Scams involving cryptocurrency have been growing in popularity. They involve fraudsters using various strategies to steal investors’ money. Scammers might steal investors’ personal information for identity theft, use phishing techniques to gain access to investors’ money, or create fake investment opportunities that result in huge financial losses— instead of the huge gains that were promised.
In this article, we uncover common crypto scams, how to spot that you’ve been scammed, and how a lawyer can stop a crypto scam in its tracks to minimize your losses and secure your financial future.
What are Common Types of Crypto Scams?
There are many crypto scams to be aware of so you can avoid them and protect yourself.
AI Deepfake Scams
The scammer uses realistic AI-generated audio or video to pretend to be a trusted family member or CEO to target victims. This tricks them into sending cryptocurrency or sharing their personal data.
Fake Investment Managers
Scammers pretend to be investment managers to lure victims. They promise amazing returns, but the catch is that they request that the victim sends them cryptocurrency first. To appear professional and authentic, the scammers usually have polished websites and apps.
Phishing
Fraudsters will email victims, requesting them to log into their accounts. They’ll usually include infected files that get downloaded or malicious links for the victim to click on. When the scammers gain access to the person’s account, ransomware encrypts personal data and gains access to wallets. Sometimes, the scammer will demand the account owner to pay them crypto to unlock access.
Pump and Dumps
Scammers generate fake hype on social media to inflate a crypto asset’s value. Thinking there’s high demand for it, the victim will find the asset appealing. When the price gets very high, scammers sell (“dump”) their holdings. This sell-off results in the asset’s supply exceeding its demand, so the price falls and people can experience big losses.
Romance Scams
Some crypto scammers find their victims on dating apps. By building an emotional connection with the person, the fraudster will slowly convince them to invest in crypto or transfer funds to them.
Giveaways
Giveaway scams are when the fraudster pretends to offer free crypto. When people agree, they’re promised rewards in exchange for handing over personal data or making an investment.
What are Signs You’ve Been Scammed?
Think you might have already been scammed, or someone is trying to scam you? Here are some signs to look out for.
- Pressure. If the person is putting pressure on you to invest, this is a red flag.
- Fake articles or websites. To give them greater authority, scammers might use fake articles, testimonials, or websites to lure victims.
- It seems too good to be true. It’s common for fraudsters to promise unrealistic high returns in a short amount of time.
- No white papers. Cryptocurrencies are supposed to have whitepapers that describe how the cryptocurrency works. If there’s no whitepaper, this is a sign of fraud.
- Lots of marketing. Fraudsters will go big on marketing with extravagant claims to lure as many people as possible.
- No team members. If you can’t find information about the team who runs the investment, it’s probably because it’s not legitimate.
What Steps Should You Take to Stop a Crypto Scam?
If you’re the victim of a crypto scam, you should act fast to stop it in its tracks. Here’s what to do immediately.
Report the Scam
You should report the scam to your local authorities and bank. Include information about the scammer, such as how you were contacted by them and take screenshots of their messages. The more details you can record or note about the fraudster, the better.
Block your bank accounts if you shared financial information with the fraudster, so they won’t be able to access more funds.
You should also report the scam to the wallet or exchange that you used to send the fraudster money.
Work with a Crypto Lawyer
Experienced crypto lawyers can engage in various activities to help you. They’ll freeze accounts and criminally charge the fraudster. By drafting legal documents to initiate proceedings and trace your money by working with forensic experts, they could help you to recover your funds.
Can You Get Your Money Back From a Crypto Scam?
It’s disheartening to know that when funds reach a scammer’s wallet, you can’t reverse them. Scammers use highly intelligent strategies to hide their tracks, such as by making use of multiple wallet transfers. However, this doesn’t mean you should accept your losses.
A crypto lawyer who has experience in crypto scams can help you by using advanced forensic methods and legal processes to trace the scammer. They’ll work with blockchain forensics teams, coordinate with law enforcement teams, and even help you with tax strategies to help you reduce the financial losses.
Legal Solutions for Stopping Crypto Scams
Your lawyer can also help you with the following legal strategies for stopping crypto fraud.
- Civil litigation. You can hire a lawyer to sue the scammer, provided you have identifying details about them, to get your money back.
- Regulatory complaints. When you file a complaint with the FCA, CFTC, or SEC, they can investigate the scam and shut it down.
- Asset tracing. This is when your lawyer teams up with blockchain analysts to trace the coins. They can also get court orders to freeze the money before the fraudsters try to move them.
- Negotiations. In some cases, lawyers and investigators find the scammers and tell them to return the money or risk legal escalation.
How Can You Prevent Getting Scammed in the Future?
To stay safe, there are some important things to remember in the future.
- Never click on unverified links in messages or emails.
- If the “investor” tells you about guaranteed returns, take this as a red flag not to send them money.
- Always research investors and projects before you decide to invest.
- Ask for details about where your investment will be going. Don’t invest if the answer is vague.
- Don’t share your digital wallet private key if this is where you store your cryptocurrency.
Do You Need a Crypto Lawyer?
If you’re worried about being a target of a crypto scam, or you’ve already been scammed, you should reach out for legal advice. ContractsCounsel is an online legal network that connects clients with experienced lawyers. You can get fixed-fee quotes from vetted crypto lawyers on the platform.
Main Takeaways
- Crypto scams can be sophisticated, but stopping them is possible.
- Be mindful of common crypto scam signs, such as if they’re too good to be true.
- Hiring a lawyer can help you navigate the scam, protect your financial interests, and recover your losses.
