Twice Burnt! The Scammers Who Scam People Who Just Got Scammed

If you spend any time on Reddit, the odds are pretty good you’ve heard a story a lot like this one: There’s a guy who wants to get into cryptocurrencies, but he wants to be smart about it and start small, so he sets aside $800. One day, he pulls the trigger and invests his cash. Things go well for the amateur investor, and his initial crypto investment quickly balloons into a small fortune of 30K. Then he contacts the crypto website and attempts to withdraw some of the profits from his investment. The crypto site informs him that he has to pay a 10-percent fee to cover the governmental paperwork, taxes, etc. 

But the amateur investor doesn’t have three grand sitting around. And so, he turns to his big brother to help him pull out his profits. Together, the two men cobble together $3,000 and wire it to the crypto site. They sit back and wait for the money to come in. Just like that, though, they go from losing $800 to losing $3,800. The guy’s big brother turns to Reddit to ask for help: Have we been scammed? 

The general answer to that question is, of course. (If you have to ask, yes, you were scammed.) And in this case — twice:

After describing the above scam story to him, Paul Sibenik from the blockchain investigation agency CipherBlade tells me this is an example of an “advanced fee scam” — a variety of the “recovery scam.” The investigators at CipherBlade have seen all sorts of scams over the years, but they’ve also seen how often people go back and get burnt again, having learned no lessons from their first brush with digital fraud. “Once you lose your money in this type of situation, it should be a reality check that you need to take fraud prevention and security seriously. But all too often, people don’t, and they end up getting scammed again and again,” he warns.

At the same, when people lose money, it’s only natural that they want to recover it. To meet this demand, there is now a digital scamming cottage industry that preys on the recently scammed (so-called “recovery scammers”). “Because you have so many different types of scams — from phishing scams, to projects where the founders exit suddenly and take everyone’s money — now there are people out there who try to tell people, ‘We have a way to recover the money.’ They’ll say, ‘There’s a bug in the Bitcoin blockchain that allows us to hack the funds back,’” Sibenik explains. “There’s thousands of them out there. Maybe even tens of thousands.”

Con artists and digital charlatans hit their victims while they’re still reeling from the first scam because clearly, they’ve already proven to be gullible and are primed to be fleeced again. Knowing that they’re at an emotional low point, recovery scammers promise the previously bilked that they can get back what’s theirs — for a small fee. “In some cases, the recovery scammer will charge a certain fee. A lot of times they’ll pretty much guarantee to recover the funds. If they charge something, what will typically happen next is there’ll be more charges later on once the funds are supposedly recovered, and they’ll be released for this fee and that fee,” Sibenik tells me. 

“In other cases,” he continues, “there won’t be any upfront charge, but then you’ll be told, ‘We’ve successfully recovered your five Bitcoin’ — or whatever it happens to be — ‘and now you just need to pay a tax or our fees,’ which, conveniently, can’t be deducted from the amounts that were supposedly recovered. They delude people into thinking that funds can be recovered when, in reality, these cryptocurrency transactions cannot be reversed.” 

The last part of Sibenik’s quote is critical — cryptocurrency transactions cannot be reversed. Maybe they can if you have the power of the Justice Department, or if a crypto exchange is able to identify and freeze the currency. But if someone tells you they can hack a Bitcoin wallet and retrieve your stolen crypto, that person is lying to you. “You’ve got to be very skeptical anytime someone new emails you,” Sibenik says. “People are, by nature, not that skeptical, and that’s a weakness scammers exploit.”

What about Sibenik and CipherBlade, though? Why should they be trusted in such a seedy industry? “People need to do a bit of due diligence to find a firm like us,” he argues. “They see that a firm like ours is often quoted in various media outlets, maybe their colleagues have heard of us before. They look at the content of our reports, and how we explain what happens.”

That said, finding the real deal can be tricky because recovery scammers often pretend to be “ethical hackers,” or a person or firm who offers up their vengeful assistance to make things right. For example, over on Instagram, you might find a specialist like Crypto Recovery Service. In the page’s bio, there’s limited info about the services offered, but there’s a grammatically challenged question that gets right to the point: “Have you been scammed by fake investment platforms or lost password to your wallet?” 

If you click on the website listed in the Instagram bio, you arrive at a slick landing page that boasts that the company has first-rate “private key finder tools” and promises, “We’re here to make things right and create awareness on crypto.” As for the people behind all of this, they profess to be “talented hackers & programmers” who “specifically provide solutions for optimizing overall experience and performance for individuals and organizations of all kinds.”

Eventually, you reach the testimonials from satisfied customers. Here’s one from a young woman named Michelle P.:

This all sounds terrific, until you reverse image search Michelle P. and discover that her thumbnail image is also featured on a photography instructional website: 

The same goes for John J., whose testimonial claims: 

And yet, per a reverse image search, he also happens to be a model for PCR tests in Oklahoma: 

Finally, there’s the testimonial from Smith T., an unfortunate soul who supposedly lost a small fortune to a shady crypto guy — 23 Bitcoin by his count, which would be worth just over a million dollars these days — only for it to be miraculously recovered by Recovery Crypto Service (which also seems to go by BTC Key Recovery). At the very least, you can see why he’d say, “now I appreciate.”

But again, when you reverse image search “Smith T.,” you find that his likeness has been used elsewhere — most notably, and quite fittingly, on a Photoshop instructional website:

Making marks for such scams even simpler to find, sometimes the name and information of people who have fallen for such cons previously are compiled onto lists, which are then sold amongst scammers. The Canadian government has even warned its citizens, “If you have been the victim of a fraud or scam, you are more likely to be contacted by a seemingly official ‘law firm or agency’ offering to help you recoup your losses and shut down the scammers. Don’t pay a fee to get your money back! It is always a scam if you’re asked to pay a fee in relation to an investigation.”

It’s easy, of course, to mock the people who do pay — and mock them even harder when they make the same mistake twice. But in reality, that adage — don’t make the same mistake twice — is often much more trite than a truism, especially when money is involved. For all the reasons above, when swindled out of cash, there’s more than a little wish fulfillment involved when trying to get it back. So maybe the better piece of stock advice is financial — never throw good money after bad.