Education 10 min read

How To Report Crypto Fraud In 2024: Who To Talk To

The first few months of 2024 have seen a significant rise in crypto fraud, with substantial financial losses reported globally. In Q1 alone, approximately $430million was stolen in about 50 crypto attacks. One notable incident involved the crypto gaming platform PlayDapp, which lost $290m in PLA tokens in a single breach.

DeFi (decentralized finance) protocols continue to be a major target for scammers, accounting for 60% of all crypto heists in early 2024. While overall illicit crypto activity decreased in terms of total transaction volume, specific crimes like ransomware and darknet market activities saw an increase in 2023. This indicates a shift in the methods used by cybercriminals, with stablecoins becoming more commonly used for illicit transactions due to their liquidity and stability.

So, it’s clear that crypto fraud is not reducing any time soon. For users to remain safe and cautious, it’s imperative to know how to report crypto fraud to the relevant authorities.

Overview of crypto fraud in Q1 2024. Source: NEFTURE SECURITY
Overview of crypto fraud in Q1 2024. Source: Nefture Security

Key takeaways

  • Look for unrealistic returns, lack of transparency, and complex or vague white papers. Analyze social media and community activity for fake endorsements, bot activity, and hyped marketing tactics.
  • Save all forms of communication, track blockchain transactions, keep bank statements and exchange logs. Report to authorities and regulatory bodies with all collected evidence.
  • Prepare necessary information, contact customer support, request immediate action, follow up in writing, and monitor account activity to protect and recover funds.
  • Notify BitcoinTalk, Reddit, Telegram groups, Discord servers, Facebook groups, crypto scam alert websites, local cryptocurrency meet-ups, Twitter, and LinkedIn groups to spread awareness and gather support.
  • In the UK, contact Action Fraud, the FCA, and report to local police stations. Utilize resources like the FCA register to verify credentials and prevent crypto fraud.
  • In the US, report to the FTC, IC3, SEC, and CFTC. Provide detailed information and documentation to support the investigation and potentially recover funds.

What is crypto fraud?

Red flags in crypto projects

One of the first steps in crypto fraud detection is recognizing the common red flags associated with scam projects. Scammers often use high-pressure tactics and unrealistic promises to lure investors.

  • Unrealistic returns: Promises of guaranteed high returns are a major red flag. Legitimate investments come with risks, and no credible project can guarantee substantial profits in a short time.
  • Complex and vague white papers: A white paper should clearly outline the project’s goals, technology, and use cases. If the white paper is overly complex, vague, or filled with jargon without clear explanations, it could be a sign of a scam.
  • Lack of transparency: Scams often involve projects with anonymous or unverified teams. Legitimate projects usually provide detailed information about their team members, including their professional backgrounds and contact information. If a project’s team is shrouded in secrecy, it’s a strong indicator of a scam.
How to identify crypto fraud graphic
Source: CryptoManiaks

Social media and community analysis

Analyzing a project’s presence on social media and its community can reveal a lot about its legitimacy.

  • Fake endorsements and partnerships: Scammers often claim endorsements from reputable companies or personalities to appear legitimate. Always verify these claims independently. Look for official announcements from the alleged partners to confirm the authenticity of these endorsements.
  • Bot activity: A disproportionately high number of followers or likes on social media platforms, often generated by bots, is a red flag. Genuine projects grow their community organically and have active, engaged followers. Check the interactions on social media posts. A lack of meaningful engagement can indicate that the followers are not genuine.
  • Hyped marketing tactics: Excessive hype and aggressive marketing, especially with promises of ‘getting rich quick’, are common scam tactics. Authentic projects focus on their technology and use cases rather than just marketing their token.

Collecting evidence of the scam

Collecting evidence of crypto fraud is crucial for both personal protection and to aid law enforcement in tracking down and prosecuting scammers. This guide outlines the steps to gather evidence effectively, ensuring that you have a strong case should you need to report the scam and seek crypto fraud recovery.

Document communication

Preserve all forms of communication with the suspected scammer. This includes emails, social media messages, chat logs, and any other form of digital communication. Ensure that the timestamps and sender information are visible.

If you have had voice communications, use apps or tools to record these conversations, ensuring you have consent if required by local laws. These recordings can provide direct evidence of fraudulent claims or promises.

Take screenshots of relevant chats, websites, and social media interactions. Make sure to capture the entire screen, including the URL bar and timestamps, to provide context and authenticity to the interactions.

Gather transaction data

Use blockchain explorers to track and document all transactions related to the scam. Record the transaction IDs, wallet addresses, and any associated metadata. This immutable ledger can provide undeniable proof of financial interactions.

If you transferred money from a bank account or used a payment service, keep all records and receipts. These documents can establish a clear financial trail leading to the scammer.

If the scam involved a cryptocurrency exchange, download and save your transaction history from the platform. This includes deposits, withdrawals, and any trades conducted as part of the scam.

Collect digital footprints

Use WHOIS lookup tools to gather information about the domain registration of scam-related websites. Document details such as the registrant’s name, contact information, and registration dates.

Collect data on the social media profiles involved in the scam. Record usernames, profile links, and any publicly available information about the individuals behind these profiles.

If possible, record the IP addresses used by the scammer in email headers or web server logs. This technical data can help trace the geographic location and ISP of the scammer.

Engage with authorities and experts

Submit all collected evidence to local law enforcement agencies or relevant authorities specializing in cybercrime. Provide a detailed report outlining the scam and include all the documented evidence.

Seek assistance from cybersecurity professionals and a legitimate crypto fraud lawyer who can analyze the evidence further. They may help uncover additional details and strengthen your case while assisting crypto fraud recovery.

Report the scam to regulatory bodies such as the Federal Trade Commission (FTC) or equivalent organizations in your country. Provide them with all the evidence to facilitate a broader crypto fraud investigation.

Contact financial institutions

  • Prepare necessary information: Gather all relevant details before contacting your financial institution. This includes account numbers, transaction IDs, timestamps, and any correspondence related to the scam. Having this information ready will streamline the process.
  • Contact customer support: Reach out to the customer support team of your bank or payment service provider. Use their official phone numbers or secure messaging systems provided on their website. Explain the situation clearly and provide all the gathered information.
  • Request immediate action: Ask the customer support representative to freeze the affected accounts and transactions. Request them to initiate an internal fraud investigation and provide you with a reference number for the case.
  • Follow-up in writing: Send a follow-up email or letter to your financial institution summarizing the phone conversation and attaching any relevant documents. This creates a written record of your request and ensures that your case is formally acknowledged.
  • Monitor account activity: Keep a close eye on your account activity for any unauthorized transactions. Report any suspicious activity immediately to your financial institution.

Notifying cryptocurrency exchanges

When falling victim to cryptocurrency fraud, contacting the crypto exchange involved is a critical step. Begin by gathering all relevant information, including your account details, transaction IDs, timestamps, and any communication with the scammers. This documentation will be essential in supporting your case and facilitating a prompt response from the exchange.

Eight levels of anti-scam risk control measures from Binance. Source: Binance
Eight levels of anti-scam risk control measures from Binance. Source: Binance

Start by visiting the exchange’s official website to find their customer support contact options. Most reputable exchanges provide multiple channels for support, such as email, live chat, and phone. Opt for the method that promises the quickest response. Clearly explain your situation, providing all the gathered details to help the support team understand the severity and specifics of your case. Emphasize the urgency, especially if there is a chance to freeze or recover the assets involved.

Following your initial contact, send a detailed follow-up email to create a formal record of your request. Attach any relevant documents and reiterate your case details. This written communication ensures that your request is officially logged and can be referenced in future interactions. Regularly check your email and the exchange’s support portal for updates on your case, and respond promptly to any requests for additional information to expedite the investigation and resolution process.

Alerting online platforms and forums

  • BitcoinTalk: A popular forum for discussing all things related to Bitcoin and other cryptocurrencies. It’s a good place to alert other users about scams and seek advice.
  • Reddit: Subreddits like r/Bitcoin, r/CryptoCurrency, and r/CryptoScams are useful for sharing experiences, alerting the community, and gathering more information on similar scams.
  • Telegram groups: Many crypto projects and communities have active Telegram groups. Join relevant groups to inform others about the scam and provide details.
  • Discord servers: Crypto-related Discord servers often have channels dedicated to security and scam alerts. Share your experience to warn others.
  • Facebook groups: Numerous Facebook groups focus on cryptocurrency trading and investing. Posting a detailed account of your scam experience can alert a broad audience.
  • Crypto scam alert websites: Websites like BadBitcoin.org and CryptoScamDB allow users to report scams and fraudulent activities, helping to spread awareness and prevent others from falling victim.
  • Local cryptocurrency meet-ups: If you attend or are a member of local cryptocurrency meet-ups or clubs, sharing your experience can help alert your local community and provide support.
  • X (formerly Twitter): Using hashtags like #CryptoScam and tagging relevant accounts can help spread the word quickly to a large audience. Engaging with the crypto community on Twitter can also gather support and advice.
  • LinkedIn groups: Professional groups focused on cryptocurrency and blockchain on LinkedIn can be useful for alerting professionals and seeking advice on handling the scam.

Seeking legal assistance

Identify specialized legal counsel

Start by identifying legal professionals who specialize in cryptocurrency and financial fraud. A crypto fraud lawyer or crypto fraud investigator with experience in cybercrime and digital assets will be more equipped to handle the complexities of your case. Use online directories, bar association resources, and recommendations from trusted sources to find qualified attorneys.

Schedule consultations

Arrange initial consultations with a crypto fraud attorney to discuss your case. Most lawyers offer a free or low-cost consultation to evaluate the merits of your case. During these meetings, provide detailed information about the scam, including all documentation and correspondence. Ask about their experience with similar cases, their approach to handling crypto scams, and the potential outcomes.

Evaluate legal options

After consultations, evaluate your legal options based on the advice received. This might include filing a lawsuit against the scammers, working with law enforcement to pursue criminal charges, or attempting to recover funds through civil litigation. Consider the costs, timeframes, and likelihood of success for each option.

Engage law enforcement

Report the scam to local and federal law enforcement agencies, such as the police, the FBI, or the equivalent cybercrime unit in your country. Provide them with all collected evidence and cooperate with their investigation. Law enforcement involvement can strengthen your case and increase the chances of recovering lost assets.

How to report a crypto scam in the UK?

  • Action fraud: The primary agency for reporting cryptocurrency scams in the UK is Action Fraud, the national fraud and cybercrime reporting center. You can file a report online at their website, Action Fraud, or call their helpline. This organization works closely with the National Fraud Intelligence Bureau (NFIB) to investigate and address reported scams.
  • Financial Conduct Authority (FCA): If you encounter crypto fraud, report it to the FCA. They provide guidance on dealing with crypto scams and maintaining caution. Verify the credentials of firms or individuals on the FCA register before engaging in any investment activities to avoid fraudulent schemes. More details can be found on the FCA’s consumer page.

How to report a crypto scam in the US?

  • Federal Trade Commission (FTC): Report crypto fraud to the FTC via their online portal. The FTC collects information on various types of fraud and provides resources to help recover from scams.
  • Internet Crime Complaint Center (IC3): Operated by the FBI, IC3 handles complaints about internet-based fraud, including cryptocurrency scams. File a complaint at IC3.gov, providing as much detail as possible about the scam, including transaction IDs and communication logs.
  • Securities and Exchange Commission (SEC): The SEC oversees securities markets and can be contacted for scams involving crypto investments that might be considered securities. Reports can be filed through the SEC’s website at sec.gov.
  • Commodity Futures Trading Commission (CFTC): If the scam involves commodities or futures, report it to the CFTC through their whistleblower program.

Final thoughts

Staying safe from crypto fraud and scams requires vigilance and proactive measures. Always conduct thorough research before investing, verifying the legitimacy of projects and individuals involved. Utilize reputable exchanges and be wary of unsolicited offers and unrealistic promises. Protect your personal information by avoiding sharing private keys and other sensitive data. Regularly monitor your accounts for suspicious activity and report any potential scams to relevant authorities and online communities.

Frequently Asked Questions

  1. 01.

    Can a crypto scammer be traced?

    Yes, a crypto scammer can be traced, although it can be challenging. Blockchain technology, which underpins cryptocurrencies, is inherently transparent, allowing transactions to be tracked through blockchain explorers. However, scammers often use techniques such as mixing services, privacy coins, or multiple wallets to obscure their tracks. Law enforcement agencies and cybersecurity experts use advanced analytics and collaboration with exchanges to trace these activities, but it can be complex and time-consuming.

  2. 02.

    Is it worth reporting a scammer?

    Yes, it is worth reporting a scammer. Reporting scams helps authorities track and combat fraudulent activities, potentially leading to the recovery of stolen funds and the prosecution of scammers. Additionally, reports contribute to broader efforts to prevent future scams by raising awareness and prompting regulatory action. Various organizations, including local police, national fraud centers, and financial regulatory bodies, rely on public reports to build cases against scammers.

  3. 03.

    Can you go to jail for crypto scamming?

    Yes, you can go to jail for crypto scamming. Crypto scams are considered serious crimes, and individuals involved in such activities can face significant legal penalties, including imprisonment. For example, in the United States, federal laws against wire fraud, securities fraud, and money laundering can result in long prison sentences for convicted individuals. Similar legal consequences exist in other countries, highlighting the severe repercussions of engaging in crypto scams.

Mohammad Shahid @ CryptoManiaks
Mohammad Shahid

Mohammad is an experienced crypto writer with a specialisation in cybersecurity. He covers a wide variety of topics spanning everything from blockchain and Web3 to the retail crypto space. He has also worked for several start-ups and ICOs, gaining insight into the mindset and motivation of the founders behind the projects.

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