Lost Money in a Crypto Scam? Here’s What You Need to Do Next

Crypto-related scams increased by 80% last year compared to the preceding year. In 2024, all kinds of scams stole over $2.2 billion in crypto , leaving devastated victims never again to see a cent of their money. But you are not alone if you have lost money to a fraudulent scheme.

Crypto scams come in many forms, including phishing attacks and fake investment opportunities promising "guaranteed returns." Feeling helpless and frustrated? It's hard enough to watch your hard-earned money disappear into thin air, but the most grating part is that many of its victims believe there is no way out.

You might be thinking, "How did I fall for this? Was there a way to have protected myself? Am I ever going to get my money back?" These are all valid questions, so rest assured you are not alone in asking them.

This article will focus on the critical steps one can follow after losing money in a crypto scam. You'll get practical advice and information at your disposal that will help you with the next course of action and how to better your chances of recovery.

Understanding Crypto Scams and Their Common Types

Crypto scams are fraudulent schemes designed to steal money or cryptocurrency from unsuspecting victims. Scammers mainly depend on the techniques of deception, false promises, and technical tricks to manipulate the victim into doing what he/she wants. Crypto fraud is evolving rapidly, with scammers constantly devising new tactics to exploit victims.

Types of Crypto Scams

Some major types of Crypto Scams include:

• Investment scams: In this type of scam, users are approached with the promise of big returns if they invest in some cryptocurrency or trading platform. In most cases, the scammers show fake profits to attract victims into depositing more money. After they have succeeded in collecting enough funds, they disappear with user money, so investors stand in line to lose their money.
• Phishing scams: Scammers send bogus emails, text messages, or websites that appear to come from a trusted crypto company. They will trick victims into revealing their account login credentials or private key. As soon as the scammers gain access to the wallet, they drain it in seconds.
• Fake crypto exchanges: Fraudsters create fake exchanges that look real and offer excellent deals on trading. Victims deposit money with the intention of trading, but when it comes to withdrawing their funds, they find the exchange has disappeared along with their money.
• Ponzi and Pyramid schemes: These scams promise ridiculous profits if you bring in more people to invest. Some early investors may get returns, but the money is coming from new investors and not real profits. Eventually, when the signup rate of new investors falls, these schemes crash down, leaving mostly everyone out of their money. 
• Rug Pull scams: They are those scams in which fraudsters create a new cryptocurrency project and subsequently advertise that this is a great opportunity. Once sufficient capital is sunk in, the fraudsters sell off all their holdings and disappear, causing the value of the project to decline. This leaves investors with pure junk.
• Pump-and-Dump Schemes: The fraudsters artificially inflate the price of a cryptocurrency by spreading unreasonable hype about it or giving false news about it. With the race heuristic of supply overtaking demand, the price would peak for a brief instant and then crash again. Early investors suffer losses as the value declines.

How Do Crypto Scams Work?

Crypto scams are simply attempts to take money or cryptocurrency from you. The scammers apply easy tricks to get you to trust them. They know about social pressures and emotions and push you to act very quickly. This is why these scams often find several victims in the U.S.A.

Scammers start with friendly messages or calls. They say, "Invest now, and you will make big profits!" They offer too-good-to-be-true promises to make you feel special and secure. Also, they want you to believe you could get rich quick and with no risk whatsoever.

They may also set up fake websites or emails that look like they came from familiar companies. Such scams are known as phishing methods. Click on these links, and you may be taken to a site where you are instructed to fill in personal details or crypto wallet keys. After you input this information, the scammers simply take control of your accounts.

Sometimes, scammers may use the tricks of the trade against you. They will hide behind the mask of a fake investment. You might run into a web page that shows you increasing profits and happy customers. But that is a facade. The sole purpose of the website is to bait you, and soon you will find your money spirited away.

Moreover, they want your money as fast as possible, and that is the simple reason behind it. After that, the scammers vanish with your hard-earned money, leaving you with little hope and a big loss.

Losing money in a crypto scam can be devastating, both financially and emotionally. There are ways through which you could try getting back your money, but the first step is getting to know how these scams work. Thus, stay careful and always verify whenever any offer appears too good to be true.

7 Steps to Follow After Losing Money in a Crypto Scam

Losing money in a crypto scam can feel like an overwhelming experience, but the steps you take afterward can make a significant difference in your chances of fund recovery. Here's what you should do:

Step 1 - Recognize the Scam

The first step in restoring one's sanity is to accept that one has been scammed. Crypto scams are cunning in their paycheck-to-play narrative. If you ignore the signs or hesitate, you risk deeper financial loss and emotional distress. Thus, once you have observed any of these scams, you need to act right away to prevent further loss.

Note: Some of the common scams are mentioned in the above section.

Step 2 - Stop Any Further Transactions

When the ugly truth dawns on you that you are a victim, it's time to stop such transactions. Do not engage with the scammer or send any more money. This is undoubtedly the most important step in minimizing losses.

• Change Passwords: As mentioned, change the passwords of any crypto exchanges, wallets, and emails connected to your investments and activate two-factor authentication (2FA) to enhance security.
• Revoke Permission: If you have shared access with other apps or services to your crypto wallet or accounts, then revoke their permissions immediately to limit the scammer from taking more from your assets. 

Stopping the flow of funds quickly can significantly improve your chances of limiting damage.

Step 3 - Report the Scam

Even though reporting the scam may not give you back your money, it is a crucial step in fighting fraud. Reporting helps the authorities track criminals and prevent others from becoming victims of the same scam.

• Federal Trade Commission (FTC): The FTC protects consumers from fraud. File a complaint online through its website that tracks scams and may help warn others.
• Internet Crime Complaint Center (IC3): Operated by the FBI, IC3 investigates crimes like online scams. This will not, in itself, recover lost funds but may help law enforcement build cases against scammers.
• Local Law Enforcement: If the scam cost you a considerable amount of money, you might want to see if there is a local police department that can then refer it to federal agencies such as the FBI.
• Crypto Exchange: In case you lost money through a crypto exchange, reach out to their support. Some exchanges will freeze the accounts of scammers or launch investigations.

By reporting the scam, you get the authorities moving, and it may save others from falling into the same trap.

Step 4 - Document Everything

The more information you gather, the better your chance of getting your money back. Keep detailed notes about the interactions regarding the scam.

What are the documents?

• Transaction IDs: Every cryptocurrency transaction must have an identification attribute to it, which could help track your money back.
• Screenshots: Keep any emails, texts, or social media exchanges with the scammers. If you can, you should also include some ads or promotions.
• Addresses or Wallet IDs: In the event that you did send cash to a wallet, make sure to save that address along with any transaction details involved.

Having a well-documented record will be critical for investigations and any future attempts to recover your funds. 

Step 5 - Consider Recovery Firms

If you have lost a serious amount of money but haven't seen success in your attempts to recoup your money, you might want to seek professional help in recovery.

Recovery firms like Financial Recovery Experts are recovery firms that help victims of crypto fraud recover their funds. Such firms use advanced tracking tools and resources to trace stolen cryptocurrency and negotiate between the scammers or exchanges.

Financial Recovery Experts is one of the most respected recovery firms out there. They are into helping victims of cryptocurrency fraud. With tools, experts carve a path for successful case investigations.

Reach out to the firm before deciding on the recovery service. Ask questions and get to know their process. A credentialed recovery service should provide you with cohesive guidance and a transparent service cover.

Let’s look at how this process works for Financial Recovery Experts:

• Fund tracing: Recovery experts can trace the flow of your funds on the blockchain, which is often difficult for the lay user.
• Legal support: In some cases, recovery firms work together with legal professionals to pursue legal actions against the perpetrators.
• Negotiation: Some firms may negotiate directly with the scammers to attempt to recover some or all of the money stolen from you.

While recovery firms can be truly helpful, keep in mind that the process can be difficult and costly. Think about whether it is worthwhile to hire a recovery firm if the funds you might recover don't add up to a certain amount. 

Step 6 - Monitor Your Crypto Wallet

You need to maintain your vigilance and monitor your wallet for suspicious transactions even after the scam.

• Monitor Transactions: Regularly check your wallet for unauthorized transactions and set notifications, if possible.
• Watch for Follow-Up Scams: Scammers may target you again under the guise of helping you with all the lost money. They would pounce on you, so do not fall for these second scams.
• Stay Cautious: Do not answer unsolicited messages or phone calls that seem to be from anyone claiming to offer help. This is a common tactic used by scammers, as they will use these subsequent approaches to steal even more money.

Step 7 - Learn from the Experience

While losing money to a crypto scam is unfortunate, it’s a valuable learning experience. You can minimize your chances of being scammed in the future by following these tips:

• Do Thorough Research: Always investigate any cryptocurrency or project before investing. Check for reviews, the team behind the project, and red flags like unrealistic promises or lack of transparency.
• Use Reputable Platforms: Stick to well-known exchanges and wallets that offer strong security features and positive reputations.
• Be Skeptical of Unrealistic Promises: If an offer seems too good to be true, it probably is. Avoid crypto scams that promise high returns with low risk.
• Enable 2FA: Always use two-factor authentication for added security when accessing your crypto accounts.

Educating yourself on the risks of crypto investments and how to recognize red flags will help you avoid future scams.

Key Takeaways

• Act Fast: Immediately stop further transactions to limit further losses.
• Report the Scam: Filing reports with the FTC, IC3, and crypto exchanges helps authorities track down scammers.
• Consider Professional Recovery: If you’ve lost a significant amount, professional recovery firms can.