What To Do If You Lose Cryptocurrency To Scammers

Cyber criminals are constantly coming up with new ways to hack and scam you into sharing sensitive information and giving away your hard-earned money or cryptocurrency. This resource explains what you can do if you get in this situation and ways to avoid it moving forward.

Report Cryptocurrency Scammers

When a scammer steals your cryptocurrency or scams you into sending it somewhere, a crime has occurred. Because blockchains are immutable and decentralised, you’re almost certain to never regain ownership of your cryptocurrency unless the scammer returns it.

Like any crime, you can report it to the police. However, it is best to report directly to the Australian Government’s dedicated website, Scamwatch. Through Scamwatch, you can report an online scam, which then gets forwarded to the Australian Competition & Consumer Commission (ACCC).

Scamwatch also has lots of informative content which teaches you how to identify an online scam and what to do if you see one.

UK residents have a a similar service called Action Fraud, the UK’s national reporting centre for fraud and cyber crime.

U.S. residents can visit the ‘Report Scams and Frauds’ section of the U.S. Government website. Here, you can report online scams to the local and federal government and also review preventative steps to protect against scammers.

Protect Yourself Against Crypto Scammers

Scammers can target anyone who has an online presence and they often succeed because many of their victims do not expect it to happen to them.. Online scammers are very accurate in their re-creation of real and frequently visited websites, thoroughly mimicking a trusted website that even an IT expert could struggle to distinguish.

There are many types of ways scammers can scam you. Simply being aware of these is your most powerful defence.

#1 Understand who you’re dealing with online

Scammers often befriend victims to gain trust and garner enough sensitive information via general conversation to be able to take advantage of them. Be weary of anyone who you’ve never met in-person and only ever interacted with online.

#2 Be aware of how scams are delivered

It may be a phone call with an automated message, a text message, a telegram or WhatsApp message, a phishing email or pop-up window on your computer. You may even become infected with a computer virus just by visiting a nefarious website.

#3 Take cyber security seriously

Having a reputable anti-virus engine installed into your computer which monitors your web traffic and intercepts suspicious content is crucial to avoiding becoming victim to cyber criminals.

#4 Don’t share your personal data unless you trust the website that you’re entering

This includes ICOs and KYC processes, which many people in the crypto space are familiar with.

#5 Secure your online logins with multi-factor authentication (MFA) wherever possible

Additionally, use a reputable password manager to bolster your security profile.

#6 Before sending a cryptocurrency transaction, double check the destination wallet address and the quantity you’re sending

By using computer viruses, scammers have been known to intercept the copy/paste function of your computer to swap your address with theirs in your clipboard. By not verifying the destination address, you are vulnerable to such an attack.

#7 Never store your private keys or seed phrase in clear, unencrypted text format on your computer or digital storage devices

Some viruses silently scan for patterns which match these, so if you have them in a text file or Word document, you are vulnerable.

#8 Never disclose how much cryptocurrency you own

Otherwise, you may become a scammer’s next target.

What to Do After Your Cryptocurrency Has Been Stolen

Aside from reporting the scam to local authorities, there are a few things you should do if it has happened to you.

Depending on the nature of the scam, it may be worthwhile self-auditing your security practices. Virus scan your computer first and then consider changing all your passwords. You may want to consider using a password manager and ensure you have MFA configured on all possible online accounts.

Losing a relatively large sum of cryptocurrency can be devastating. It’s important to talk about it with someone to help come to terms with what’s happened. Consider contacting a counselling service like Lifeline or Beyond Blue to talk about the loss and its effect on your well-being. It could be a partner or family/friend, even someone from the Collective Shift community—we’re all in the community to support each other.

Theft or loss of bitcoin and other cryptocurrency may be considered a capital loss for tax purposes, depending on your taxation jurisdiction and individual circumstances.

Generally speaking, if you can prove that you owned the wallet which the cryptocurrency was stolen from, you may be able to claim the whole amount as a capital loss. The ATO community website has some content which may be useful. However, it’s always best to speak to your capable cryptocurrency-friendly tax agent for tailored advice.