In September 2024, the FBI San Diego Field Office seized three websites owned by “cryptocurrency recovery services” that allegedly defrauded victims by promising results that they couldn’t deliver — and charging upfront for each attempt.
Cryptocurrency recovery is a legitimate service, but it has limited applications. At Datarecovery.com, we provide resources for restoring crypto from damaged hard drives, or restoring seed phrases when a portion of the seed phrase is known. However, we can’t perform miracles; if crypto has been stolen by a bad actor, the theft can be traced, but assets cannot be recovered without help from authorities.
Likewise, we do not charge hefty upfront fees for attempts. We base our pricing on the complexity of each recovery, and we support all services with a no data, no charge guarantee.
If you’ve lost crypto, we’d love to help — but just as crucially, we want to provide consumers with the info they need to avoid falling victim to fraudulent recovery schemes. Below, we’ll explain how crypto recovery services function and how to avoid scams.
Why Cryptocurrency Recovery is Complex
Recovering lost or stolen cryptocurrency is inherently challenging due to several factors:
- Decentralization: Cryptocurrency transactions occur on a decentralized blockchain network, meaning there is no central authority to reverse transactions or freeze accounts. Without a central authority, it’s difficult (or impossible) to trace and recover funds.
- Anonymity: While not completely anonymous, cryptocurrency transactions offer a degree of pseudonymity, making it challenging to identify the individuals involved in a scam.
- Irreversible Transactions: Once a cryptocurrency transaction is confirmed on the blockchain, it is typically irreversible. This makes it extremely difficult to recover funds once they have been transferred to a scammer’s wallet.
- Security: When you’ve lost your crypto seed phrase or private key, your funds are often unrecoverable unless you retain a significant portion of the phrase (up to 4 missing words, or private keys with up to 6 missing or incorrect characters).
For these reasons, no company can realistically promise recovery in every case — only in specific circumstances.
And even when a case falls within the parameters for data recovery, the service provider must have access to appropriate tools and technologies. For example, to restore a wallet from a crashed hard drive, repairs must be performed in a certified cleanroom. To recover a partial seed phrase, the provider must have an extensive knowledge of BIP39 or other relevant protocols.
Red Flags of Crypto Recovery Scams
Be wary of any cryptocurrency recovery service that exhibits the following red flags:
- Upfront Fees: Legitimate companies do not charge upfront fees for failed recovery attempts. They typically operate on a contingency basis; they only charge a fee if they are successful in recovering your cryptocurrency.
- Unrealistic Success Rates: No company can guarantee the recovery of lost or stolen cryptocurrency. They can guarantee that the consumer won’t pay for failed attempts — but that’s quite different than advertising “99% success rates” or something similar.
- High-Pressure Sales Tactics: Scammers often use high-pressure sales tactics and create a sense of urgency to coerce victims into making quick decisions.
- Vague Explanations: Be suspicious of companies that offer vague or overly simplistic explanations of the recovery process. Legitimate companies will provide clear and detailed information about their methods and expertise.
Research Crypto Recovery Services to Avoid Scams
Protecting yourself from these scams requires careful research and scrutiny. Before engaging any recovery service, thoroughly research the company, looking for reviews and testimonials from previous clients. Verify their credentials and experience, and don’t hesitate to ask detailed questions about the recovery process, fees, and the company’s expertise.
Crucially, ensure all agreements and quotes are provided in writing before engaging any services. If you suspect you have been targeted by a crypto recovery scam, report it to the appropriate authorities, such as the Federal Trade Commission (FTC) and the Commodity Futures Trading Commission (CFTC). The CFTC, in particular, has valuable resources on recovery scams, including this helpful page: Don’t be Re-Victimized by Recovery Frauds.
Finally, use common sense. If you’ve lost your crypto assets due to theft, remember that no service can reverse the transaction on the block chain — report the scam to relevant authorities, but don’t pay anyone to “trace” the transaction (at best, they’ll only provide publicly available information from the blockchain).
To discuss crypto recovery with a member of our team, call 1-800-237-4200 or submit a case online.
