The Cryptocurrency transactions that takes place in digital currency as an alternative form of payment are getting increasingly popular each day. However, not many people are aware of the risks that come with them even though it is created using encryption algorithms. Unfortunately, most people only realize these risks when it’s already too late. In this guide, we have Top 5 Ways To Recover Funds From Crypto Currency Scam.
Due to this lack of awareness, scammers are taking advantage of certain weaknesses in blockchain technology to deceive unsuspecting individuals. These scammers have shifted their focus from traditional payment methods like gift cards and Western Union to cryptocurrencies. They prefer cryptocurrencies because it offers them better security as well as a chance to be anonymous.
The most common type of cryptocurrency scam is investment fraud. In our efforts to provide useful guidance to our readers, we come across a lot of counterfeit investment websites on a daily basis. These websites make unrealistic promises of extraordinarily high returns, like 1% per day with no end in sight. They falsely claim to engage in trading activities involving cryptocurrencies, forex, binary options, and other financial instruments.
These scammers specifically target people who have poor knowledge about investing. These people with little or no info about trading make it easier for scammers to manipulate them into giving away their money. Unfortunately, many victims only realize later on that they have fallen victim to a scam.
The scammers typically demand payment in the form of cryptocurrency, often Bitcoin. Consequently, we frequently receive requests for assistance from victims who are seeking help in recovering their stolen cryptocurrency funds. Now, the question will be; can you get a stolen crypto-funds back? no, you can’t. But why? Let’s walk you through a thorough explanation for better understanding.
Can Cryptocurrency Transactions be Reversed or Not?
Many people will be expecting a positive answer to this question about cryptocurrency transaction reversal but to their greatest disappointment, the answer is; no. Simply put, you cannot reverse cryptocurrency transaction after it is successful. You have given approval for the transaction, therefore it cannot be reversed.
When it comes to blockchain technology, it’s important to understand that once a transaction is processed, it cannot be undone. Unlike credit card transactions that offer a “transaction chargeback” option, blockchain transactions lack a central authority to control the movement of funds.
(For further resource, see How to Prevent Fraud on Credit Card with Identity Theft Detection that will protect you).
In the case of crypto transaction, there is no intermediary bank involved between you and the merchant. Therefore, blockchain transactions resemble more of a cash transaction rather than a traditional bank transfer.
While certain cryptocurrency wallets may have a “Refund” feature, it’s important that you know that the initiation of a refund rests solely with the merchant. It cannot be enforced or compelled by a third party.
Let’s use credit cards as an example to help illustrate this further. But first, take a look at “How Cash Back Credit Card Work for Account Holders” as an abstract. Now, when you make a payment to a merchant using a credit card, the bank facilitates a digital payment to the merchant on your behalf. Later on, when you negotiate with your bank and settle your credit card bill, you cover the amount that was paid on your behalf.
Now, if you encounter a problem with a transaction and apply for a chargeback, the bank has the ability to reverse the payment it made to the merchant. As a result, the corresponding amount is deducted from your credit card bill. This system acts as a safety net, providing a certain level of protection for consumers.
In contrast, with blockchain transactions, there is no approved authority like a bank overseeing the process. Once a transaction is completed and recorded on the blockchain, it becomes extremely difficult to reverse or modify. This lack of a central authority and irreversible nature of transactions make blockchain transactions more similar to cash transactions, where once you hand over the money, it’s challenging to get it back.
Since cryptocurrencies operate without a middleman, there is also a lack of a safety net. In case of fraudulent activities or scams, there is no designated “customer service” to turn to for assistance. The decentralized nature of blockchain means that there is no single entity or authority overseeing the entire system.
Consequently, if you fall victim to a scam or encounter issues with a transaction, it becomes challenging to seek recourse or assistance as there is no centralized body to address your concerns. Meanwhile, you review this useful guide on “How to Recover Your Money Back From a Scammer” as quick as possible. This article highlights the importance of being vigilant and taking necessary precautions while engaging in cryptocurrency transactions. Another recommended resource is a publication on Credit and Debit Card Safety Precaution you must take when making Online Payments.
How to Track Crypto Transactions to Reveal the Online Scammer’s Identity
Can you trace a crypto transaction and recover funds? The answer to this question is yes you can track transactions even though it requires a rigorous effort. But to recover the funds, it takes the grace of God. Let me explain. Every cryptocurrency transaction possesses a specific “fingerprint” that enables you to track funds as they move from one crypto wallet to another. However, it’s important to note that while these transactions are traceable, they are also anonymous and cannot be directly linked to any specific person.
In other words, the flow of funds can be observed and analyzed on the blockchain, but the identities of the individuals involved in the transactions remain anonymous. This anonymity is one of the features that attract many people to cryptocurrency transactions. It offers a certain level of privacy, but it also means that if a scam or fraudulent activity occurs, it can be challenging to identify the responsible individuals behind the transactions.
In theory, it is possible to uncover the hidden identity of the person behind cryptocurrency transactions. However, in practice, it can be a complex and time-consuming process that requires the involvement of multiple parties.
To identify the individual associated with a particular crypto wallet, various techniques and investigative steps need to be taken. These may involve analyzing transaction patterns, gathering information from exchanges or platforms where the wallet is used, and even collaborating with law enforcement agencies or regulatory bodies.
Prevent Scam: Use the “Know Your Customer” (KYC) Process
Once the investigation agency has successfully traced the movement of funds in a cryptocurrency transaction, they may need to reach out to the exchange platform involved and request the disclosure of the wallet owner’s identity. In many countries, there are regulations in place to prevent money laundering, and exchanges are obligated to verify their users through a process called Know Your Customer (KYC).
However, bear in mind that some cryptocurrency exchanges are established in countries where KYC verification is not mandatory or not strictly enforced. This can create challenges in obtaining the necessary information about the wallet owner’s identity.
Challenges of Tracking Crypto Transactions
Let’s look at some of the challenges of tracking process of cryptocurrency transactions.
1. Setback of Cold Wallet to KYC
In another scenario, The scammer also has the option to transfer the funds offline to a “cold wallet,” which essentially creates a roadblock in the tracking process.
2. Third Party May Refuse to Reveal Scammer’s Identity
In the situation where the funds have not been transferred to a cold wallet and the wallet or exchange follows KYC verification procedures, it is likely that they would decline to disclose the information unless a formal request is made by law enforcement authorities. This can be a complicated process, mainly because cryptocurrency scammers often operate across international borders. Consequently, coordination among law enforcement agencies from multiple countries becomes necessary to effectively address the situation.
3. The Use of Money Mules
Additionally, scammers often employ money mules to launder their illicitly obtained funds. As a result, the individual registered under the wallet may not be the actual scammer involved in the fraudulent activities. Instead, they might be an unaware accomplice or a victim themselves, manipulated into facilitating the money laundering process. This further complicates the process of identifying and holding the responsible individuals accountable.
What Happens After the Scammer’s Identity is Uncovered?
Even after all your efforts to identify the scammer, there is still no guarantee that you (the victim) will be able to recover your funds. This is because, by the time the scammer is identified, they may have already depleted or transferred the funds to other accounts or entities. In some cases, scammers may have spent or hidden the funds in a way that makes recovery difficult or nearly impossible.
Unfortunately, the likelihood of successful fund recovery depends on various factors such as the promptness of reporting the scam, the cooperation of law enforcement agencies, and the available assets or funds held by the scammer. It is crucial for individuals to be cautious and take preventive measures to avoid falling victim to scams in the first place, as the chances of full restitution can be uncertain.
While it is theoretically possible to trace the person behind cryptocurrency transactions, the reality is that it often requires extensive effort, collaboration, and coordination among different entities.
Cryptocurrency Recovery Agencies Real or Fake?
Although it is widely known that cryptocurrency transactions are irreversible, there are numerous companies that assertively claim to assist scam victims to recover their lost cryptocurrencies. Interestingly, these companies tend to follow similar as well as questionable patterns in their approach.
- Search Engine: These companies primarily rely on extensive promotion of their services through various channels, notably search engines.
- Online Ads: Certain companies even resort to operating spam advertisements on platforms like YouTube and Instagram. In fact, on websites like Scamadviser.com, a significant number of fake reviews claiming successful fund recovery by recovery firms are detected and removed on a monthly basis, reaching around 200 to 300 instances.
- Reviews: It is crucial to exercise caution and not place so much trust in these reviews. Additionally, some of these recovery firms resort to sending out paid press releases that may appear similar to genuine news articles, potentially misleading individuals.
- Testimonials: These websites often feature testimonials from seemingly satisfied clients who express their initial skepticism about ever retrieving their funds but eventually recovering their stolen cryptocurrency with the help of the recovery agency. These testimonials are carefully crafted to convey a sense of confidence and emphasize the agency’s ability to successfully recover cryptocurrency. However, it’s important to approach such testimonials with skepticism, as they may not accurately represent the actual experiences of clients or the effectiveness of the recovery agency.
Are Cryptocurrency Recovery Agencies to be Trusted?
Do these cryptocurrency recover agents have a secret that the rest of the crypto world is unaware of? Well, despite their claims, it is highly unlikely that these recovery firms possess any secret knowledge or methods that are unknown to the rest of the cryptocurrency community.
Upon investigation, it has been found that most of these firms are outright scams, preying on vulnerable individuals who have fallen victim to cryptocurrency scams. Others may offer services that have questionable effectiveness, providing false hope to victims without delivering on their promises. It is essential to exercise caution and thoroughly research any recovery firm before engaging their services to avoid further loss or deception.
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These recovery firms offer “free consultations” to supposedly assess the possibility of helping victims recover their funds. Interestingly, they rarely decline a case. However, the true intention behind these consultations is often to gauge the client’s level of desperation rather than to genuinely evaluate the likelihood of successful recovery.
In as much victims have lost their life savings, they find themselves in a desperate situation, yearning for any glimmer of hope to recover their funds. Consequently, they are willing to comply with the recovery agency’s requests as long as the agency continues to offer promises of reclaiming their money. It is not surprising that these firms consistently ask for upfront fees and rarely operate on a performance-based model, despite potentially claiming otherwise in the beginning.
Although certain recovery firms present themselves as “investigation agencies” rather than “chargeback agencies,” their advertised claims of high success rates often contradict the actual evidence. The statements they make in their advertisements and on their websites fail to provide substantial support for their proclaimed achievements. It is important to approach such claims with skepticism and thoroughly evaluate the credibility of these firms before engaging their services.
Types of Crypto Funds Recovery Agencies
We have come across two types of recovery agencies when it comes to cryptocurrency chargebacks: Scams and Borderline Scams
1. Scam Recovery Agencies
Scammers keep records known as “donkey lists” or “sucker lists,” which consist of previous victims that they intend to target again with new scams. In the context of investment scams, these scammers may reach out to their victims, posing as recovery agents, shortly after the initial scam, in an attempt to defraud them once more.
Such firms often operate as Advance Fee scams, where they deceive victims by taking their money and subsequently disappearing. One common tactic involves requesting the victim’s e-wallet credentials, including the private key, under the guise of gaining access for recovery purposes. They then proceed to ask the victim to deposit a specific amount into the e-wallet, claiming it is necessary to “convert the recovered non-spendable Bitcoin into spendable Bitcoin.” However, these requests are typically part of the scam and serve only to further exploit the victim.
Despite the fact that these actions are baseless, victims are often unaware and end up depositing money into the wallet controlled by the scammer. Once the funds are deposited, the scammer easily transfers the funds into their own crypto wallet and promptly disappears, leaving the victim without any recourse or means of recovering their money.
2. Borderline Scam Recovery Agencies
While these recovery agencies may offer legitimate services in non-crypto recovery, their approach often involves simply sharing templatized emails that the victim is expected to send to their bank or card company. Essentially, these agencies are providing a service that individuals can easily perform themselves, without incurring any additional costs. While this may not qualify as a complete scam since some form of service is being provided, it is important to recognize that the value provided by these agencies is minimal, as individuals can undertake these actions independently and free of charge.
However, the situation becomes significantly more dubious when it pertains to cryptocurrency recovery offered by these firms. Upon reviewing the feedback and reviews for these websites, it becomes evident that while they may have generally positive reviews, the feedback specifically related to cryptocurrency cases is considerably less favorable.
These firms intentionally create false hope regarding the recovery of cryptocurrency funds, despite being aware that the chances of success are minimal. Their primary motive is to extract fees from the client in the form of a retainer, capitalizing on the client’s desperation and desire to reclaim their lost funds.
Similarly, in cryptocurrency recovery cases, these firms often rely on providing templated emails for victims to send to law enforcement authorities and scam brokers. Although there may be instances where scam brokers offer refunds due to the threat of legal action, most do not comply. As a result, clients find themselves repeatedly paying retainer fees while their cases drag on, ultimately resulting in further financial loss and deeper frustration. You can however report to Federal Trade commission (FTC) at reportfrade.ftc.gov
Presently, efforts are underway to develop innovative methods for assisting scam victims in recovering their funds. However, the technology required to enable such recovery is still in the developmental phase and not yet accessible to the general public. While there is optimism that cryptocurrency recovery may be possible in the future, it is important to note that the process is likely to be more complex and costly compared to recovering fiat currency from scammers.
Bottom line: Don’t ever make payments to strangers by making use of cryptocurrency methods, as there is no hope of recovery if you get scammed.
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This article has been written by a scam fighter volunteer. If you believe the article above contains inaccuracies or is missing relevant information, please contact us by sending a mail with your corrections and resource.
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