FBI Warns Of Cryptocurrency Scam Targeting Victims
By staying informed and following the FBI's guidelines, individuals can better protect themselves from becoming victims of these crypto scams.
Samiksha Jain June 26th, 2024
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The Federal Bureau of Investigation (FBI) has warned the public about a new wave of cybercriminal activity targeting victims of cryptocurrency scams. These fraudsters are posing as lawyers and law firms, offering bogus cryptocurrency recovery services to steal funds and personal information from those already defrauded.
This latest cryptocurrency investment scam alert is an update to a previous warning from the FBI’s Internet Crime Complaint Center (IC3), which had highlighted a surge in scams involving fake services for recovering digital assets. The updated Public Service Announcement (PSA), titled “Increase in Companies Falsely Claiming an Ability to Recover Funds Lost in Cryptocurrency Investment Scams,” was originally published on August 11, 2023.
Moreover, in April 2024, the FBI warned of financial risks tied to using unregistered cryptocurrency transfer services, highlighting potential law enforcement actions against these platforms. The announcement focused on crypto transfer services operating without registration as Money Services Businesses (MSBs) and non-compliance with U.S. anti-money laundering laws. These platforms are often targeted by law enforcement, especially when used by criminals to launder illegally obtained funds, such as ransomware payments.
Cryptocurrency Scam: Emerging Criminal Tactic
The FBI’s announcement aims to inform the public about a new criminal tactic designed to exploit cryptocurrency scam victims further. Using social media and other messaging platforms, fraudsters posing as lawyers from fictitious law firms are contacting scam victims and offering their services.
These “lawyers” claim they have the authority to investigate fund recovery cases and often assert that they are working with, or have received information from, the FBI, Consumer Financial Protection Bureau (CFPB), or other government agencies to validate their legitimacy.
In some instances, victims have reached out to these scammers through fake websites that appear legitimate, hoping to recover their lost funds.
The scammers use various methods to further the recovery scam, including:
- Verification Requests: They ask victims to verify their identities by providing personal identifying information or banking details.
- Judgment Amount Requests: They request that victims provide a judgment amount they are seeking from the initial fraudster.
- Upfront Fees: They demand a portion of the fees upfront, with the balance due upon recovery of the funds.
- Additional Payments: They direct victims to make payments for back taxes and other fees purportedly necessary to recover their funds.
- Credibility Building: They reference actual financial institutions and money exchanges to build credibility and further their schemes.
Between February 2023 and February 2024, cryptocurrency scam victims who were further exploited by these fictitious law firms reported losses totaling over $9.9 million, according to the FBI Internet Crime Complaint Center (IC3).
Tips to Protect Yourself
The FBI offers several tips to help individuals protect themselves from falling victim to these scams:
- Be Wary of Advertisements: Be cautious of advertisements for cryptocurrency recovery services. Research the advertised company thoroughly and be suspicious if the company uses vague language, has a minimal online presence, and makes unrealistic promises about its ability to recover funds.
- Do Not Release Information: If an unknown individual contacts you claiming to be able to recover stolen cryptocurrency, do not release any financial or personal identifying information, and do not send money.
- No Fees from Law Enforcement: Remember that law enforcement does not charge victims a fee for investigating crimes. If someone claims an affiliation with the FBI, contact your local FBI field office to confirm their legitimacy.
Victim Reporting
The FBI urges victims to file a report with the Internet Crime Complaint Center. When filing a report, try to include the following information:
- Contact Information: Details about how the individual initially contacted you and how they identified themselves, including name, phone number, address, email address, and username.
- Financial Transaction Information: Details such as the date, type of payment, amount, account numbers involved (including cryptocurrency addresses), name and address of the receiving financial institution, and receiving cryptocurrency addresses.
The FBI’s announcement highlights the importance of vigilance and caution when dealing with unsolicited offers of assistance, particularly in the highly targeted and vulnerable area of cryptocurrency investments. By staying informed and following the FBI’s guidelines, individuals can better protect themselves from becoming victims of these crypto scams.
