How To Report A Crypto Scam In The USA

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Crypto scams are on the rise and residents of the United States (US) are top of the list of targets due to the underlying wealth of the country.

It can be difficult to spot a crypto scam if you’re living in the USA as the scammers are well versed in convincing victims they’re offering a genuine Bitcoin or cryptocurrency investment.

Fake Bitcoin and crypto websites and apps come in all different shapes and sizes and may claim to offer a range of different investments, such as options, staking or mining.

They often follow a set pattern – referred to as pig butchering – which I’ll cover in more detail in this article, alongside who to report a scam to if you’ve been caught out.

Common crypto scams in the United States

Crypto scams targeting the USA often start with the victim being approached online by a random stranger who strikes up a friendship.

They may introduce themselves through a social media channel, such as WhatsApp, Telegram or Facebook, or show an interest through a dating website.

The scammers will claim to be someone else and use fake credentials in a bid to lure the victim into a false sense of security.

They’re also experts in manipulation and know which emotional buttons to press to coerce victims into parting with their cash.

How crypto scams work in the USA

The scammer will soon turn the conversation to investing and mention a cryptocurrency scheme that they claim offers exceptionally high returns over a short period of time.

They’ll often tell the victim that there’s no risk involved and that they can retrieve their money at any time.

Of course, all investments carry a degree of risk, especially crypto which is known for its extreme volatility.

Once the victim is sucked in, the scam will usually involve the victim transferring cash from a US bank account to a legitimate crypto exchange that serves the USA where it is swapped for Bitcoin or another cryptocurrency.

The victim will then be told to transfer this crypto to another platform, app or wallet, usually set up on the victim’s behalf by the scammer.

The scammer will control the wallet, the private key or seed phrase associated with it, and the password meaning they can syphon off the funds whenever they choose.

Profits appear in victim’s account

To start with the investment will seem genuine and the victim will see ‘profits’ accruing in their new trading account.

Often the scammers run a companion group on WhatsApp or Telegram where there appears to be a lively community of fellow American investors claiming to be making amazing profits.

These groups are also fake with other members of the scamming gang or bots populating the chat with positive investing reports.

One of the tricks that the scammers sometimes use at this stage is allowing victims to withdraw some of the money they’ve invested.

This is designed to instil a false sense of security and prove the platform is genuine to encourage the victim to invest larger chunks of cash.

If the victim carries on with the scheme the fake profits will continue to accrue, sometimes doubling the principal investment within a week or so.

Pig butchering scam USA

The problems usually start when the victim tries to withdraw their money and their new-found profits.

They find their account blocked and their funds locked away with no means of accessing them.

When they query this with the scammers, they’ll be given one of a number of reasons why this happened, and told they need to pay a fee of some description to release the money.

These may include a mining fee, income tax, advisor fee, management fee, or a gas fee to fund the transaction on the Ethereum network.

Often the fraudsters ask for eye-watering sums, but it’s all part of the scam and a way to get the victim to hand over even more money.

The funds will remain locked (in reality they are gone), with new demands for cash being made by the scammers until the ‘pig is butchered’.

Fake crypto apps and websites in the US

Some of the fake Bitcoin apps and websites that the scammers use are very amateurish and easy to spot, especially if you know what to look for.

Others though can be more sophisticated and can easily fool someone who is not well versed in the crypto ecosphere.

Scammers often play to the fact that crypto is relatively new, and while many people are interested in the investment opportunities crypto may present, they often may not have the necessary knowledge to fully understand what they’re investing in.

I’ve written extensively about the tell-tale signs of scam crypto and Bitcoin apps and websites and have included a list of resources below this article that you may find useful.

How do I report a Bitcoin or crypto scam in the USA?

Learning that you’ve been scammed can be incredibly upsetting, compounded by the fact that there is very little redress against the scammers.

They often live aboard and go to great lengths to cover their tracks.

It’s important, though, that you report what’s happened and there are various ways of doing this if you live in the United States.

The three main organizations you should contact are:

• Federal Bureau of Investigation (FBI) Internet Crime Center (IC3)
• Federal Trade Commission (FTC)
• Securities and Exchange Commission (SEC)

You should also speak to your bank about what’s happened and, if you used a legitimate crypto exchange as part of the scam, raise it with their support team.

It’s important to manage your expectations when it comes to recovering money lost to a crypto scam, but you should still let the authorities know.

The information you provide will help them build up a more complete picture of the scams that are currently operating and the methods being used by the fraudsters.

Crypto scam recovery companies USA

There are a number of companies that work to help victims trace funds lost to crypto scammers and ultimately recover them.

These companies usually charge an up-front fee and employ a variety of forensic techniques to trace the transactions involved in the scam back to the scammer.

At some point crypto scammers are likely to use a genuine crypto exchange to convert their ill-gotten gains into cash and this is often a weak point in their plan as they need to provide identification and pass AML/KYC checks.

Even if they use someone else’s details, it can still prove an effective way of closing in on the scammers.

Again, it’s important to manage your expectations and understand that there’s no guarantee your funds will be recovered.

Final word

Rich countries like the United States are always going to be a target for scammers which is why residents need to be especially careful about engaging in a financial arrangement with someone you’ve met online, especially if it involves an asset class that you don’t fully understand.

It’s important to always thoroughly research an investment before parting with your cash, and never trust someone you’ve only ever met on the internet who’s encouraging you to get involved.

The scammers will often play on the trust element of the relationship and try to make you feel guilty about not believing what they’re saying.

But it’s all part of their ‘script’ which they’ve played out dozens of times before and designed to emotionally blackmail you into parting with your cash.

If you live in the USA and have been scammed or are unsure whether a crypto app or website you’re planning to invest in is legit or fake, get in touch. We might be able to help you avoid a very costly mistake.

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