How to stop Bitcoin scams using crypto-tracing?

In Germany, cryptocurrency scams have become the most common form of investment fraud. But how to get your money back?

Cryptocurrency investment scams and scams are on the rise. Although the cryptocurrency market came to a halt in the first half of 2022, a marked increase in criminal activities was observed. Cointelegraph Germany has for example reported statistics from blockchain security company PeckShield.

According to these, a total of $2.98 billion in digital assets have been stolen until October 31, 2022. This represents almost double the amount of damage in the space of one year. In 2021, the recorded amount of stolen cryptos still amounted to 1.55 billion US dollars.

The Itzehoe parquet floor evoked the fact that cryptocurrency scams have now become the most common form of investment fraud in Germany.

The scammers act in a very professional and organized manner. The term “scam”, which comes from English and means “to defraud”, has become established in the context of cryptocurrency fraud.

Overview of different types of scams

There are different forms of crypto scams and fraudulent scenarios with which scammers succeed in extracting bitcoins and other cryptocurrencies, for example:

• Investment scams;
• Romance scams;
• Rug pull scams;
• Phishing or phishing;
• Gift scams on social networks;
• Ponzi schemes;

Investment Scam is the generic term for any form of investment scam using cryptocurrencies as a means of payment. The range of possible scams ranges from buying from fraudulent stores to investing in real estate.

THE romance scam or love scam (romance scams) rely on fake profiles on dating sites and social networks. After establishing contact with alleged partners, scammers obtain financial assistance. In principle, this form of scam is a modern modification of the relationship or marriage scam.

In the case of therug pull scam, this is a real project for which risk capital is obtained in the form of cryptocurrencies. In the case of the scam, this project is then stopped unexpectedly, without notice or following the rules, and the creators of the project withdraw the investors’ funds and disappear silently.

THE phishing or phishing usually works with emails, prepared links and email attachments, which then allow criminals to obtain, for example, access data or account information. In the crypto sector, cybercriminals lure their victims to fake banking or stock exchange sites, collect access data there or try to motivate victims to transfer cryptos for profit or trade.

THE social media gift scams or fake lotteries operate with fake accounts impersonating celebrities, brands or support addresses of service providers and companies. Through the fake account, scammers contact participants in fake competitions and congratulate the supposed winners in order to collect information. The aim is to obtain banking and wallet information, credit card data and other personal data.

A Ponzi scheme is a type of investment scam that promises high returns for minimal risk. Ponzi schemes generally work by having the profits of early investors come from the investments of later investors. Other names for this type of investment scam include the Ponzi scheme or pyramid scheme. The system always tips over when it is no longer possible to attract enough new investors to serve the “returns” of existing investors.

Crimes linked to bitcoin and other cryptocurrencies

Growing cybercrime has led to the development of new structures and services on the part of authorities as well as IT security companies. Crypto-crime or economic fraud around crypto-assets refers to a new area of ​​legal and specialist advice that deals with crimes related to cryptocurrencies.

The specific requirements for this form of IT expertise are, for example, transmitted through continuing education courses such as CipherTrace Cryptocurrency Training and Certification Services, which offer internationally recognized specializations with certification. When it comes to cryptocrime and blockchain expertise, it is worth mentioning the Cryptocurrency Essentials Certification (BCEC), Cryptocurrency Tracing Certified Examiner (CTCE), and Certified Cryptocurrency Risk Specialist (CCRS) as certifications.

Social networks are popular with cybercriminals

Companies such as Crypto-Tracing.com specialize in helping victims of crypto fraud recover all or part of their lost funds. Crypto-Tracing.com was founded in 2022 by Timo Züfle as part of his independent activity as an IT expert. The company, based in Baiersbronn in Baden-Württemberg, tracks financial flows and transaction data around the world on behalf of its clients, working with a global network of lawyers to recover their cryptos.

“After a relatively simple start with a simple homepage and a presence on Twitter and Telegram, the company is growing quickly. The last few months have been used to establish cooperations with lawyers and law firms around the world, so that we can also legally follow the transaction routes of crypto payments worldwide,” explains Timo Züfle about from the beginnings of the company.

The idea to create Crypto-Tracing.com came to the founder following the increasing amount of scam attempts on Twitter and Telegram. “Victims of cryptocurrency scams often feel abandoned. Most of those affected do not even know that there are possibilities to recover the lost money. There is a strong demand for this type of service all over the world,” explains Züfle.

According to the cryptotracking investigator’s experience, the most common form of scam comes from the field of social engineering. Alleged victims are contacted via Twitter, Telegram, Facebook or LinkedIn. During personal contact, the scammers then convince victims to invest bitcoins in an ICO or other crypto-investment. Most of the time, trust is first established through social media, until the phone number is exchanged and communication established through WhatsApp. Often, criminals get to the heart of the matter quite quickly and immediately push for bitcoins to be transferred to the scammers’ accounts.

Then, to reassure themselves, they dangle gains in the dashboard that are not real. The bitcoins never landed in any investment area, but were transferred directly to the scammers’ wallets. If you want to make a payment, it is refused. The reason given is usually that taxes or fees must be paid first. Sometimes lock-up periods are also given so that investors do not make withdrawals for months. Prudent investors who invest small amounts on a trial basis are often even paid a so-called profit in order to encourage larger payments later.

Crypto-Tracing.com’s experience shows that scammers are often found in Eastern Europe. Here too, investigators have a chance of recovering lost cryptos. In the case of romance scams, the trend is towards profiles of Asian women with whom victims are contacted. Even if the scammers are from China or other countries well outside the EU, investigators can help in this type of situation.

Professional help allows you to recover your money and cryptos

Money flows can be tracked internationally via blockchain. It is thus possible to freeze the funds as soon as they land again on a central exchange such as Binance for example. In this context, the country of origin of the fraudsters does not matter.

Many investigators carry out free due diligence before consulting. They then examine what are the chances of repatriating or freezing payments. However, the “recovery” process can be lengthy and depends on the cooperation and support of government investigative authorities, such as the prosecution and police, locally and abroad.

For investigators to intervene, the amount of damage must not be insignificant and must represent a certain volume. Crypto-Tracing.com intervenes, for example, from an amount of 15,000 USD/euros. But even for smaller amounts, victims often receive help. Crypto-Tracing.com, for example, offers these customers help with tracking transactions and advice on damage suffered.

Learn more about Crypto-Tracing.com

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