- A crypto scam is any fraudulent scheme intended to trick individuals or organisations into giving up their digital assets, crypto tokens, or coins
- After being attacked by crypto criminals, one of the first steps is to contact your wallet provider if your assets were in a custodial wallet
- Contact crypto recovery agencies or professional investigators
Every day, people in the crypto community lose valuable assets to criminals through scam schemes, including fraud and phishing. Sadly, most of the time, the victims do not know where to go or how to recover their stolen crypto assets.
Before we explain how to recover stolen crypto tokens, let's first understand what crypto scams are.
What is a crypto scam?
A crypto scam is any fraudulent scheme intended to trick individuals or organisations into giving up their digital assets, crypto tokens, or coins. Importantly, crypto scams are fraudulent, sometimes with promises of huge returns, and are primarily targeted at stealing crypto assets or tokens.
Crypto scams can take many forms and frequently exploit feelings like greed or fear.
The scams happen nearly every day in the crypto community. For instance, TheRadar reported that in Novemebr 2024 alone, 9,200 crypto users lost $9.3 million in various crypto scams, including fraud and phishing, according to data released by ScamSniffer, a blockchain analytics platform.
As massive as $9.3 million is, in October, the crypto industry reported losses as high as $20.2 million.
How crypto scammers steal your tokens
Crypto fraudsters use various methods and technologies to steal assets from their victims. Here are a few of the most common types of crypto scams.
1. Non-custodial wallet theft
Non-custodial crypto wallets like Trust Wallet give users control of their private keys, which provides them with total ownership of their assets.
However, there are dangers associated with this independence. If a user’s private keys are exposed or compromised, attackers can move their funds without needing third-party approval.
2. Custodial wallet theft
In custodial wallets provided by cryptocurrency exchanges like Binance, a user’s private keys are managed or kept by the exchange on the user’s behalf.
This arrangement presents risks even though it provides convenience and some protections. Cybercriminals can gain access to your cryptocurrency if the exchange that holds your private keys is compromised.
3. Scams and ponzi schemes
Cryptocurrency theft is still most commonly accomplished through fraudulent schemes. Scammers frequently use investment opportunities that promise significant returns to entice victims, only to take the money they have invested and run.
How ponzi schemes work
The contributions of new investors are being used to repay early investors. When the scheme fails, many participants lose their money forever.
Ponzi schemes could include:
- Fake Initial Coin Offerings (ICOs)
- Pump and dump schemes
- Fake wallets or exchanges
- Fraudulent trading platforms
Four simple ways to recover your stolen crypto token
After criminals steal crypto tokens, they quickly transfer the assets to wallets they control. Many victims lose hope when they lose their assets, but there is always a way out. According to Coinwire, here are four simple ways to recover your stolen crypto assets.
1. Contact wallet provider
After being attacked by crypto criminals, one of the first steps is to contact your wallet provider if your assets were in a custodial wallet. Tell your provider about the theft and give them as much information as possible, including account information, transaction IDs, and suspicious activity.
Although this varies greatly depending on the platform, some custodial services have procedures to freeze or reverse unauthorised transactions.
2. Contact crypto recovery agencies or professional investigators
There are agencies that specialize in tracking and recovering stolen cryptocurrency.
These organisations use blockchain analysis tools to track down stolen money across several wallets and exchanges. They can also work with law enforcement and cryptocurrency platforms to improve the likelihood of recovery.
Nevertheless, success is not assured, and these services are frequently costly. Before hiring any agency or private investigator, you should thoroughly investigate them because some fraudulent operations pose as recovery assistance but are actually scams.
3. Contact law enforcement agencies
Another vital step is to contact a local law enforcement agency. This could be an important and helpful step in the recovery process, given that many countries have now created units dedicated to investigating cybercrime, including crypto scams.
In addition to officially documenting the theft, filing a police report allows law enforcement to obtain resources like subpoena powers, which may be required to locate suspects or freeze assets.
4. Report to crypto exchanges
Contacting crypto exchanges to which the criminals may have transferred your stolen assets could be very helpful.
Due to their anti-money laundering (AML) policies, many exchanges are obligated to assist with investigations and may even freeze accounts linked to questionable activity. However, since stolen cryptocurrency can be swiftly transferred between wallets or exchanged for fiat money, it is essential to report the incident as quickly as possible.
SEC chair announces resignation, XRP reacts
Meanwhile, TheRadar earlier reported the chair of the United States Securities and Exchange Commission (SEC), Gary Gensler, has announced his resignation effective January 20, 2025.
In a press statement dated November 21, 2024, and published on the SEC website, which Gensler shared on his X account, the SEC chair described the commission as a mission-driven commission focused on protecting investors.
“On January 20, 2025, I will be stepping down as SEC Chair,” he posted. “The SEC is a remarkable agency. The staff & the Commission are deeply mission-driven, focused on protecting investors, facilitating capital formation, and ensuring that the markets work for investors & issuers alike. The staff comprises true public servants.”
