Are you worried about falling victim to cryptocurrency fraud? You’re not alone. With digital assets reaching mainstream adoption, crypto scammers have become increasingly sophisticated. Our blockchain security experts have analyzed thousands of cases of fraud. Using a case study from one of our customers, we can provide you with this comprehensive protection guide.
| ℹ️ | Client: Mr. Paul A. – Atlanta (GA), USA – Retail Investor |
| ❌ | Problem: Paul has already been the victim of fraud once and fears losing money again. |
| ✅ | Solution: Paul booked cryptocurrency consulting with iMi Blockchain. |
| 😃 | Results: We saved Paul from losing another 70,000 USD. |
Paul wishes to remain anonymous. Because he is ashamed when he talks about how scammers robbed him of his entire savings. Paul has transferred over USD 20,000 to unknown fraudsters.
Paul is a very nice man and has worked hard all his life. By U.S. standards, he belongs to the lower middle class. A simple worker. His savings were just enough for a modest life. In this case study, we show you how Paul lost almost his entire fortune and was on the verge of losing everything.
Fortunately, Paul called a cryptocurrency coach shortly before being betrayed again.
The rising tide of cryptocurrency fraud: How Paul lost his savings
The cryptocurrency market’s explosive growth has attracted both legitimate investors and fraudsters. According to the U.S. FBI, crypto-related fraud caused over $5.6 billion in losses in 2023 alone. Scams increased 45% from 2022 and this trend is still rising. Let’s dive into how you can protect yourself. In today’s case study, we show you how Paul lost all his savings to fraudsters.
As in most cases, Paul was lured with promises of high winnings. Crypto scammers place advertisements featuring celebrities and claim that you can’t go wrong if even a celebrity gets rich with it. Paul was directed to a website where he could buy Bitcoin. He bought 0.5 Bitcoins by credit card. What he didn’t realize was that the purchase was a sham and the reported profits were fake. A well-known method to keep the investor in a good mood and hope that he will invest even more. But it got even worse. The fraudsters now also had access to Paul’s credit card details. He was defrauded of USD 20,000 within a few hours. His entire savings were gone.
Understanding Common Cryptocurrency Scams
There are many different cryptocurrency scams. The most common types are:
1. Pishing Scams
Legitimate cryptocurrency service providers will never ask for your private keys or seed phrases.
- Description: Fraudsters impersonate legitimate entities to steal sensitive information.
- Example: Fake emails or websites mimicking reputable exchanges to capture login or credit card credentials.
2. Ponzi and Pyramid Schemes
The crypto space is full of promises, but red flags should immediately grab your attention when the deal is too good to be true.
- Description: Schemes promising high returns with little risk, paying earlier investors with funds from newer ones.
- Example: Platforms offering guaranteed returns, which are unsustainable and collapse over time.
3. Everything Fake
Unfortunately, anything can be faked on the Internet.
- Description: Identity fraud, documents, websites, ICOs, or fake apps on Google Play and Apple App Store solicit investments for non-existent projects. Everything can be faked.
- Example: Promoting a company service or a new cryptocurrency without a viable product or fake platform versions to trick unsuspecting victims.
4. Pump and Dump Schemes
You can’t trust anyone on social media channels.
- Description: Coordinated efforts to inflate a cryptocurrency’s price before selling off, leaving others with losses.
- Example: Groups hyping a low-value coin to drive up its price, then selling en masse.
5. Malware and Ransomware Attacks
Attacks on your accounts are becoming increasingly massive.
- Description: Malicious software designed to steal crypto assets or demand ransom.
- Example: Infected downloads that access wallet information.
Our customer Paul was tricked with a combination of the scams mentioned above. We will now show you how we saved our client from losing even more money.
How to Spot Cryptocurrency Fraud
Our experience working as crypto security professionals has revealed these key steps for recognizing fake cryptocurrency scams:
1. Unrealistic Promises & Pressure Tactics
Be wary of guaranteed returns, complex referral structures that reward bringing in new investors, pressure to “act fast” before a “limited opportunity” expires, and claims of “risk-free” investments. Such promises are not only dubious but also prohibited.
2. Lack of Transparency
Legitimate projects and companies provide clear information. If no contact details like address, telephone number, and team, are provided, then it is most likely a scam.
3. Unsolicited contact and offers
Be cautious of unsolicited messages or emails promoting services or investment opportunities. No reputable company will send messages without you having contacted the company first.
4. Poor Website and Email Security
First, check the email header to see if the sender’s address is unique and registered. Double-check the domain ending. Clever fraudsters buy fake domains, i.e. instead of iMiBlockchain.com, the domain is called something else, such as imiblockchain.INFO or similar. Also, check the whole URL and not only the ending. If you visit a website, a reputable company always uses HTTPS as a sign of security.
5. Identity Theft
Identity, brand, logo, everything can be stolen and copied. Before doing business with a company, ensure the company is registered and can be contacted. Our company, for example, can be found in the Swiss Central Company index. Please note that a branch office must also be registered. Many fraudsters copy well-known company’s identities and claim to be a branch in another country.
Avoiding Crypto Investment Scams: Best Practices
Avoiding crypto investment scams is pretty easy if you follow our best practices. First, always remember that the most successful investors are often very cautious. They understand that in crypto, patience and verification are crucial. Second, trust no one and check all information to the last detail. To prevent cryptocurrency scams, simply follow these 5 steps:
- Conduct Thorough Research: Verify the legitimacy of companies, platforms, and projects before investing.
- Use a Reputable Company: Stick to well-known and regulated crypto service providers and cryptocurrency exchanges.
- Secure Your Wallet: Always use a hardware wallet to store your cryptocurrencies and keep your private keys offline.
- Call an Expert: Before investing, you should call the company and speak to an expert.
How to Recover Funds from Cryptocurrency Scam
Guess what? Cryptocurrency recovery services are a scam as well. The recovery of funds from cryptocurrency fraud is not possible in 99% of all cases. Scammers are trying to rob you twice in a row. Ask yourself: How would a legitimate company have your data? How would they know you were scammed? Criminals use previously shared data to rip you off again. Fake experts and “lawyers” even advertise such services. No surprise that you have to pay thousands of dollars in advance, to lose even more money.
I’m a Victim: What to Do After a Fraud
- Stay Calm and Composed: Everybody can be a victim of a cryptocurrency scam. Calm down your emotions and don’t panic.
- Recall the Incident: It is important that you fully document your case. Collect all evidence and make copies or screenshots of it.
- Call the Police: Contact the police or the relevant authorities immediately. Be sure to report your case! You will probably not get your money back, but at least you will help prevent others from becoming victims.
- Contact an Expert: Specialized companies like iMi Blockchain use analytical tools and advanced algorithms to track a transfer. Thorough data analysis can be used to track stolen funds in the blockchain and attempt to reveal the identity of the fraudsters.
How iMi Blockchain Saved Paul from Losing USD 70,000
“After losing money on a fraudulent crypto trading platform, I saw an advertisement on how to make even more money in no time. Fortunately, friends warned me and recommended that I seek advice from iMi Blockchain, before investing. Their crypto expert then showed me within 30 minutes how I can spot scammers myself and how to invest the right way.” – Paul A., Atlanta (GA), USA
Conclusion: Stay Vigilant, Stay Secure
The cryptocurrency landscape offers tremendous opportunities, but security must always come first. By following these guidelines and staying informed about new threats, you can participate in the crypto economy while minimizing risks.
Want to learn more about protecting your crypto investments? Contact our security experts:
BOOK YOUR PERSONAL CRYPTO COACH NOWFrequently Asked Questions
What Are the Red Flags of a Cryptocurrency Scam?
Be cautious of unsolicited investment offers, promises of guaranteed returns, lack of verifiable information, and pressure to act quickly.
How can iMi Blockchain assist in safeguarding my crypto investments?
iMi Blockchain offers expert consulting services to help identify potential scams, provide due diligence on projects, and implement robust security measures to protect your cryptocurrency investments.
What role do regulatory bodies play in preventing crypto scams?
Regulatory bodies establish guidelines and enforce laws to protect investors, promote transparency, and deter fraudulent activities in the cryptocurrency space.
Can I recover funds lost to a crypto scam?
Due to the decentralized and irreversible nature of cryptocurrency transactions, recovering funds is a major challenge. Reporting the incident immediately and cooperating with authorities can improve the chances of recovery. However, scammers are usually based in countries where they cannot be accessed.
How do crypto scammers typically contact potential victims?
Scammers often reach out through Social Media, Email Phishing, Messaging Apps, and Fake Websites.
Are all Initial Coin Offerings (ICOs) scams?
Not all ICOs are scams; however, due diligence is essential. Evaluate the project’s whitepaper, team credentials, community feedback, and regulatory compliance before investing.
How can I verify the legitimacy of a cryptocurrency project?
To verify a cryptocurrency project’s legitimacy, research the team and ensure they have verifiable identities and relevant experience. Assess the whitepaper as it should detail the project’s purpose, technology, and roadmap. Check the community engagement for credibility, and transparent communication, on forums and social media. Check the regulatory compliance, and necessary licenses, and verify the company’s address and phone number.
