The high-stakes poker party that turned out to be a crypto scam: All it takes is an anonymous wallet to scam crypto millionaires out of their money.

• Author: Alsever, Jennifer

IN JANUARY, more than a hundred people gathered at a Puerto Rican billionaire's mansion with the intent of making big money. Fellow billionaires, cryptocurrency founders, and high-powered tech executives mingled in formal attire over poolside cocktails and hors d'oeuvres. They put up $80,000 apiece to buy into a high-stakes private poker game. Some played at a $2 million cash table.

Despite the high-profile guests, the event turned out to be a disaster. The buy-in money was managed in a cryptocurrency wallet, and whoever managed that wallet soon disappeared with the $5 million pot--all in untraceable cryptocurrency. Everyone who put up money lost it, and those who won never got to take home their winnings.

The wealthy players, including five people from Utah, had long touted the virtues of cryptocurrency and blockchain--run on decentralized platforms that are secure and private. Now they found themselves flabbergasted. None of them, many of whom run crypto funds, wanted to speak on the record about the scam.

The Puerto Rico fraud is among a long list of crypto cons running rampant across the world, duping even the brightest minds and most successful people in the burgeoning cryptocurrency industry.

According to a new analysis by the Federal Trade Commission, consumers have lost more than $1 billion from cryptocurrency fraud from January 2021 through March 2022, which suggests that cryptocurrency is quickly becoming the payment of choice for many scammers. An average of one out of every four dollars is reported lost to fraud paid in cryptocurrency.

Blame the hype around the sector; Bitcoin, Dogecoin, and Etherium deals have created a huge number of millionaires in the past couple of years. Americans earned $4 billion from crypto last year, according to a report by software company Chainalysis. The markets began to crash last spring, but plenty of people still see cryptocurrency with dollar signs in their eyes.

"Everyone wants to get rich quick, and a lot of people will take your money," says Scott Paul, founder of Utah-based Convoi Ventures, which provides pre-seed funding to crypto startups.

Fraudsters love crypto because the scams are harder to track and decentralized. Many of these scams start with an ad, post, or message on a social media platform promising guaranteed profits or requiring participants to buy or pay in crypto, according to the FTC. Others involve a love interest who wants to show you how to invest in cryptocurrency or to...