Disclaimer: Please be advised that Blockchain Intelligence Group will never initiate contact to trace or recover stolen funds. Exercise caution and validate the authenticity of any unsolicited communication claiming association with our services.

Where there’s a money transfer there’s a risk of fraud. But what’s worse, is that criminals don’t stop at intercepting your transactions and stealing your fortunes. There is a known trend of scammers that prey on victims’ hope to retrieve stolen funds by convincing them that they can return the stolen funds for a fee. Those are widely known as Recovery scammers.

Picture this: you’ve fallen prey to a deceptive scheme, and your digital assets slipping away. Amid this financial turmoil, a glimmer of hope appears—a “crypto investigator” promises to retrieve your stolen cryptocurrency, but there’s a catch—a fee

If you’ve recently fallen prey to a scam, exercise caution. Fraudsters may contact you, asserting the ability to restore your financial losses. These perpetrators operate under the guise of Recovery scams, a form of advance fee fraud. They coerce victims into making upfront payments for a supposed ‘service,’ only to vanish with their funds. Recently, the Recovery scam has resurfaced, adopting tactics reminiscent of other scams. Like many other scams, this one also tries to exploit the credibility of legitimate companies.

The process involves scammers meticulously compiling lists of email addresses and contact information of cryptocurrency users from various sources, including but not limited to:

• leaked user databases of crypto exchanges 
• crypto-related news platforms. 
• Social media platforms (i.e.  X and Reddit)

The scammers also actively seek information from individuals who have previously fallen victim to crypto scams, capitalizing on their willingness to share experiences online with other members of the cryptocurrency community. 

Targeting users of insolvent exchanges is an optimal approach for these illicit actors, as they prey on those who have already suffered losses, and manipulate their desire to reclaim lost assets. With the collected personal information at hand, the victims become more prone to scams.

First Interaction with the Victim

A purported “crypto investigator” contacts victims, claiming to have unearthed cryptocurrency owed to them during an unrelated investigation. Exploiting the victim’s curiosity or greed, the scammer promises to “return” this crypto.

For the initial interaction with the target, the fraudsters’ methods vary, using email or phone calls. Regardless, the scammer consistently poses as an associate of a legitimate crypto investigations agency.

Crypto recovery scammer reaches out to a scam target. Source: www.pcrisk.com

Important Insight

A notable red flag in this scam is unsolicited contact from someone claiming the ability to return lost crypto or offering to “return” crypto the target isn’t aware they are owed. 

Generally speaking, getting randomly promised crypto, whether previously stolen or supposedly owed, is highly suspicious. In reality, recovering stolen crypto involves complex legal processes, typically communicated through lawyers or official court documents. Any proactive outreach claiming easy recovery or unexpected crypto windfalls should be met with immediate skepticism. Such offers deviate from standard practice and often serve as bait by scammers to lure victims.

At this stage, scammers often employ email spoofing – a tactic where they falsify the sender’s address to appear as if it’s from a reputable source, like a well-known company. Essentially, it’s a digital disguise to impersonate someone else in an email conversation. This ploy aims to add authenticity to their claims and lower the guard of potential victims. However, since these email addresses are spoofed, any direct replies sent to them won’t reach the scammer.

Upon entering the domain from the scammer’s email address into a browser, it typically leads to either a non-existent website or one that doesn’t match the company the scammer claims to represent. If the domain leads to an actual website, your immediate action should be to contact the company through the browser to verify if the individual who sent the email is a legitimate employee. The verification of the sender’s claims is essential in affirming their legitimacy.

To overcome the spoofed e-mail tactic limitation, scammers often prompt targets to continue the conversation through alternative channels like WhatsApp, or direct phone calls. It’s a strategic move by the scammer, ensuring that once they’ve gained credibility with the faked domains, further communication reaches them and remains under their control.

Important Insight

Insisting on redirecting communication away from email to platforms like WhatsApp or direct phone calls hoists the first substantial red flag. Legitimate investigation companies and law firms adhere to written communications for an audit trail. The request to transition to a less formal platform should promptly raise suspicions, signaling that the individual or entity in question might not be who they claim to be, warranting heightened caution and verification.

In this example, the scammer asserts that the victim won’t need to make any upfront payments, aiming to build credibility and trust. However, it’s crucial to understand that eventually, the victim will be asked to make payments. The request for upfront fees is the essence of the fraud. While the scammer may initially state that there are no upfront charges for their “services rendered,” as the scam progresses, they introduce various fabricated fees. These fees include made-up taxes, compliance fees based on fictitious regulations, a security deposit, and other nonexistent charges. The entire scheme hinges on convincing the victim to pay these fraudulent fees before any “return,” which, in reality, is the primary objective of the scam.

Cultivating Trust

In the second phase of this scam, the aim is to shift the victim from initial doubt to anticipation of an alleged financial gain. Once the victim expresses interest, the scammers confidently advance with their well-orchestrated plan.

Through emails, WhatsApp messages, and phone calls, the scammers assert that the victim’s funds are recovered and securely held in a reputable exchange like Binance. This step is crucial to convince the victim of the legitimacy of the process and the safety of their soon-to-be-returned assets.

The focus is to make the victim believe that the return of their funds is not only certain but also imminent. The scammers may share fake success stories or provide false evidence, aiming to move the victim from skepticism to anticipation and excitement, paving the way for the next phase of the scam.

Important Insight

A critical red flag in this phase is the portrayal of the crypto recovery process as straightforward and involving the victim. In reality, a legitimate effort to return stolen crypto would entail a more complex procedure with meticulous legal proceedings, requiring substantial documentation and verification.

Moreover, recovered crypto assets in legitimate scenarios would be under the strict custody of courts or law enforcement agencies, not a third party claiming to be a crypto investigator. These assets would remain secure until the legal process is resolved.

Contrary to the scammer’s narrative of continuous victim involvement, in real legal proceedings, the victim’s role is typically minimal. They would not be involved or consulted until the stolen funds were ready to be returned. Communication would be formal and through official channels, often mediated by legal representatives.

Creating Artificial Urgency

With a foundation of perceived security and excitement laid, the scammers progress to a pivotal phase – the demand for various fees before the purportedly recovered funds can be liberated.

Introducing Fabricated Fees

Now, the scammers assert that specific fees must be settled before the funds can be disbursed to the victim. These may encompass fabricated regulatory fees, security deposits supposedly payable to the exchange, reimbursement for third parties involved in the recovery, taxes, or other concocted charges. The victim, already convinced of the process’s legitimacy and eager for their funds, may not immediately discern these requests as fraudulent.

Rushing the Victim

At this stage, the scammers concentrate on dissuading the victim from questioning the process’s legitimacy. They may discourage consultation with others, utilizing high-pressure tactics and time-sensitive threats to retain control. To prompt swift action, the scammers fabricate a false sense of urgency. They may assert that failure to promptly settle these fees could lead to government seizure or losses due to bureaucratic hurdles. While entirely untrue, the scammers present these claims convincingly to coerce the victim into immediate action.

The ultimate objective in this phase is to prompt the victim to pay the concocted fees without hesitation. The scammers employ a blend of false assurances, urgency, and psychological pressure to achieve this.

Important Insight

In stark contrast, authentic legal and financial procedures follow a methodical path, rarely subject to abrupt deadlines. Genuine processes adhere to clear, structured timelines, involving formal communication with ample time for response and action. These cases often span months or years.

Any situation pressuring you to act swiftly, especially under the threat of fund loss or missed opportunities, warrants extreme caution. This urgency is a common ploy used by fraudsters to bypass rational thinking and should be recognized as a serious red flag. Legitimate organizations comprehend the intricacies of legal and financial processes, avoiding unrealistic time constraints for payments or decisions.

Exploiting the Established Trust with the Victim

In the following stage of the scam, the victim, having already parted with an initial fee, becomes ensnared in the fraud scheme. Contrary to expectations, the scammers do not disappear after the initial payment. Instead, they discern an opportunity to exploit the victim further.

Next, the victim, having already invested money, they feel compelled to persist in paying, clinging to the hope of recovering their initial sum and the promised crypto. This psychological influence makes it challenging for the victim to recognize the scam and cut their losses.

Recognizing the victim’s vulnerability, the scammers continuously concoct new urgent fees supposedly essential for the release of funds. These fees are portrayed as the ultimate hurdles before the substantial sum arrives with the victim. Each new fee arrives with a justification and a sense of urgency, meticulously crafted to maintain the victim in a state of anticipation and compliance. With every additional fee, the scammers reinforce the belief that the release of funds is imminent. This deliberate tactic is employed to sustain the victim’s hope and trust in the process. Driven by the aspiration to recover losses, the victim finds themselves ensnared in an unending cycle of payments.

The victim is inflicted profound damage, resulting not only in increased financial loss but also exacting a considerable emotional toll on the victim. The persistent cycle of hope and disappointment, coupled with financial strain, becomes distressing. Breaking free from this cycle demands acknowledging the harsh reality of the scam, notwithstanding the emotional and financial investment already made.

Important Insight

It is crucial to grasp that, in legitimate scenarios, the payment of fees does not serve as a precondition for the release of a victim’s assets. Genuine legal processes operate without a quid pro quo dynamic, where assets are not held hostage pending the payment of specific fees. The continual demand for payment under the guise of releasing assets is an exclusive tactic employed by fraudulent schemes.

The consistent introduction of unanticipated fees as a prerequisite for fund release serves as a significant warning sign. It signifies a deviation from the norms governing legal and regulatory processes. Legitimate cases refrain from leveraging assets to extract additional payments from their rightful owner.

Conclusion

The scam we’ve dissected here is only an example of many well-orchestrated deceptive schemes and psychological manipulations that fraudsters employ to trick their victims. The warning signs outlined here extend beyond the specific scenario under consideration.

Key Takeaways

1. Recognize the Red Flags: Be wary of unsolicited communications claiming to recover stolen funds; such promises are often indicative of recovery scams. Trust in your senses and investigate suspicious offerings.
2. Research Legitimate Processes: Familiarize yourself with how genuine legal and recovery processes work. Legitimate recovery of stolen crypto involves complex legal procedures, typically communicated through formal channels and legal representatives. Any deviation from standard legal practices, especially promises of swift and easy recovery, should be treated with skepticism.
3. Verify and Validate: Verify the legitimacy of the supposed investigator by checking the provided domain in the email. Contact the claimed company directly through a browser to confirm authenticity. Insist on written communication for an audit trail, as legitimate investigation firms adhere to formal processes.
4. Avoid Sunk Cost Fallacy: Resist the temptation to continue payments based on the belief that prior investments make recovery imminent.
5. Seek Professional Help: If in doubt, consult with legal or financial professionals to validate the legitimacy of the recovery process. Professionals can guide authentic recovery procedures and help break free from potential scams without further financial and emotional investment.

What to Do If You’ve Fallen Victim to a Recovery Scam

1. Cease Further Payments: If you suspect you’ve fallen victim to a recovery scam, immediately cease any further payments. The scam relies on a continuous cycle of fees, and breaking this cycle is crucial to mitigating financial losses.
2. Document All Communication: Preserve records of all communications with the scammer, including emails, messages, and phone calls. These can serve as evidence should you need to involve law enforcement or seek legal assistance.
3. Report the Scam: File a complaint with your local law enforcement agency and report the incident to the appropriate online fraud reporting authorities. Provide them with detailed information about the scam, the scammer’s contact details, and any supporting evidence.
4. Contact Your Financial Institution: If you’ve made payments through your bank or other financial platforms, inform them immediately about the fraudulent transactions. They may be able to assist in investigating and potentially recovering some funds.
5. Seek Legal Advice: Consult with a legal professional experienced in fraud cases. They can provide guidance on potential legal actions, advise you on the best course of action, and help you understand your rights.
6. Get Professional Help: Consider seeking assistance from reputable stolen funds tracking service providers. These specialized services are blockchain experts and they use advanced technologies to trace and identify the movement of stolen funds. Collaborating with professionals in this field can enhance your chances of recovering lost assets and holding perpetrators accountable.

Remember, recovering funds lost to scams can be challenging, but taking swift and appropriate actions can minimize the impact and contribute to efforts in combating online fraud.

Combatting crypto scams demands heightened awareness and education. Disseminating information about these scams, their strategies, and preventive measures is pivotal for fostering a more secure and reliable digital currency landscape. Always bear in mind, in the crypto space, skepticism is warranted when something appears excessively promising. Maintain awareness, stay vigilant, and prioritize your security in every transaction and interaction.

Detect and trace the funds stolen by recovery scammers using Blockchain Intelligence Group’s advanced investigation and compliance suite.

Learn more at blockchaingroup.io