How to recover funds from a crypto scam

How to recover funds from a crypto scam

Over the past few years, the cryptocurrency industry has grown exponentially. With the value of digital currencies like bitcoin increasing, many people are now investing in crypto and using it to make transactions.

by Chris and Charlie Brooks, Founders, Crypto Asset Recovery

But the soaring value and market interest surrounding crypto have also made it a lucrative opportunity for cybercriminals. Consequently, crypto scams have become commonplace right across the internet. And in 2021 alone, cybercriminals stole a staggering $14 billion worth of crypto.

For victims of a crypto scam, recovering funds is extremely unlikely. However, there are a series of things you can do to ensure that you won’t be scammed a second time through so-called “recovery scams” and to help other people avoid the same scam that took your money.

Here are some best practices for recovering funds from a crypto scam.

1. Check your credit

After falling victim to a crypto scam, one of the first things to do is monitor your credit report. This will allow you to identify any fraudulent accounts opened in your name following the crypto scam and check its impact on your credit score.

Another thing to consider is adding a fraud alert to your credit report, which will help prevent scammers from using your identity to create a credit account. You can file a fraud alert through credit reporting agencies such as Equifax, Experian, or TransUnion.

2. Note the details of the scam

Losing money to a crypto scam is very stressful, and it’s understandable that you might not want to relive the experience. But before you lose track of vital information, it’s crucial to document the details of the scam. Be sure to keep a trail of emails, text messages, and other digital assets linked to the crypto scam.

When it comes to documenting the scam, you should note down your personal details, the contact information of the company or person behind the scam (including full names, email addresses, social media profiles, phone numbers, and IP addresses), and a detailed description of the scam (when it happened, the perpetrators, the amount of money you lost, the crypto wallet and exchanges involved, and evidence).

By recording all of this information, you can create a detailed report of the crypto scam and send it to the relevant authorities to track down the criminals. This is a great example of a victim impact statement used for a scam in the US.

3. Contact relevant government agencies

After documenting the details of the scam, you’ll need to find the relevant authorities for reporting it and get in touch with them. Many government agencies deal with crypto scams and other kinds of fraud.

In the US, you can report a crypto scam to the Federal Trade Commission (FTC) at ReportFraud.ftc.gov, the Commodity Futures Trading Commission (CFTC) at CFTC.gov/complaint, the U.S. Securities and Exchange Commission (SEC) at sec.gov/tcr, or the Internet Crime Complaint Center (IC3) at ic3.gov/Home/ComplaintChoice.

Meanwhile, Action Fraud is the best place to report cybercrime in the UK. But most countries will have government agencies that handle fraud cases, and a quick Google search should clarify this. So, no matter where you live in the world, you can report crypto scams.

4. Report the incident to crypto exchanges and wallet providers

As well as reporting cyber scams to the government, it would help if you also alerted the crypto exchanges and wallet providers involved with the incident. The vast majority of crypto companies have dedicated support for reporting a crypto scam. For example, Coinbase asks victims of a crypto scam to email security@coinbase.com. And Kraken has a page where you can report a phishing incident.

5. Don’t fall for recovery scams

Something to bear in mind after experiencing a crypto scam is that cybercriminals may try to defraud you again through recovery scams. In this type of scam, the perpetrator will contact the victim and claim to work for a government agency, law firm, or recovery company.

They’ll tell you they have recovered your stolen money and will ask for a late tax payment, a retainer, or an upfront fee before returning the funds. While this may sound like an attractive proposition, it’s a recovery scam. If they genuinely had access to your stolen money, they’d be able to take a fee from this.

Refrain from paying any up-front fees to people who claim they can help you get your money back following a crypto scam. You should only consider paying a fee once you retrieve your stolen money.

Conclusion

The chances of recovering funds from a crypto scam are slim.  The only real chance you have is if law enforcement agencies are able to track and seize your funds from the scammer.

Try not to make the situation worse, preserve your credit, create a detailed account of the scam, contact the relevant authorities and educate others on the threat of crypto scams. And, most of all, don’t fall victim to recovery “experts” that charge you an up-front fee – if they were legitimate, they could easily take your fee from the funds that they recovered.