Crypto fraud comes in two acts, and the second is the one I want to dwell on, because it is aimed at people who have already been hurt once and are therefore the easiest people in the world to hurt again.
The first act
The first act is familiar by now. A stranger, met on a dating app or through a wrong-number text, is patient and attentive for weeks before mentioning an investment platform. The platform has a polished dashboard, and the first small withdrawal goes through, which is the point of allowing it. Deposits grow. When the victim finally tries to take real money out, the platform discovers a tax, a verification fee, a liquidity requirement, each payable in advance and each the last. A variant skips the romance and runs through a “liquidity mining” or “staking” contract that the victim is talked into approving from their own wallet, which authorizes the drain. The money, once it leaves, moves through a chain of wallets in minutes and lands at an exchange, often offshore, within hours.
The second act
The second act begins when the victim starts searching for help, and the people who find them first are not the police. They are the recovery operators, who advertise on the same platforms the fraud used and who sometimes are the fraud, returning for the remainder. Their pitch has a recognizable set of parts.
They have contacts in law enforcement, or at the FBI, or at an exchange, who can freeze the funds, and the contact is never someone you can reach yourself. They have already located your money, and can show you a dashboard with your balance sitting in a wallet, frozen and waiting. They need a fee to proceed, described as a retainer, a gas fee, a court filing cost, an insurance bond, or a tax, and the fee is always a fraction of the recovery, which makes it seem reasonable. They may send a letter on the letterhead of a regulator, a court or an exchange, and the letter will have no case number that resolves anywhere. They will ask for your seed phrase, or for remote access to your computer, to “verify” the wallet. Some offer to scam the scammers on your behalf, by forging bank documents or “hacking back,” and anyone who proposes to commit fraud for you is committing it on you. And they guarantee the result.
Anyone who proposes to commit fraud for you is committing it on you.
What recovery looks like
None of that is how recovery works. Only the exchange itself, or a stablecoin issuer, can freeze those funds, and they act on requests from law enforcement or a court, not on a phone call from someone’s cousin. The legitimate path runs through a report to law enforcement (the FBI’s IC3 portal in the United States), through blockchain tracing that any competent firm will show you and explain, and then through a court: a subpoena to the exchange to identify the account holder, and a freezing order or its local equivalent to hold the funds while the case is heard. It is slow, it is expensive, it is uncertain, and anyone who tells you otherwise is selling the second act. I have had clients lose more to recovery operators than they lost to the original scheme, and the second loss is the one they find hardest to talk about.
The bottom line. If you have been hit and someone approaches you with a plan, ask for the case number, the court and the name of the lawyer. Then call the court.
First steps after a loss: I was scammed. What now? · What tracing can and cannot do: Crypto asset recovery.
