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If you lost money in the cryptocurrency implosion, crypto-recovery scammers would love to add to your losses.
The crypto industry's complexity, lack of regulation and abundant cash have proven irresistible to resourceful, technically sophisticated fraudsters. Following the 2022 crypto crash, criminals added bogus crypto recovery services to the list of ploys they use for emptying investors' real and virtual wallets. Awareness and alertness can help you avoid them. Here's what you should know.
Avoid These Crypto Recovery Scams
Here are some tactics crypto-recovery scammers may employ via phone, text, email or social media:
Promising to Recover Market Losses
Posing as government officials, law enforcement officers or private recovery experts (perhaps bolstered by bogus credentials, as discussed below), thieves claim your trading losses are linked to market manipulation or other irregularities, and that your investment can be retrieved using digital forensics or other credible-sounding (but totally bogus) methods.
The sad truth is that losses from drops in crypto value are generally not recoverable. Anyone claiming otherwise is trying to exploit your misfortune. Don't let them.
Promising to Recover Prior Scam Losses
If you've been bilked by crypto scammers in the past, criminals (possibly the very ones who ripped you off the first time) may target you, claiming to represent a government or law enforcement agency with good news about your case. The crooks who cheated you have been caught, they'll claim, and some or all or your funds have been recovered. To get them back you need only pay a tax or administrative fee and/or provide access to an account where they can deposit your funds. Comply and they'll pocket any fee, control your account and possibly sell your personal information to other criminals.
Touting Phony Expertise
To bolster claims of legitimacy, scammers may use bogus websites and social media accounts to tout testimonials from made-up recovery customers, with rave reviews and high ratings. Some crooks have even landed "coverage" of their nonexistent services from understaffed news outlets that publish news releases as-is. They may use links to these "articles" to add credence to bogus crypto-recovery advice on discussion platforms such as Quora, Reddit and Disqus. The articles may also include embed links that'll pull you into fraudulent websites, saving them the trouble of targeting you.
How to Recover Crypto Assets
Reversing market losses is impossible and recovering funds from scammers is highly unlikely. There are legitimate recovery services that may be able to help you regain access to your crypto assets under certain other circumstances.
- If you've lost access to your crypto wallet or account because of a computer crash, damaged hard drive or loss of stored passwords or encryption keys, data-recovery experts may be able to help by extracting the contents of damaged hardware. Note that these services make no claims to boost the value of your crypto holdings or restore lost funds, and they never insist on payment before they've performed their services.
- If your crypto exchange files bankruptcy, it's a good idea to notify the court of your claim against them, which you can do by completing a proof of claim form. This may eventually lead to recovery of some funds, but it's important to have realistic expectations, so be prepared to wait for a long time to receive just a fraction of what you lost, if anything.
Tips for Avoiding Crypto-Recovery Scams
Here are steps you can take to protect yourself and stop crypto scammers in their tracks:
- Verify identities. If you get a crypto-recovery offer from anyone claiming to be a member of law enforcement or a government agency, don't respond using web links, email addresses or phone numbers they supply. Look up the relevant agency and reach out yourself, asking for confirmation that the communication is legit. (Crooks have been known to use the names of real officials, so simply confirming that an agent with a given name works at the agency isn't enough.)
- Rely on known contacts. If someone claims to be following up on a past fraud incident, be extra wary: The criminals who fleeced you in the first place will naturally know details of the crime, so they can be convincing when posing as investigators. Don't respond using any contact information they supply, and instead use information from your records to contact the individuals who handled your case. Reach out to them directly to learn if there are any new developments and report any contacts from phony investigators.
- Beware shady contact information. Steer clear of anyone who reaches out to you with advice on crypto recovery (or any other financial matter) and gives you contact information that sounds suspect or refuses to give you contact information.
- Avoid payment ploys. Upfront payment requests should be a red flag. Legitimate asset recovery services never collect fees until their work is done. Claims that you must pay a fee or settle (or prepay) taxes on your holdings before retrieving them should also set off alarms. Finally, anyone seeking payment in the form of gift cards or wire transfers is looking for funds that won't leave a trail. Do not comply and report them to appropriate authorities.
- Insist on a contract. No reputable service provider will start work without providing an overview of the services they plan to provide, with associated pricing. Insist on reviewing paperwork before agreeing to any work. If a person you're dealing with hesitates to do so or gives you a runaround, cease communication and report the potential scammer.
- Guard personal info. Don't give up your bank account information, Social Security number, passwords or private crypto key to anyone promising recovery of lost crypto value. If you have reason to think a scammer already has some or all of these credentials, notify appropriate institutions and legal authorities immediately, and take steps to protect your accounts.
- Recognize promises that are too good to be true. Investments involve risk, and crypto is riskier than many. Funds lost from a drop in the price of a cryptocurrency cannot be recovered. There are no quick fixes for these losses, and no one who offers one is trustworthy.
What to Do if You Fall Victim to a Crypto Recovery Scam
Here are steps to take if you believe you've been victimized by crypto recovery scammers.
- Report the incident to the authorities. Use the FTC's interactive form for starters. If your holdings include crypto futures or other derivatives with prices tied to crypto values, you can also alert the U.S. Commodity Futures Trading Commission (CFTC), by filing a form detailing your complaint.
- If you've furnished criminals with bank account numbers, passwords or other personal information, change passwords immediately and notify the relevant institutions and alert them to watch for fraudulent activity.
- If you believe your social Security number has been stolen, you have the right to place a fraud alert or security freeze on your credit reports at the national credit bureaus.
The Bottom Line
Criminals are willing and even eager to exploit suffering and anxiety, and to add to your financial losses with empty promises and false hope. If you've been rattled or worse by crypto market losses or swindled out of your holdings, it's natural to seek a way to recover what you've lost. But the hard truth is that you may be out of luck, and pursuing phony solutions could just add to your problems. Be mindful of the predator's tactics and take care to avoid compounding your losses.