Cryptocurrency has become a popular digital asset used for several transactions in today’s digital world. But with its growing popularity, cryptocurrency scam incidents are also on the rise. To avoid fees and maintain anonymity, an increasing number of people are using cryptocurrency to purchase products and services and conduct payment transactions. Not only that, but investors also hold several digital currencies as investments to get more profit.
For these reasons, cryptocurrency has also attracted the attention of many scammers in the digital world.
Cryptocurrency scammers took a record $14 billion in 2021.
Mainly, a crypto scam refers to an illegal scheme that involves stealing your digital assets through phishing, blackmail, Ponzi schemes, and fake exchanges, among others.
If you were scammed, you would feel devastated because of what happened and wonder if the stolen funds could be recovered. While there’s no 100% recovery guarantee, there are ways to increase your chances of getting your money back.
In this article, we’ll take an in-depth look at the types of cryptocurrency scams and the best ways to recover funds from a cryptocurrency scam.
Understanding the scam
A. Types of Cryptocurrency Scams
Ponzi scheme: This classic crypto scam is making a comeback in the cryptocurrency world. Start with a convincing step – an opportunity to earn large profits in a short amount of time. However, behind the invitation to earn big lies, a sinister plot. The returns promised to early investors are paid out using new investors’ funds, and the whole scheme eventually collapses when the flow of new investors deepens.
Phishing scam: This cryptocurrency scam consists of tricking people into giving up their valuable information, such as passwords and banking details, by pretending to be a trustworthy entity. In the cryptocurrency world, phishing scams can affect exchanges, wallets, or even individual users. Cryptocurrency scammers are becoming more advanced every day. So always be on the lookout for anything that seems too good to be true.
Cloud Mining Scam: This crypto scam lures unsuspecting investors with promises of huge profits by investing in cloud mining operations. The idea is simple: lease a company’s mining power to mine cryptocurrencies and watch profits come in. However, many of these companies are nothing more than fraudulent operations. They are just waiting to make a quick escape with the hard-earned investments from their customers.
B. How scammers work
Cryptocurrency scammers often trick people into giving them their cryptocurrency by posing as legitimate entities and offering investment opportunities that are too good to be true. For example, they can create fake websites or social media profiles that mimic well-known exchanges or companies, and offer fake promotions or bonuses to convince people to deposit their cryptocurrencies into their accounts.
It’s important to be cautious when it comes to cryptocurrency and always do your research before investing. Do not trust anyone who promises guaranteed returns and always uses reliable foreign exchange and wallets.
Reporting Cryptocurrency Scam
A. Importance of early warning
Reporting a crypto scam in a timely manner is crucial for several reasons. It can help protect other potential victims from falling into the same scam. By alerting the authorities and spreading the word, you can help prevent others from being exploited by the same scammers.
Reporting a cryptocurrency scam can also help you recover your losses. The sooner you report it, the higher the chances that the authorities will be able to track down fraudsters and recover any stolen funds. In some cases, reporting a scam can also lead to compensation or reimbursement for victims.
B. Where to report cryptocurrency scam
If you use a specific exchange to fund your crypto account and send funds to a scammer, it is best to report the scam to them. Tell them that the recipient of your money is a scammer so that the exchange platform can provide more security to your account.
While this step doesn’t guarantee recovery, it can help increase your chances of getting your funds back by encouraging them to look for patterns that will help track down scammers. In addition, notifying the exchange will also make it harder for cybercriminals to scam other users in the future.
C. Information to include in the report
Losing track of vital information about the cryptocurrency scam can significantly affect your ability to recover your money from the scammer. For this reason, it is essential to document the situation accurately and correctly. Whether it’s text messages, emails, or other correspondence, be sure to keep track of these sources of information for the purposes of recovering funds.
To ensure proper documentation of the cryptocurrency scam, you should collect the following information:
- All ID codes of the transactions involved;
- amount of money lost, the exchanges involved and when the scam occurred;
- Other relevant information needed for the investigation.
Any information regarding the scam, including the scammers involved, how the scam started, the
In addition, you should also ensure access to the accounts from which the funds come. This is especially true when investigators will require you to prove ownership of the crypto account to speed up the investigation.
A. Option to sue fraudsters
While it doesn’t ensure funds recovery, it’s also best to report the cryptocurrency scam to the designated law enforcement authorities in your area.
Typically, when you report a crypto scam, the government tracks down the criminals and will get your funds back for you. So, don’t hesitate to work with your government.
For example, let’s say you’re a U.S. citizen. In that case, you can report any fraudulent activity involving cryptocurrencies to the United States. Securities and Exchange Commission, Commodity Futures Trading Commission and Federal Trade Commission.
If you live outside the United States, try checking where you can report a cryptocurrency scam and sue the cryptocurrency scammer to get your money back.
B. Hire a Lawyer Who Specializes in Cryptocurrency Scams
A lawyer who specializes in cryptocurrency scams can help you recover your lost funds, file a complaint with the relevant authorities, and even take legal action against the culprits. In 2021, a US-based cryptocurrency investment platform, BitConnect, was shut down by the US. Securities and Exchange Commission (SEC) for the management of a Ponzi scheme. Investors who lost funds in the scam could have hired a lawyer who specializes in cryptocurrency scams to help them recover their losses and hold the company accountable for their fraudulent activities.
A. Working with a recovery company
A crypto recovery company can help recover lost or stolen crypto funds. They use their technical expertise and assets to track down and recover lost crypto assets. This includes using their proprietary tools and connections in the industry, as well as their understanding of the crypto landscape and potential vulnerabilities. If you’ve lost access to your crypto assets, a crypto recovery company can help you recover them and restore your financial security.
B. Participating in a class action
If you are a victim of a
crypto scam, joining a class action lawsuit can help you recover some or all of your funds. A class action lawsuit brings together many victims who have suffered similar crypto leaks. This makes it easier to hold those responsible and demand justice.
In a class action lawsuit, plaintiffs (people who have suffered losses) appoint a representative to lead the legal battle on their behalf. This representative is usually an experienced lawyer who has in-depth knowledge of the legal system and the world of cryptocurrencies and knows it.
How to recover ETH stolen by a scammer?
The return of stolen ETH depends on many factors. It’s best to seek the guidance of a Blockchain expert first and share information about how you lost ETH in the first place. Do yourself good to stay away from recovery agents or hackers who claim they can recover it. Many of them are scammers themselves.
Dealing with a cryptocurrency scam can be frustrating, especially if you have no idea how to get your funds back. As of the first quarter of 2022, there are over 300 million cryptocurrency users in the world. Cryptocurrency scammers take advantage of the growing popularity of cryptocurrencies and trick people into giving up their digital assets through phishing, Ponzi schemes, etc. However, if you have fallen victim to a crypto scam, there is still hope of getting your funds back.
Reporting the crypto scam in a timely manner to the exchange platform or law enforcement authorities can increase the chances of recovery. In addition, it is essential to document the situation accurately and correctly. A legal action, such as suing cryptocurrency scammers, may also be considered to track down criminals and recover stolen funds. Always be cautious when dealing with cryptocurrency and always do your research before investing.