How Crypto Recovery Scams Pile on the Loss and the Pain
Cryptocurrency seems to hold a lot of promise, and many people invest in it with hopes of quick profits. But those hopes can quickly turn into nightmares if investors fall victim to recovery scams.
Scammers pose as law enforcement or recovery experts (perhaps bolstered by fake credentials) to exploit your misfortune. Watch out for these red flags:
- Scammers offer quick fixes
For fraud victims who’ve lost a portion of their savings or even their retirement nest egg, an offer to recover the stolen crypto is tempting. But scammers take advantage of that desperation by promoting “recovery” services that charge advance fees and require personal information such as wallet details and seed phrases.
These scams can be hard to detect. For example, the fraudsters often create websites that feature reassuring customer testimonials and A-plus ratings. They also post press releases that claim to have breakthrough technology or a stellar record of returning money to fraud victims and distribute them widely on Google.
But these claims are false. While it is possible to recover some funds from a fraudulent crypto exchange, that’s only true in rare cases, and there are no quick fixes. Anyone who claims otherwise is a scammer.
Recovery scams are also a form of advance-fee fraud, which the FBI warns can be especially damaging to victims who’ve already been burned by other online scams. In addition, they often discourage people from reporting a crime to police or using an identity theft protection service. This could lead to scammers taking out loans or emptying bank accounts in their victims’ names or using stolen personal data from a leaked data breach. Scammers also lure victims to their traps by posing as authorities such as law enforcement or the FBI.
- Scammers charge high fees
Cryptocurrency is a volatile investment, and investors who have lost funds in a market downturn are understandably upset and anxious to get their money back. Criminals know this and are happy to exploit those fears and hopes by offering phony solutions.
For example, a victim who posted on Reddit about being scammed out of thousands of dollars in crypto received multiple messages from people claiming to be “Best crypto recovery service” who could help get the stolen funds back. They asked the victims to send them their wallet information and a payment via cryptocurrency transactions that can’t be disputed or reversed.
Scammers promote their “recovery services” in ads on the internet, in social media posts and in comment sections of news stories. They may also contact you directly through those channels.
When you receive a call from someone who claims to be from a recovery service, ask how much they charge for their services up front and weigh that against how much you’ve lost in the scam. If the fee is more than your losses, you should not work with them.
If you’ve been a victim of crypto recovery fraud, report the scam to your local law enforcement agency and the CFTC. Keep records of your transactions and interactions with these individuals, and don’t give them any personal or financial information.
- Scammers promise instant results
When people are shaken by market losses or swindled out of their crypto holdings, they often seek ways to recover their money. Criminals are aware of this and seek to exploit the fear, anxiety and frustration that victims are feeling.
They post fake requests for help in online forums and messaging apps. They impersonate well-known companies or send alerts claiming to be from Facebook, Twitter or your bank. They can even send messages that appear as pop-ups on your computer. They tell you to pay them upfront and that they will help you get back your money.
These scams can be hard to stop. They use fake websites, social media accounts and fake press releases to convince the unknowing public that they are legitimate recovery experts. They often include reassuring testimonials and high ratings from fake reviewers. They may also include links to articles that feature their nonexistent services in understaffed news outlets.
While it is very unlikely that you will ever recover all your stolen crypto, it is important to report any fraudulent activity to authorities as soon as possible. This can help launch or continue an investigation, trigger warnings for other victims and potentially lead to the return of some of your funds. It can also help bring the perpetrators to justice and help others avoid the same fate.
- Scammers make up stories
Using bogus credentials, scammers pose as law enforcement or crypto recovery experts. They claim that your investment losses are due to market manipulation and can be recovered using digital forensics. In the meantime, they ask for personal information and access to your wallet, often threatening to use it to steal more of your cryptocurrency.
Scammers also create fake testimonials and success stories to bolster their claims. These can be found on websites, social media, and other places where legitimate reviews are not available. They may also write fake press releases that are picked up by news outlets.
The decentralized nature of cryptocurrencies makes it difficult to track and recover funds when scams occur. Because of this, it’s important for victims to stay calm and document any fraudulent activity as soon as possible. They should also report the incident to their local authorities, as this will increase the chances of recovering stolen funds.
It’s important for victims to recognize red flags such as guaranteed returns, pressure to act quickly, and lack of transparency. They should also examine the cryptocurrency they invested in to understand its unique characteristics. For example, some cryptocurrencies prioritize traceability while others focus on privacy and anonymity. This can help them determine whether the funds are traceable or not. Lastly, they should report the crime to the exchange they used and other government agencies.
