What is a bitcoin recovery service? Does it work for victims of cryptocurrency scams?

If you have been the victim of a scam, you know that you would do anything to recover your lost funds. For a California man, this meant enlisting the help of a “crypto recovery specialist” after being scammed by the Ether currency during a scheme elaborated on YouTube.

But months later – and after paying the “specialist” the equivalent of more than $20,000 in taxes – the victim faced a harsh truth: he had been scammed once again.

Cryptocurrencies have become lucrative targets for scammers, hackers, and scammers. Depending on the source you believe in, cryptocurrency scams cost victims $1 billion to $14 billion in 2021 alone.

Unfortunately, scammers aren’t content with stealing your crypto assets. A new breed of fraudulent “crypto recovery services” and “fundraising agencies” prey on victims by promising to recover their lost assets, but instead steal even more from victims.

So how can you spot a cryptocurrency recovery scam? And is there a way to legitimately and safely recover lost or stolen digital currency?

In this guide, we’ll explain how these crypto recovery scams work, how to spot a scammer’s red flags, and what to do if you’re a victim of a crypto scam.

What are cryptocurrency recovery services?

Cryptocurrency recovery services promise to recover crypto funds that have been lost or stolen, for example, Bitcoin, Ethereum, Litecoin, Dogecoin, and other cryptocurrencies.

But while there are some legitimate recovery services — which can help you with data and password recovery or gain access to your Bitcoin wallet, for example — most of them are scams.

These services are part of the broader category of refund and recovery scammers who claim to investigate and uncover lost or stolen goods. These scammers target people who have already been victims, offering them false promises to recover their lost assets, for a fee.

Unfortunately, there are many ways for scammers to make fraudulent online services look legitimate. For example, they could:

  • Have a professional-looking website that appears in Google search results. It is relatively easy to create a website and make it appear on search engine results pages. Look for warning signs such as poor grammar and unprofessional or fake-looking logos and graphics.
  • Write fake press releases that are collected by online publishers. Many news outlets publish press releases directly from distribution services. Scammers have started writing fake press releases boasting of their (false) successes. Many of these are published unchecked.
  • Create fake testimonials and success stories on their websites or social media. Most scammers publish false testimonials and success stories with the goal of convincing people that their service is legitimate. Scammers can also post these fake reviews on bona fide third-party websites like Trustpilot.

In general, the only legitimate cryptographic recovery services are those that help you recover the cryptocurrency you own, such as recovering private keys from damaged hard drives.

Any “recovery service” that claims to use hacking methods, or charges an upfront fee, is a scam.

How Cryptocurrency Recovery Service Scams Work

Cryptocurrency recovery service scams involve criminals promising to recover the lost cryptocurrency when it is impossible to do so. They often take the form of prepay scams that charge upfront fees for services that are never rendered.

Here’s how crypto recovery scams generally work:

  1. The scammer targets people who have already fallen in love with a scam by contacting them directly or via ads on websites or social media. These recovery companies often describe themselves using terms such as “recovery specialists,” “cryptocurrency bounty crankers,” or “wallet recovery services.”
  2. Scam victims see ads in search results or read successful recovery accounts on Reddit or Twitter and contact the scam organization to retrieve their cryptocurrency.
  3. The service then charges an initial fee, often hundreds or thousands of dollars. After that, the scammer continues to charge additional fees for several weeks until the victim realizes that it is a scam.
  4. Alternatively, the service may claim to charge a percentage of the returned funds in case of success. But instead, they will try to steal personal information or gain access to the victim’s cryptocurrency wallet by claiming that they need their starting words as part of the recovery process. This information can then be used to steal the victim’s identity, commit further scams, or steal multiple cryptocurrencies through financial fraud.

How to Know If a Cryptocurrency Recovery Service Is Legit: 6 Warning Signs

Almost all cryptocurrency recovery services are scams, especially those that promise to return cryptocurrencies that you no longer own. If you see any of these warning signs, there’s a very good chance you’re dealing with a scammer:

  1. They ask for an upfront fee before receiving help. This is the hallmark of a prepayment scam and a good sign that you are dealing with a scammer. Some scammers will ask for a seemingly small deposit upfront, but they will increase the frequency and size of payment requests over time.
  2. They claim to have “special access” to cryptocurrency exchanges. A cryptocurrency exchange is a digital marketplace where you can trade cryptocurrencies. Scammers often claim to have backdoor access to an exchange via “connections” or some hacking capability that will allow them to track down who scammed you and return your money. This is all a lie.
  3. They ask for your passphrase or other sensitive information. If someone asks for this kind of information, it means they’re trying to steal your identity or access your accounts.
  4. They ask for your password and your bank account or crypto wallet details to deposit your “recovered” cryptocurrencies. As above, a scammer will ask for access to your bank or crypto wallet in an attempt to steal more funds from you.
  5. They don’t list a physical address or the company is located outside the United States. Swindled companies often do not list a business address. If they do, it’s usually outside the United States, it’s not a real address, or it doesn’t feel like a real place to work. In these cases, it is safe to assume that it is a fraudulent activity.
  6. They don’t have a phone number, communicate only via messaging platforms, or have an unprofessional email address. A legitimate business person will be happy to discuss their services over the phone and is unlikely to conduct business via apps like Telegram or WhatsApp. These apps are generally used by scammers to maintain anonymity and avoid the possibility of being caught by law enforcement.

Keep Your Cryptocurrencies Safe: Beware of These 5 Cryptocurrency Recovery Scams

Cryptocurrency recovery scams are constantly evolving. If you see any of the following claims, you’re dealing with a scam.

1. “Success Stories” from customers on Reddit and social media

Cryptocurrency recovery scammers often create fake Reddit accounts (or use hacked accounts) to describe made-up “success stories” promoting their own services. They offer stories of sober claiming to have lost their life savings but to have been saved by a recovery service.

Don’t get scammed! Watch out for these red flags
  • Scammers often refer to “experts” on Instagram, WhatsApp, Telegram, and similar messaging apps. This is an immediate red flag: true professionals are much more likely to use a combination of email and direct calls to conduct business.
  • The accounts used to post “success stories” are brand new, have very few posts, or show signs of being stolen by a previous user.
  • The “success stories” all follow the same pattern with very little detail about the expenses incurred or the methods used to recover the cryptocurrency. They use emotional language to target distraught people who are desperately trying to recoup their lost investments.

2. Fake emails and fake receipts showing “recovered” cryptocurrencies

If contact is made with a cryptocurrency recovery scammer, they will likely send fake emails designed to convince you that they really have found your lost cryptocurrency and that it is on its way, as soon as you pay.

For example, they might send a photo of a crypto wallet (probably photoshopped or ripped from the internet) showing your supposed balance. They will then charge you for the delivery of the funds, which will never happen.

Don’t get scammed! Watch out for these red flags
  • Scammers often use free email service providers (such as Gmail or Yahoo!).
  • Scammers can use stock photographs, fake names, and fake credentials, which can be double-checked with a simple Google search in many cases.

3. “Ethical hackers” offering to get your cryptocurrencies back

“Ethical hackers” offer to hack the original scammers and steal your cryptocurrency in exchange for a fee or percentage of the returned funds. However, it is usually impossible to find a real-world identity from the information available via cryptocurrency transfers.

Even if it were possible to discover the identity of the original scammer, it is highly unlikely that a Robin Hood figure would hack and return your cryptocurrency out of goodwill. If they have the ability to hack and steal other people’s cryptocurrencies, they would most likely steal yours.

Don’t get scammed! Watch out for these red flags
  • Any claim to be able to hack your cryptocurrency, reverse a transaction, or force a private key should be an immediate red flag. There is no way to reverse a transaction once confirmed on the blockchain. Similarly, it is almost impossible to find out the identities of scammers to target them.
  • Often, scammers won’t ask you key questions about whether it’s possible to recover your cryptocurrencies. Instead, they will fool you with promises while making suspicious requests for information or payments.

4. Cryptocurrency recovery services that charge an upfront fee (or personal information)

This is the most common type of digital asset recovery scam and involves the scammer asking for an initial fee (normally quite large) before returning the recovered cryptocurrency. In almost all cases, scammers will charge additional fees as time goes on, citing several excuses for not returning the cryptocurrency.

Don’t get scammed! Watch out for these red flags
  • Prepayment scammers often present strange requests such as initial fees, “donations,” and payment requests or your personal information.
  • Scammers provide the reasons why fees cannot be paid after the money has been recovered.
  • Scammers often ask for payment in cryptocurrency (especially smaller and lesser-known currencies) to ensure that transfers are untraceable and non-returnable.

5. Recovery “gurus”, lawyers or law enforcement on social media

In these scams, criminals pretend to be so-called experts such as lawyers, investigators, or law enforcement agents and promise to recover the stolen funds for you.

Scammers will get in touch on social media to claim that they are (or know) specialists who can recover your lost cryptocurrencies.
They make exaggerated claims about their successes and try to convince you that they will be able to perform miracles. You should block these users immediately to avoid falling victim to a scam.

Don’t get scammed! Watch out for these red flags
  • This type of scammer sends unsolicited messages offering their “services”. They usually found out your name via a social media post or public scam report and contact you already knowing that you are a potential victim. Real businesses are highly unlikely to send unsolicited messages, especially via social media platforms.
  • These scammers often pressure you to use their services by claiming that if you don’t act fast, you could lose cryptocurrencies forever. In fact, cryptocurrency is already lost, so it’s better to cut losses than fall victim to a second scam.

Remember: Legitimate government agencies investigating fraud will never ask you for money and will contact you via a government email address, not through social media.

Can you bring back your money or cryptocurrencies from a recovery scam?

The unfortunate reality is that it is almost impossible to recover the stolen cryptocurrency. Only in specific cases of hardware damage or partial loss of keys is the cryptocurrency potentially recoverable (for example, if it is partially lost or inaccessible in an old storage device).

If you have lost cryptocurrency in a transaction by sending it to an account over which you have no control, there is very little you can do to recover the funds.

Is there a safer way to try to get stolen cryptocurrencies?

If you are a victim of a cryptocurrency scam, it is unlikely that you will ever see your cryptocurrency again. However, there are steps you can take to improve your cybersecurity, prevent future scams, and perhaps recover your lost cryptocurrencies.

Report the scam to your cryptocurrency exchange

By providing your exchange with important details about the scam, they may be able to identify scammers and prevent them from perpetrating future scams.

In rare cases, they may be able to freeze the author’s account and potentially return the stolen cryptocurrencies.

Include all the details about the scammers you have, such as how and when the scam happened, and any transaction identification code (TXID). The TXID hash provides critical information about the time, receiving location, amounts, and more.

Report the scam to the relevant authorities

Reporting scams to government agencies helps catch scammers and prevent future fraud.

Monitor and protect assets

It is crucial to ensure that no important information has been passed on to fraudsters. If it were, they might be able to steal your identity or access more of your assets, including your bank account or crypto wallet.

  • Protect your accounts using unique, strong passwords and watch out for data breaches.
  • Use two-factor authentication (2FA) or multi-factor authentication (MFA) across all your accounts. Whenever possible, use an authenticator app (like Authy) instead of SMS for your 2FA codes.
  • Keep your keys private. No one needs to know these.
  • Stay skeptical and stay up to date on current scam methods.
  • Ignore all requests, promises, and threats you receive via text messages and emails; and always contact companies or government agencies directly via their official contact information.
  • Never send your personal or payment information to another individual over the Internet.
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