How to get paid in crypto and not get scammed

Vyacheslav Demchuk, Ukraine entrepreneur and CEO of anti-money laundering service AMLBot and the first crypto wallet with AML (anti-money laundering) module AMLSafe, reflects on the steady growth of the freelance workforce and how crypto has been introduced into the workforce’s payment systems, but not always in a good way.

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With the rise of the gig economy, more than 1/3 of the American freelancing workforce receives payments in cryptocurrencies. Many end up being victims of crypto rip-offs, and millions of hardworking people end up losing their hard-earned money.

That’s according to research by AMLBot, our anti-money laundering service, which found out that 29% of wallets are at risk of getting banned – which means one in three people are at risk of losing everything they have earned in crypto.

Getting paid in crypto? Here’s how to protect your finances

“Many of the employees who lost their jobs during the pandemic have turned to freelancing as a way to make ends meet,” says Demchuk.

“The rising popularity of cryptocurrencies has given freelancers a new way to get paid, with more than one-third regularly using crypto. However, most are unaware of the potential risks and challenges of receiving crypto payments.

“Fraudsters and employers with shady practices may end up scamming freelancers out of their hard-earned money, leaving them with an empty wallet,” adds Demchuk.

Freelancer’s 101 on getting paid in crypto

Crypto has been popular in the US freelancer economy, especially for those with overseas clients, because it often means fast and hassle-free international payments. Cryptocurrency lets you get paid anywhere in the world without having to worry about long processing times or having to create accounts in multiple currencies for each international client.

• No hidden commission. When you get paid in cryptocurrency, the full amount is transferred to your wallet. You don’t have to worry about losing money along the way in fees.
• No conversions to worry about. You can make crypto payments almost everywhere without the need to worry about currency exchange rates. 
• Revenue diversification. Instead of putting all the eggs in one basket, you can diversify your revenues and risk-proof your profits.

Alarming growth of “dirty” crypto: a freelancer’s dilemma

Despite the benefits, the cryptocurrency industry has been growing steadily, providing more opportunities for criminal activities. Around 40% of BTC transactions are illegal. If you’re a freelancer, receiving dirty crypto can put you at risk and get your account banned.

Dirty crypto can come from a number of sources, such as:

• crypto hacking attacks or “cryptojacking”
• criminal activities like money laundering, scams, ransom, or fraud
• unregulated exchanges and dark market transaction

Cybercriminals are indiscriminate, with people throughout the UK, Europe and the rest of the world falling victim to their increasingly creative scams, says Demchuk.

“While you may now recognise that email from your mysterious, deceased millionaire uncle, would you notice if somebody paid for your services with ill-gotten crypto? The financial and regulatory institutions certainly would once you try to withdraw it. With close to a third of holders at risk of losing their wallets, we’re on a mission to provide hardworking people with the awareness and knowledge they need to protect their crypto funds,” he says.

Top tips on how to protect yourself from crypto rip-offs:

• Check the sender’s wallet and each incoming transaction to make sure they’re legitimate. Before you receive the payment, use anti-money laundering screening services to ensure that it’s from a trustworthy source.
• Choose a secure crypto wallet. Consider security features like multi-signature authentication, two-factor authentication (2FA) and built-in AML screening features.
• Choose a secure crypto exchange. Trade crypto only on the exchanges that require Know Your Customer (KYC) verification.
• Consider having several wallets. Create one for your trusted contacts and another for high-risk or unknown contacts. This will help you keep your funds safe and secure and minimize your risk in case you receive dirty crypto on one of your wallets.

Oops! Already received dirty crypto. What do I do now?

• Inform the payer. It’s possible that they are unaware of the origin of their funds.
• Never receive any other transactions from the same wallet. This is a no-brainer. There’s a higher risk that you’ll be scammed if you continue to receive payments from the same source.
• Triple-check all future transactions. Be extra vigilant when dealing with future payments. While you might get away with receiving one payment of dirty crypto, the more unusual or suspicious activity on your account, the more likely you are to get caught or banned.
• Try to dispute. If your account was banned or blocked by an exchange, you can try to dispute the decision if you can prove that no fraudulent activity took place.
• Ask for professional help. Seek assistance from companies that offer crypto dispute resolution services and investigations—but do your best not to get into this situation in the first place.       

AMLBot’s headquarters are in Hong Kong, within Ukraine and the EU.