Patrick Martinez-Brown
- Associate
- Commercial Disputes
Crypto fraud factsheet
Cryptocurrency is now a mainstream feature of financial markets. Alongside its benefits, it has become a significant target for fraud. This factsheet explains the most common forms of crypto scams and — most importantly — the legal steps victims can take. Our team acts for businesses and individuals facing crypto-related losses, often on an urgent basis.
What is Cryptocurrency?
Cryptocurrency is a digital asset recorded on decentralised networks built on blockchain technology. It enables users to send and receive funds directly without relying on a bank or traditional financial intermediary. Examples include Bitcoin and Ethereum, as well as “stablecoins” designed to maintain a steady value.
The opportunity – and the risk
Crypto offers transparency, speed and global reach. However, these features also allow criminals and other bad actors to operate anonymously and move funds rapidly, making recovery more challenging if fraud occurs or if a litigation defendant or debtor holds crypto assets.
How crypto scams typically work
Crypto scams vary widely, but most fall into these following categories:
- Social engineering and impersonationFraudsters build trust – often through social media, messaging apps or dating platforms — or pose as legitimate firms, advisers or even regulators. Victims are persuaded to transfer funds or hand over account access.
- Fake trading and “investment” platformsScammers operate websites or apps that imitate real exchanges or brokers. Account balances and “profits” are fabricated, but withdrawals are blocked or subject to invented charges.
- Project collapse or “rug pulls”Developers promote a new token or decentralised finance project, attract investment, and then shut it down after liquidating their own holdings. Investors are left with valueless assets.
- Account takeover and wallet drain attacksFraudsters obtain access to private keys or exchange logins through phishing emails, spoofed support channels or malware. Once inside, they rapidly transfer funds through multiple wallets, making recovery more difficult.
- Airdrop and malicious smart contract scams
Common Warning Signs
While scams take many forms, the following features appear repeatedly across crypto fraud cases:-
- Promises of guaranteed returns
- Pressure to act quickly or privately
- Requests to send funds in cryptocurrency only
- Unexpected barriers to accessing your funds, such as demands for “tax”, “fees” or “unlock charges”
- Unsolicited approaches through messaging platforms
If in doubt, pause and seek advice. Stopping the transfer of funds at an early stage is often the most effective form of protection.
How we can help
Crypto disputes often require urgent, coordinated legal action. Common steps include:
Identifying the Perpetrator
We use disclosure applications – including Norwich Pharmacal Orders – to compel exchanges, banks and payment platforms to reveal information linking wallet addresses or accounts to individuals. They are particularly useful in crypto fraud, where perpetrators rely on anonymity and pseudonymous wallet addresses.
Tracing Assets
Working with specialist forensic blockchain analysts, we assist in tracing the flow of assets across chains, wallets and jurisdictions to identify where assets have moved and whether they can be recovered.
Preserving Assets
Where there is a risk of dissipation, we can apply for freezing injunctions – including worldwide relief – to prevent or restrict perpetrators from moving or converting assets (including crypto assets).
Recovering Funds
Depending on the circumstances, options include:
- Proprietary claims to assert ownership over misappropriated crypto;
- Civil litigation against fraudsters and recipients of misappropriated funds;
- Insolvency processes, particularly where the fraud is organised through a company or network of entities, can be used to gain control of assets and facilitate the use of statutory investigation powers.
Coordinating with authorities
We work with Action Fraud, specialist police units and regulators where appropriate, sharing information and progressing civil claims in parallel. Civil proceedings can often move more quickly than criminal investigations and can secure urgent interim protection – such as freezing injunctions –while law enforcement work continues.
When to seek advice
Time is of the essence. Crypto can move between jurisdictions in seconds, and delay can limit recovery options. If you believe you have been affected by a crypto scam – even if you are unsure – early legal intervention significantly protects your position.
Our specialist team has extensive experience in crypto-asset tracing, urgent interim applications, and complex multi-jurisdiction recovery action. Please contact us if you would like to discuss your situation in confidence.
This article is for general information purposes only and does not constitute legal advice or a comprehensive statement of the law. Specific legal advice should always be sought in relation to individual circumstances.
Meet the team: