What is a Crypto Money Mule? A Case Study

As crypto gains more exposure and acceptance by the mainstream media, the threat of crypto scams is becoming very real nowadays. From the most obvious scams to the more camouflaged it’s important for us to stay vigilant. As such is the case study I’ll be discussing in this article about a close encounter of a scam known as a money mule – more specifically a crypto money mule. 

Malcolm was scrolling through his Facebook feed when he was greeted with a message: “Would you like to make some extra money working from home?” 

Malcolm was a young student and given the semester just started he did not have the opportunity to work as much. 

He was tempted, and responded.

Malcolm was told that he’d be working as a “transfer agent”, a role also commonly known as a “local representative” for an overseas company. 

This company, Company X, offered to pay $300 into Malcolm’s bank account, but in order to do so he needed to set up a Cryptocurrency trading account where they would transfer 2.5 Ethereum to him. The proceeds of the sale was to be paid into his account where he’d keep $300 himself while transferring the rest of the amount to an offshore account. 

Malcolm thought to himself: “Ah! Easy money — and something that I can do within seconds on banking apps”.

Little did Malcom know that the proceeds were from an online fraud, and he was stopped by the Cryptocurrency retailer when he failed to produce his proof of purchase. Malcolm unknowingly because what is known as a “Money Mule”.

What is a crypto money mule?

A money mule in general is defined as someone who transfers illegally acquired money on behalf of a criminal – unknowingly or willingly. 

Mules are typically  recruited to move money electronically through bank accounts, take it out in cash or buy virtual currency like Bitcoin. With that understanding, due to the involvement of crypto in the scenario, Malcolm is therefore involved in a crypto money mule. 

Where are money mules recruited?

Those who intend to execute a money mule scam usually look for unsuspecting individuals to help them in their cause through the internet, usually on social media platforms, online forums, or websites that serve as a portal to search for jobs or services, such as Craigslist.

How do you know if you may be a crypto money mule?

For those who are unfamiliar with the term or scenario of a money mule, it can be very easy to be involved in one without your knowledge or consent.

Keep in mind the following commons signs that you may be exploited as a money mule:

• You received an unsolicited email or contact over social media promising easy money for little to no effort.
• Your so-called “employer” you communicate with uses web-based email services such as Gmail, Yahoo Mail, Hotmail, or Outlook. 
• You are asked to open a trading account, a crypto wallet, or a bank account in your own name or in the name of a company you form to receive and transfer money.
• As an employee, you are asked to receive funds in your bank account and then “process funds” or “transfer funds” via a variety of means, such as wire/telegraphic transfer, mail, cryptocurrency or a money service business (such as Western Union or Moneygram). You are allowed to keep a portion of the money you transfer.
• Your duties have no specific job description.
• Your online companion, whom you have never met in person, asks you to receive money and then forward these funds to an individual you do not know. 

Consequences of being a crypto money mule

Money mules play a role in criminal money laundering and potentially face the following consequences:

• You may face prosecution and imprisonment – Money mules may be prosecuted for participating in criminal activities and sentenced to jail time.
• Your identity and personal information can be compromised  – Money mules’ own personal information may be stolen by the very criminals they are working for and used for other criminal activities.
• You may be liable – Money mules may be held personally liable for repaying the money lost by victims in some cases. 
• You may lose your ability to open bank accounts – Money mule activities may result in banks refusing to open bank accounts in the future.

Protecting yourself from being a crypto money mule

Prevention is always the best case when it comes to scams, therefore it’s best to educate yourself to be extra vigilant in order to detect a potential money mule scheme.

However, in the unfortunate event that you are involved or know someone who is, see the following below for action points you can do:

• Notify your bank immediately.
• Stop all communication with the suspected criminals.
• Stop transferring any money, cryptocurrencies, or anything valuable. 
• Keep all contact and communication history such as texts
• Notify NZ Police through their non-urgent suspicious activity by dialing 105 or emailing 105.police.govt.nz/home.
• Alternatively, you can report this to NetSafe through their online form. 

With that said, I hope this article has been proven useful to give you an insight into the crypto money mule scam.

Make sure to keep in mind the signs and points mentioned above to be able to take preemptive measures should you find yourself in a money mule situation.

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