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International bitcoin scam costs investor big

February 4, 2014 in Bitcoin, News, Virtual currency

By: By Christena T. O’Brien Leader-Telegram staff Monday, February 3, 2014 (http://www.leadertelegram.com/)

An Eau Claire man has reported losing more than $150,000 in an international Internet scam using a different kind of money.

Jamie Russell, a 34-year-old software engineer who lives in Eau Claire, first invested in bitcoin — digital currency exchanged through a peer-to-peer network — in August 2012. He purchased hundreds of bitcoins in their infancy for $5 per coin. Since then the currency has increased in value to more than $800 apiece.

Concerned about the security of his digital bitcoins, Russell agreed to digitally submit 201.7 bitcoins to a man in the United Kingdom for 190 physical bitcoins, or tokens with a bitcoin digital key hidden behind a tamper-proof strip. (Russell actually has some of the physical currency, which he keeps in a safe place outside his home.)

Between Dec. 9 and 11, Russell transmitted digital bitcoins worth $151,275 to the digital wallet of a man who identified himself as David Williamson, according to an Eau Claire police report. The men met through the website bitcointalk.org and had been in contact for more than a year, and Russell came to trust Williamson.

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