Organisations that are now engaging or exploring opportunities with digital assets are likely wondering how to determine whether fraud is occurring within their digital accounts, how to identify it and how to trace suspicious activity involving digital assets back to specific individuals or organisations. These efforts begin with targeted investigative strategies aimed at tracing assets as they move between digital wallets and exchanges.
Asset tracing in cryptocurrencies examines the full lifecycle of a cryptocurrency account. Investigators may use specialised blockchain forensic tools and traditional forensic methods to search, review and analyse the origination and transaction activity of digital wallets and cryptocurrencies across their history. During an investigation, forensic experts will look at artefacts including a transaction ID address, type of cryptocurrency held and transacted, transaction history, source of funding, account and transaction balances and oftentimes attribution (account owner information). A close examination of the origination of a transaction on the blockchain (i.e., whether it was input into an exchange) can also provide a trail for investigators to follow.
These and other forensic investigations tactics are also applicable beyond track and trace use cases. For example, financial services organisations can use similar methodologies to analyse and validate the stability of a cryptocurrency company they are considering acquiring or to conduct KYC, AML, anti-corruption, sanctions compliance or other internal investigations involving digital assets. Our team has also applied these techniques to conduct in-depth technical due diligence and analysis preceding M&A transactions in the digital assets industry — sought by a seller before an investment or by a potential buyer in anticipation of an investment.
At a glance:
Cryptocurrency and bitcoin scams often promise big returns from a small initial investment.
These scams are often exposed when people want to withdraw the money they’ve invested and find that they can’t.
Crypto scams can be used to steal money or financial details.
How cryptocurrency and bitcoin scams may work
There are a lot of bitcoin and crypto scams around, which can vary in how they look and what tactics are used.
Two main ways these scams work are:
Getting the person targeted to buy genuine cryptocurrencies, which are then stolen from them.
Making it appear that the target is making an investment when they’re really just giving money to the criminals.
Here are common themes to look out for:
Targeting through social media – Two third of crypto scam start on social media. Others may appear through text, email or a phone call.
Promise of very high returns – Scams offer big profits from an investment. These are often unrealistic.
Real-looking fake apps or companies – Fake apps and websites impersonating genuine firms, or real-looking made-up companies that try to win your trust. Both of these can be used to steal personal details or money.
Coaching – An influencer, or person who claims to work at the crypto company may “coach” the target, telling them how to evade security from a bank or building society.
Starting small – The scam may involve investing relatively small amounts of money to begin with. You may be able to take out a small amount of profit. Fraudsters do this to encourage targets to invest more later.
‘Celebrity endorsement’ – scammers will create pictures or videos of celebrities and public figures endorsing their scheme to persuade you to invest. Often these images and videos have been computer generated or manipulated with AI tools to appear genuine, but have nothing to do with the person.
How to protect yourself against crypto investment scams
YBS does not allow transfers to cryptocurrency accounts.
Not everyone who invest in crypto currency know how it works This can mean fraudsters can make false promises of how easy it is to make money.
To help protect yourself from crypto scams, ask yourself:
Are you being told what to do?
If someone is telling you what to do while you are making an investment, they could be trying to “coach” you. If someone who claims to be an employee of a crypto company is guiding you, do not hand over any details or money and stop contact straight away. If someone instructs you to open a new account in order to move money into crypto later, this indicates a scam.
Are you being rushed?
Scams often try to rush their targets into investing money quickly, or risk losing out. If there is any time pressure from the ad, or a person contacting you, stop contact and don’t hand over any details.
How old is the social media account?
Have the account (or accounts) of the investment company been set up recently? Do the followers seem real? Sometimes, there may be positive comments on posts from fake “users” or bots.
Are there any trust symbols on the website?
Check if there any security or trust symbols on the website. If there are, try clicking on them. If they don’t take you to the website where the accreditation is from, they could be fake.
Does the company have documents to back it up?
Cryptocurrency needs to have supporting documents that explain where it comes from and how it works. This includes a whitepaper. If there’s no documentation, or documents are poorly written (or very short), this could be a red flag.
Is it too good to be true?
If the returns are very high, or promise profits for “free”, be wary. Be sceptical about crypto investments, and do lots of research before you hand over any money.
How to know if you’re being coached
Coaching is a cruel way that fraudsters earn a target’s trust, by pretending to support and help them. Coaching may happen to try get around a bank or building societies scam protection policies.
For example, a “coach” may:
Explain how to transfer money without alerting the scam protections your bank has in place.
Ask you to download software that can be used to view or control your device remotely. This software can be used to gather personal and banking details.
Tell you what to say to your bank or building society if they warn you that the transaction could be a scam. They might even give you phrases to use.
Tell you to open an account with a specific bank or building society that is ‘crypto friendly’. Ask yourself why you couldn’t just make an investment direct from your usual account? They’re testing to see if you’ll act on their instructions.
How to spot a crypto scam
Our Financial Crime Awareness Specialists, explains how to spot a crypto or bitcoin scam:
There are a number of different scams that use promise of high returns on cryptocurrencies as a way to steal people’s money. These can include pretending to be genuine crypto trading firms, or other firms that claim to be entering the crypto market.
You may be shown graphs and figures showing growth to convince you to invest, or be told that the person you’re speaking to wants you to join them in funding an investment. Apps and websites can be created by criminals to show whatever they want you to see. They will go to great lengths to make you believe what they offer is genuine.
If you are planning to invest in crypto, do your research before parting with your money. Don’t take any ‘opportunity’ that has come to you without you asking for it, like in your e-mail inbox or over the phone.
Take your time to check reviews of platforms and get to know what the key terms like ‘blockchain’ and ‘mining’ mean. There can be a lot of volatility in genuine crypto markets, but feeling rushed into making an investment is a sign that you’re the target of a scam.
How does one recover from being a victim of crypto scam?
- WhiteAtlasOne is a team of IT experts that provide a wide range of digital solutions using latest technology and software to assist individuals and businesses in areas of digital need.
- they have assisted victims of online scams to get recourse through digital forensics and investigation. With a deep scope of cyber intelligence gathering, IoT, networks, and systems connectivity we offer services aimed at providing help to many people across the globe.