Avoiding Crypto Recovery Scams: Essential Tips and Guidance
If you’ve experienced losses in the cryptocurrency market, you might be tempted to seek out recovery services. However, it’s crucial to be aware of the numerous scams that prey on individuals in such situations. The complexity of the crypto industry, combined with its lack of regulation and the significant amounts of money involved, makes it a prime target for sophisticated fraudsters. Following the 2022 crypto crash, many criminals have added bogus crypto recovery services to their arsenal of scams. Awareness and vigilance are your best defenses. Here’s what you need to know to protect yourself.
Common Crypto Recovery Scams
Scammers use various tactics to deceive individuals into believing they can recover lost crypto assets. Here are some of the most common methods:
Promising to Recover Market Losses
Fraudsters may pose as government officials, law enforcement officers, or private recovery experts, claiming that your trading losses are due to market manipulation or other irregularities. They might promise to recover your investment using digital forensics or other credible-sounding methods. The reality 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 scammed before, criminals might target you again, claiming to represent a government or law enforcement agency with good news about your case. They may say that the crooks who cheated you have been caught and that some or all of your funds have been recovered. To get them back, you need to pay a tax or administrative fee or provide access to an account where they can deposit your funds. Complying with these requests will only result in further losses.
Touting Phony Expertise
Scammers often use bogus websites and social media accounts to tout testimonials from made-up recovery customers, with rave reviews and high ratings. Some even manage to get “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 their bogus crypto-recovery advice on platforms like Quora, Reddit, and Disqus. These articles may also include embedded links that lead to fraudulent websites.
How to Recover Crypto Assets
While reversing market losses is impossible and recovering funds from scammers is highly unlikely, there are legitimate recovery services that may help you regain access to your crypto assets under certain circumstances.
If you’ve lost access to your crypto wallet or account due to 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. These services do not claim to boost the value of your crypto holdings or restore lost funds, and they never insist on payment before performing their services.
If your crypto exchange files for bankruptcy, notify the court of your claim against them by completing a proof of claim form. This may eventually lead to the recovery of some funds, but it’s important to have realistic expectations. Be prepared to wait 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 receive a crypto-recovery offer from someone claiming to be a member of law enforcement or a government agency, don’t respond using the 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 legitimate. Simply confirming that an agent with a given name works at the agency isn’t enough, as crooks often use the names of real officials.
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. 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 the 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 the 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
If you believe you’ve been victimized by crypto recovery scammers, take the following steps:
Report the Incident to the Authorities
Use the FTC’s interactive form to report the incident. 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.
Notify Relevant Institutions
If you’ve furnished criminals with bank account numbers, passwords, or other personal information, change your passwords immediately and notify the relevant institutions. Alert them to watch for fraudulent activity.
Place a Fraud Alert or Security Freeze
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, adding 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.
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