Crypto recovery scams – and how they add insult to injury

Scams

Once your crypto is stolen, it’s extremely difficult to get back – beware of false promises to get your funds back and learn how to avoid falling victim twice

02 May 2024
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4 min. read

This is a nightmare scenario for any cryptocurrency user. You fall victim to a crypto scam or cyber attack, resulting in stolen funds. You feel regret and shame – not to mention anger at the monetary loss. Unfortunately for many victims, this is not where the story ends. Imagine an even worse outcome: you are approached by someone or see an ad offering cryptocurrency recycling services. But instead of getting your funds back, all they do is make off with the upfront fee you paid them.

Unfortunately, this type of “recovery scam” is increasingly common, and even the FBI issued a public service announcement (PSA) about it last year. Research indicates that nearly a third (30%) of identity theft victims have been revictimized at least once.

How do crypto recovery scams work?

Recycling scams are often an upfront fee type of fraud – that is, the scammer will demand an upfront fee for the service they claim to provide, then disappear once it’s paid. They may also ask for access to your crypto accounts and/or personal and financial information, which can be sold on the dark web and used in follow-up scams.

Recovery scams are all over social media. They can proactively seek out individuals who have just fallen victim to crypto theft/fraud and vent online – and send them a message. Or they might be working from a list of crypto victims they obtained on a hacking forum. They may even set up legitimate-looking asset recovery ‘businesses’ with official websites and advertise by listing in paid search engine results.

The sophistication of these scammers can vary. Some post fairly basic messages on social media. Others may call fraud victims directly, pretend to be police or court officials, and pretend to have stolen money to return it. In other cases, fraudsters may post lengthy comments in cybersecurity forums that are at best a mix of testimonials and advertisements, promoting their services.

Sample messages selling cryptocurrency recovery services in discussion forums (click to enlarge)

Some crypto-recovery scammers advertise their wares via low-cost online press release distribution services. They create a fictitious press release about recovering stolen assets – which contains links to the scam website. Then they upload it to a network of news outlets that sign up for distribution.

Avoid crypto theft

Granted, the best way to avoid crypto recovery scams is to not let your digital currency get stolen in the first place. In 2022, $2.5 billion was lost to cryptocurrency fraud alone, according to the FBI. But threat actors have developed many other ways to target your digital funds.

Consequently, it pays to be skeptical of any low-risk, high-return investment schemes; even those that appear to be endorsed by celebrities or other trusted individuals. And it is always better to pay for goods online by card, as there is more buyer protection that way. No legitimate business is likely to demand that you pay it upfront in crypto.

Also, be suspicious of any romantic interest you meet online offering investment advice — even if you feel a close connection with them. Scammers are increasingly mixing romance scams with investment scams in what is known as “pig slaughter”. Last year, the Department of Justice (DoJ) revealed it had seized an estimated $112 million worth of virtual currency related to these scams.

How to spot the warning signs

Whatever the type of scam, they all have one thing in common: there is no recovery service. Consider the following red flags:

They charge an upfront fee before they start their ‘work’, or some other charge (ie tax) before you can proceed with refund processing. They may communicate with a web-based email (eg Gmail/Yahoo) rather than a corporate account. ask for your bank, crypto account and/or personal information to return your money. They claim to work closely with law enforcement or government officials. They get in touch out of the blue – whether via social media DMs, texts or email. do not offer any phone number to contact. The person who appears to be your contact knows many details about your particular case – including possibly how much was stolen and how

What should I do if my crypto is stolen?

It should be noted that there are legitimate firms that can offer services to help you get compensation for cryptocurrency investment and other forms of fraud. Sometimes scammers also try to impersonate these organizations.

If you have recently lost cryptocurrency due to fraud or theft, consider the following steps:

Gather as much evidence as possible. Report the incident to the police and/or relevant regulatory body Reach out to a legitimate law firm that offers recovery services – make sure you research their business fully first Consider contacting the exchange where the scammer paid out your crypto (if known)

The bottom line is that once your crypto is stolen, it is extremely difficult to get back. Although blockchain-based currencies can be monitored, some are set up to protect the anonymity of users so that the fraudster cannot be unmasked. They will also try to “cash out” your crypto as soon as possible to further obscure the trail. The decentralized nature of crypto means that even if you could figure out where they ended up, getting your funds back would be extremely challenging. Sometimes the best thing you can do is not to be a victim twice.

Online fraudsters are predators and they lurk everywhere. Don’t let them get their hands on more of your money.