and Jobs Act of 2017 limited deductions for theft and individual casualties to federal disasters. Exceptions exist for Ponzi scheme scams, if the loss is considered a business theft loss rather than a personal theft loss; for this to happen, the scammer must be charged with theft, fraud, or embezzlement, and the expungement must be made in the same year that those charges are made. You can read more from the IRS here.
George Dimov, a New York-based accountant, says he receives about two requests a week from people wanting to take advantage of this type of deduction. There may be some chance – however slim – of cushioning such losses, he says. “Claiming a capital loss is the least risky option, as it typically results in a relatively smaller deduction of up to $3,000 per year in capital losses. Of course, this doesn’t help victims much, especially in the cases we’ve seen where the victim has lost millions.”
The IRS Revenue Procedure 2009-9/20, or Ponzi Scheme Safe Harbor, generates a larger deduction of up to 95 percent, Dimov adds, “but also carries potential audit risks and IRS rejection. To determine eligibility for Ponzi loss deductions, we must evaluate your situation on a case-by-case basis. Before making any concrete tax reporting decisions, it is also important to assess the taxpayer’s risk appetite for potential audits.
He cites the “lack of clarity” on the deduction of such investment losses as one of the many “loose ends” created by the Tax Cuts and Jobs Act of 2017. Although Dimov says he has successfully addressed numerous cases involving Ponzi loss deductions , the IRS’s interpretation of the tax code on scams might help some victims but, as I noted above, not others. “I don’t want to provide blanket tax advice as a blanket statement, one-size-fits-all strategy,” Dimov says.
This seems like a slim possibility, at best. Please let me know if you have been successful.
You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com and follow Quentin Fottrell on X, the platform formerly known as Twitter.
The Moneyist regrets that it cannot answer questions individually.
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