Cypto creates new risks for property rental businesses

The crypto craze has arrived in real estate.

Look no further than Manhattan. According to the New York Post, Crypto Whale, a celebrity broker like Ryan Serhant, usually attracts the richest investors in their 20s to buy the city’s most expensive listings.

In Miami, the home of Ivanka Trump and Jared Kushner, at a high-end address in Art Surfside, the 5,000-square-foot penthouse unit B recently sold for ટો 22.5 million in crypto.

Single-family homes are also in the mix. Buyers who are struggling to keep up with the rising cost of living have made huge cryptocurrencies in their homes and rental properties.

In the apartment sector, where rents are rising rapidly, some applications already allow residents to pay with crypto. Tenants of LA developer Rick Caruso’s properties will now be able to pay rent in Bitcoin. Caruso told the Los Angeles Times that his crypto program is particularly appealing to younger tenants.

These examples of the rise of crypto in real estate are still the exception rather than the rule, how deals are done. But they also highlight the increased legitimacy of digital currencies on the market today. For apartment professionals, the growing mainstream acceptance of crypto presents both new opportunities and risks.

Illegal shadow of crypto

While governments and legitimate crypto exchanges have made progress in reducing the criminal use of cyber currency, the nature of digital transactions means that it will probably never be eradicated.

Investigators have been focusing on Bitcoin payments since before January. 6, 2021 Attack on the Capitol. New evidence suggests that Russian alligators used cryptocurrencies to protect their assets from international sanctions imposed after the invasion of Ukraine.

Technology is also dangerous for hacks. According to recent findings by cybersecurity firm Atlas VPN, blockchain hackers stole $ 1.3 billion in 78 hack events in the first quarter of 2022, an all-time high. The recent X-Infinity video game hack, where જેટલી 625 million was stolen, has made it one of the biggest single crypto-thefts ever.

Know Your Customer (KYC) rules, which require crypto exchanges to verify identities on new clients, make anonymity more difficult on legitimate exchanges. But KYC is effective only if the identity used to open the account is real. An investigation by crypto news site CoinDesk found that, for as little as 200, a sophisticated fake ID – which is openly available for online purchase – could allow you to trade Bitcoin with relative ease on perceived identities on bona fide sites such as Coinbase and Binance. .

What does the rise of crypto mean for real estate?

For property rental professionals, this landscape demands a new approach. Operators need to adapt to new ways of transacting to respond to consumer preferences for digital currency while protecting against fraudulent activity using crypto as a shield.

For example, forged documents in the form of pay stubs and bank statements – crucial for income verification – have long been a disaster for the lease application process. They are widely offered for online shopping under the guise of “innovations” that are not intended for actual use, a tactic that transfers responsibility for any illegal activity to the buyer.

The new drawback with crypto is that these counterfeit document sellers are now offering their wares in exchange for bitcoin, and they are not worried about whether the digital currency they collect comes from a legally opened account.

One such seller that claims to be based in New York currently accepts Bitcoin as its sole form of payment. It avoids the legally cumbersome and traceable way of paying credit or debit cards – which must pass through the established US banking system – “for reasons of data protection and consumer privacy,” according to its FAQ page.

The site’s offer includes counterfeit paste and bank statements. And its sample documents use the logos of Bank of America, Chase, TD Bank and Wells Fargo. Utility bills, used to verify previous addresses, are available with the Verizon logo. Also, fake US tax returns are for sale.

Police forgery and fraud

In this environment, leasing agents now face the same obstacles as law enforcement officers trying to police these activities.

That is, while these scams are widely available using fiat currency, crypto application fraudsters provide another level of secrecy for leasing to hide behind.

What do operators have to do? The key, of course, is not to let them go in the first place.

Using tech can help. AI tools are available to scan computer code inside PDF documents and to determine if it has been modified.

But just as important is the low-tech approach to good property management basics.

  • A lease application requires a minimum of two months’ PestB or bank statement. Legitimate applicants will not be blindsided, but fraudsters will be forced to make more fake and potentially more easily visible mistakes.
  • Look for variable dates when PestB was issued and when the deposit was credited to the applicant’s account. Weekends and holidays can shift the deposit to one or two days, but long delays are rare. This is an area where fraudsters go extinct.
  • Pick up the phone. To confirm employment – call employers at the number listed on their website – vs. what applicants offer. Some companies will not answer, but many companies will, especially if you ask applicants to clarify the HR that you will call.
  • Encourage your team to critically apply for veterinary applications, not just on new leases, by combining bonuses with timely property rent payments.

The growing legitimacy of crypto in real estate does not have to be bad and operators can benefit. But the increased levels of fraud in the leasing application process means that they also need to proceed with extra caution.

Daniel Burland is CEO of Snappt and President of Berlind Properties,

DataDecisionMakers

Welcome to the VentureBeat community!

DataDecisionMakers is where experts, including tech people working on data, can share data-related insights and innovations.

If you would like to read about the latest ideas and latest information, best practices and the future of data and data tech, join us at DataDecisionMakers.

You might even consider contributing to your own article!

Read more from DataDecisionMakers

Similar Posts

Leave a Reply

Your email address will not be published.