Dealing with a virtual currency scam
The growing popularity of cryptocurrencies (such as Bitcoin) has resulted in more people wanting to invest in this form of digital currency. Unfortunately, cyber criminals have taken advantage of this opportunity by scamming victims into parting with their money. These scams can take different forms, but they usually result in victims being tricked into sending money or cryptocurrency to an investment that never materialises.
Common crypto asset scams include:
Fake investment websites
'Pump and Dump' schemes
Fake ICOs (Initial Coin Offerings)
Giveaway scams
In South Africa, crypto assets are not legal tender and are not guaranteed by the South African Reserve Bank. Some crypto asset service providers are now licensed or supervised, but this does not mean crypto investments are risk-free or that losses can always be recovered.
Common types of crypto asset scams
Fake Investment Websites – These sites promote "get rich quick" schemes where you may deposit money or cryptocurrency into an account or wallet expecting large returns. Once funds have been transferred, you may discover you cannot withdraw your money or cryptocurrency. Scammers may then demand additional payments to "unlock" the funds.
‘Pump and Dump’ Schemes – Scammers encourage you to invest in a particular cryptocurrency, artificially increasing demand and driving up its price ("pumping"). Once the price rises, the scammers sell their holdings ("dumping"), causing the value to collapse and leaving you with significant losses.
Fake ICO’s (Initial Coin Offering) – A legitimate company may launch an Initial Coin Offering (ICO) to raise funding by offering a new cryptocurrency. In a fake ICO, scammers convince you to invest in a cryptocurrency that does not exist.
Giveaway Scams – These scams commonly appear on social media. Criminals hack or impersonate legitimate accounts, often belonging to celebrities or well-known individuals, claiming they are giving away cryptocurrency. You may be asked to send cryptocurrency first, with the promise of receiving a larger amount in return. The promised funds never arrive.
If your cryptocurrency wallet has been compromised or your crypto assets have been stolen directly from your wallet, refer to the Hacked Virtual Currency Guide.
We want to better understand the impact of you experiencing this issue, can you share your experience by filling in this online form? This will help us better protect future victims.
Approaches to dealing with a crypto scam
Don’t send any further money or crypto – If you believe you have been scammed and are being asked to send additional money or cryptocurrency, do not send anything further. Additional payments almost always result in further losses.
Beware of crypto recovery scams - Criminals often target victims a second time by claiming they can recover stolen crypto assets for an upfront fee. Be extremely cautious of anyone promising guaranteed recovery or contacting you after learning about your loss.
Report the scam to SAPS - Report the scam to the South African Police Service (SAPS) at your nearest police station and obtain a case number.
Take any available evidence with you, including:
Wallet addresses
Transaction hashes
Bank payment records
Messages
Emails
Screenshots
Website addresses
Account details
Report the scam to the Financial Sector Conduct Authority (FSCA) - Report suspicious crypto investment activity to the Financial Sector Conduct Authority (FSCA), particularly if the scam involved:
Investment advice
A broker
A crypto asset service provider
Someone claiming to be licensed
The FSCA accepts reports of suspected investment fraud and publishes information about licensed crypto asset service providers.
Contact your bank immediately - If you paid using a bank transfer, EFT, instant payment, debit or credit card, or provided your banking details, contact your bank's fraud department immediately.
Ask whether:
The payment can be stopped or recalled.
The transaction can be investigated.
Your banking profile requires additional security measures.
Also secure your online banking, banking app and payment cards where appropriate.
Refer to the Money Recovery Guide if available.
Follow the money – Because blockchain transactions are publicly recorded, you can often view the movement of cryptocurrency from the wallet address involved using blockchain explorer tools.
If funds are transferred through a regulated crypto asset service provider or exchange, law enforcement may be able to request information from that provider during an investigation. This is one reason why reporting the incident to SAPS as soon as possible is important.
Preserve transaction details - Keep copies of:
Wallet addresses
Transaction hashes
Exchange account details
Screenshots
Emails
Messages
Any other communications
This information may assist SAPS, your bank or a crypto asset service provider during an investigation.
Will I get my money back?
Crypto transactions are generally irreversible, and recovering lost funds is often difficult.
In South Africa, some crypto asset service providers are licensed or supervised, but this does not guarantee that lost or stolen cryptocurrency can be recovered.
Recovery may depend on factors such as:
How quickly the incident is reported.
Whether the funds passed through a regulated exchange.
Whether a bank payment can be stopped or reversed.
Whether law enforcement can identify the recipient.
If you are dissatisfied with how your bank or financial services provider handled your fraud report, you may be able to lodge a complaint with the National Financial Ombud Scheme after completing the provider's internal complaints process.
How Do I Avoid Crypto Asset Scams in Future?
Avoid unsolicited investment offers –Be cautious of investment opportunities received through social media, messaging apps, email or unsolicited phone calls.
Do your research – Before investing:
Research the cryptocurrency.
Research the company.
Research the people involved.
Look for reports of scams or complaints.
Check whether the business is authorised by the FSCA where applicable.
Be cautious if someone claims to be licensed but cannot provide clear company information or a verifiable website.
Never rush your decision – If someone pressures you to invest immediately or claims an offer is available for a limited time only, take time to research before making any decisions.
Too good to be true? – All investments involve risk. Be sceptical of anyone promising guaranteed profits or exceptionally high returns with little or no risk.
Check the SEC PAUSE Program - The U.S. Securities and Exchange Commission keeps a database of entities not registered in the USA but claiming to be. You can use the PAUSE database on the SEC website https://www.sec.gov/enforce/public-alerts to see if a company is listed.
Donate
Your generosity makes our free support possible. Please consider giving today.
Without donations, we cannot keep our service free or provide help to the most vulnerable victims of cybercrime when they need it most. As a not-for-profit organisation, every donation goes directly towards keeping The Cyber Helpline up and running. Donate now and help us support victims of cybercrime.