Gazans fall victim to 'frozen dollars' scam

Dozens of Gazans who want to get rich quick have already fallen victim to a fraudulent scheme by buying "frozen dollars" from unknown sellers at half price.

al-monitor A Palestinian man changes money at a currency exchange bureau in Gaza City, Gaza Strip, Jan. 30, 2006. Photo by MAHMUD HAMS/AFP via Getty Images.

Jul 9, 2020

GAZA CITY, Gaza Strip — Fadi Kassab, a 31-year-old Palestinian from Gaza City, noticed on Facebook an advertisement that read, “Frozen dollars are available at half price … every $10,000 are sold at $5,000. Contact us on WhatsApp for the immediate delivery to any Arab country.” Kassab called the number to buy the "frozen dollars" at half price, in the hope of making money really quick, but instead he fell into a trap designed to steal his money. 

An anonymous seller in Turkey offered to sell him an amount of $200 in exchange for $100. Indeed, the seller sent Kassab $200, which he exchanged for Israeli shekels in the Gaza Strip. That encouraged him to purchase $10,000 for only $5,000.

Speaking to Al-Monitor, Kassab said, “The seller who told me he was in Turkey asked me to send him $5,000 via Western Union in order for him to send me 10,000 frozen dollars. I waited for more than two hours and did not receive anything. When I tried to contact the seller, the phone number was out of service. This is when I realized I was ripped off.”

He added, “I tried to contact the seller in different ways, but failed to do so. I contacted the cybercrimes unit at the Interior Ministry in Gaza. They advised me not to file a complaint, as I could be held accountable and imprisoned for money laundering."

Dozens of Palestinians have been scammed in the past few months, after seeing advertisements on social media offering so-called frozen dollars, before they realized that this is nothing more than a hoax that scammers in different countries, often in Turkey, use to steal their money.

The term frozen dollars was used for the first time in 2003 following the war in Iraq, when Iraqi banks lost billions of dollars, and Iraq made an official request that the United States "freezes" all the banknotes that disappeared. The dollars reappeared later in the Iraqi and Arab markets and were sold at half price, because their associated serial numbers are frozen and cannot be deposited in banks; they can only be used outside the banks. The term frozen dollars resurfaced after millions of dollars were stolen from Libyan banks following the fall of President Moammar Gadhafi in 2011.

Usama Kandil, a 28-year-old Gazan, realized at the last moment that what he was about to get into was a fraudulent scheme. Kandil saw on Facebook an advertisement about frozen dollars, and contacted the seller who is based in Turkey. Kandil offered to transfer the money to a friend of his in Istanbul, so that the seller could hand over the dollars to the friend in cash.

Kandil told Al-Monitor, “The seller rejected the offer. He asked me to wire the money from Gaza to Istanbul, and hide the last two digits of the money transfer. He asked me to give him the two digits once I had received the transferred money.”

Kandil consulted a money-changer in Gaza who warned him against the scheme, saying that the seller can easily steal the money. He did not go ahead with the deal, and warned his relatives and friends about it also.

Al-Monitor tried to contact various sellers of frozen dollars on Facebook and WhatsApp. However, they refused to talk when it became clear to them that the information would be used for an article on frozen dollars.

Speaking to Al-Monitor on condition of anonymity, an official at the anti-cybercrimes bureau at Gaza’s Interior Ministry said that dozens of victims report being scammed every month, but that the majority of the victims refuse to file a complaint when they learn that they could be charged with money laundering.

The official explained that their scope of work includes cybercrimes and money laundering in the Gaza Strip only, and that the sellers of frozen dollars in most cases are based either in Arab countries or in Turkey. He pointed out that whoever buys illegal currency notes — which is considered a money-laundering offense — shall be punished with imprisonment and a fine under the Palestinian law.

Article 18 of the Palestinian Cybercrime Law No.10 of 2018 stipulates that money-laundering offenses shall be punished with no less than a year in prison or a fine ranging between 1,000 Jordanian dinars and 3,000 dinars ($1,400 to $4,200), or both.

Saad Albarasy, director of Saad Albarasy International Exchange Co. in Gaza City, spoke to Al-Monitor about the ways fraudsters use to steal money from Gazans, after tricking them into buying frozen dollars. He said the advertised dollars are either counterfeit money, or the alleged transaction is a theft when the victim does not receive the money.

Albarasy said that many sellers of frozen money ask that the victims wire the money via Western Union or PayPal, and hide the last two digits of the transfer, in an attempt to make them believe that there is nothing wrong with what they are doing and that the victims are protecting their money in this way. He added that the fraudsters, assisted by money exchange bureaus that help them identify the two hidden digits, then steal the victim's money.

Albarasy explained that a frozen dollar is a real dollar that can be traded in the markets, but frozen banknotes that reach a bank would be seized and confiscated.

He concluded that his office managed to prevent more than 50 Gazans from falling into the frozen dollar trap in the past few months, by warning them not to get involved in such fraudulent schemes.

Continue reading this article by registering at no cost and get unlimited access to:
  • Al-Monitor Archives
  • The Week in Review
  • Exclusive Events
  • Invitation-only Briefings