When individuals have cryptocurrency stolen from them, often following some type of hack, theft, or fraud, it is common for those individuals to research and assess any cryptocurrency recovery avenues, options, or services that may be viable.
The cold hard truth, in our opinion, is that in many situations involving such losses, no firm is going to be worth hiring if the goal is cryptocurrency recovery, unless the loss is sufficiently large to warrant pursuing the matter… in many cases, it isn’t.
Any legitimate cryptocurrency investigation agency is going to have a minimum loss threshold, below which, they won’t accept an engagement since it would simply not be financially advisable nor worthwhile to the victim given the costs and the prospects. Different firms set different amounts, some of which can be a ‘firm’ amount, and others which can be more flexible in some cases depending on the specifics of the situation.
Types of Cryptocurrency Recovery Services… and Fraudsters
A good portion of services victims come across are likely to be run by outright fraudsters who will do nothing for them in return, and just seek to get victims to send them money in exchange for (false) promises.
But the point of this article isn’t just to talk about these fraudulent cryptocurrency recovery services. It’s also to talk about seemingly legitimate cryptocurrency investigative agencies, and when and whether or not it’s worth hiring legitimate firms. Sometimes, it’s not worth it, even if they claim otherwise.
The point of this article is not to dissuade users from hiring professional cryptocurrency investigators because sometimes it can absolutely make sense to seek such assistance. Rather, the point is to educate users about when it does or doesn’t make sense, provide some general guidelines on what to look for if you have decided to seek such assistance, shed light on shady business practices, things you’ll want to assess when vetting, and red flags to look out for.
Frankly, the majority of claimed professional services available that assist in cryptocurrency recovery fit into one of three categories, that you either generally wouldn’t want to hire (even if your loss is high enough to make an engagement advisable), or would at least want to give some pause and consideration to before deciding whether to hire, specifically:
- Fake cryptocurrency recovery services
- Amateurish or Shoddy Investigative Firms
- Exploitive, profit-oriented, and misleading Investigative Firms
Fake Cryptocurrency Recovery Services
Cryptocurrency “gurus”, “ethical hackers” and self-proclaimed “cryptocurrency recovery experts” are a dime a dozen, and all of them are fake or fraudulent. If the services claim to be affiliated with a company, all too often that company doesn’t even exist. There are always either no public faces associated with the service, or if there are public faces, they are stolen or AI generated images – the actual person you’re speaking to isn’t who they say they are and they are undoubtedly using fake names.
This category of ‘recovery service’ isn’t really a recovery service whatsoever. They are scammers, plain and simple, trying defraud fraud victims even further, by getting them to send them money in exchange for big promises with respect to recovery, but whom never actually do any work – other than the ‘work’ they do on victims to get them send more and more money for bogus reasons. There is no reason to ever hire such a service, unless you want to be certain to lose more money.
A lot of cryptocurrency users that are well-acquainted with the cryptocurrency space are easily able to differentiate a fake recovery service from a legitimate investigative firm whose work can sometimes leads to recovery. But some people aren’t. Below are the hallmarks and red flags that can help you identify if the recovery service is fake:
- They make lofty promises with respect to cryptocurrency recovery and will often claim they are “cryptocurrency recovery experts.”
- If the fake recover service represents itself as a brand or company, the individual(s) behind it will operate anonymously. There won’t be any public people using their real names associated with the brand or company, and if there are purported public people, they’re operating under a fake name or pseudonym (i.e., they aren’t who they say they are).
- If the fake recovery service is representing itself as an individual expert, they will often use the term “ethical hacker” or will be a self-proclaimed “bitcoin recovery expert” and will claim to have special connections and abilities to recover your stolen cryptocurrency.
- They often won’t have any social media, or if they do, there will be no real engagement or fake engagement on the channels.
- They use free/generic email addresses e.g., protonmail, gmail, Hotmail, etc…
- Generally, they won’t be willing to have a quick video call.
- They will typically not generate an investigative report since their efforts are purportedly on recovering the cryptocurrency. If they do generate a ‘report’ it will be a joke consisting of some screenshots from block explorers that ends up being entirely useless.
- They will generally not indicate the importance of working with law enforcement, and if they do claim they’ll work with law enforcement, they won’t provide communication logs between them and law enforcement.
- Their website is often plastered with (very positive) fake reviews. Third party review sites like Trustpilot are very often full of fake reviews as well (it’s very easy for anyone to create fake third-party reviews on these ‘review’ websites).
- Their website (if they have one) is chock-full of stock photos.
- They may ask for an upfront fee, or they may not. Regardless, what WILL happen is they will ask you for (more) money in the future before you get anything back. Often, the scammers will eventually even claim to have “recovered” the Bitcoin (perhaps without you even having paid anything yet) but will then ask for you to pay their fees or “taxes” before they send you the Bitcoin (which strangely enough can’t be deducted from the amount they purportedly recovered). It’s advance fee fraud plain and simple. There has not been any recovery here, and the excuses they will give you to send them more and more money will never stop. They may send you a “screenshot” of a wallet with a large balance that they “recovered.” Don’t fall for it.
- They will not have any verifiable relationships with industry partners, such as blockchain analytics software providers (this is because they don’t actually have access to any professional paid software).
- Even if they refer to themselves as a “recovery service” that should be treated as a red flag as investigators do not have the ability to effectuate recovery of your stolen cryptocurrency on their own.
Below are a few examples of fake recovery services and experts – don’t contact them unless you want to lose more money.
Simply put, they are scammers, and are fairly easy to identify when you know what to look out for. There is never any genuine reason to contact them, much less ‘hire’ them. Your Bitcoin can’t be “hacked” back.
Amateurish or Shoddy Investigative Firms
The knowledge, experience, capabilities, and connections that some investigative firms have can differ considerably. The quality of the tools they have at their disposal can differ considerably as well. And thus, the results the victim sees in the end in terms of intelligence, leads, and recovery prospects can also differ massively from one firm to another. Simply put, comparing one firm to another is rarely an apples-to-apples comparison.
Even within a firm, some investigators can be considerably more knowledgeable or experienced than other less senior investigators, which can also play a pivotal role in the results.
In my work over the past 4+ years, I’ve reviewed many different investigative and forensics reports from various investigators with various companies. Some investigations have been well-executed and thorough, but for a majority of them, there is notable room for improvement. In some cases, investigators have lacked a key technical understanding of important concepts or have a deeply flawed analysis, even though their CV may look impressive on paper.
A good investigative service, particularly if they are hoping their work will lead to some type of recovery for their client, is going to need to do more than simply draft a report, give it to the client, and say “good luck.” Unfortunately, some investigative agencies do just that and not much else, which typically isn’t the most helpful to their clients.
In many cases, investigators will (or ought to) do things like liaising with law enforcement and may contact and maintain correspondence with cryptocurrency exchanges (which they hopefully have some relationships with).
The work and results clients get can vary massively from one firm to another, both in terms of results, but also in terms of scope of work.
Despite the above, investigators and investigative agencies that fit this categorization do tend to have good intentions, and genuinely try to help their clients to the best of their ability. Furthermore, investigators tend to improve their skills over time – someone that does a shoddy job, may significantly improve their skills and knowledge a year later, and may be considerably more helpful then.
However, even if the investigators are well-intentioned, it doesn’t mean it’s a wise use of a victim’s money (or lack thereof). I’ve personally come across seven cases where someone has hired me or a firm I’ve worked at, where they already had a previous report from somewhere else that was so useless that I couldn’t even use it as a starting point, and had to start completely from scratch. Thus, the endeavor (with the original firm) was a complete waste of money for the victim.
I’ve also seen numerous instances where a victim hired purported cryptocurrency tracing professionals who proceeded to attempt to use publicly available block explorers to trace Bitcoin (rather than using professional or even freely available forensics tools), unsurprisingly with poor results.
Most situations aren’t that bad of course, but the point that ‘your mileage may vary’ is very much relevant here depending on who you hire as it could easily result in money being thrown down the drain in some cases.
So, how can victims identify a shoddy service from a better one? Unfortunately, there’s no easy or surefire way to do so, but below are a few tips of general advice.
- In the off chance you happen to know someone in real-life (not a random person on the internet) that used a cryptocurrency investigative the firm in the past, ask them what they thought of the company and investigator(s) they worked with.
- Look for professional certifications. Who are the professional certifications with? And are those professional certifications helpful?
- Ask them what blockchain analysis partners and software they use, if any. Some are considerably better than others. At Cryptoforensic Investigators, we’ve found Chainalysis to be the best, followed Crystal Blockchain, which is why we use software from both companies. And I’d like to think our opinion is relatively unbiased in this respect since we don’t sell any such software, and have tried out almost all available options.
- Listen to interviews that staff from the company has offered and use your judgment based on that.
- Check available work product of theirs if you can find some online, or if they can send you some (which they may not be able to due to confidentiality reasons).
- Assess the level of their knowledge and expertise by reviewing things like blog posts, and commentary offered in the news.
- Consult a lawyer, particularly if you know one that you think may have hired a cryptocurrency expert witness i.e., particularly if they work in tech, they may have some contacts for you.
Exploitive, Profit-oriented, and Misleading Investigative Firms
There is a third type of firm that victims may want to think about more carefully prior to any prospective engagement. I’m referring to firms that can provide useful and helpful services to victims, but at the same time are exploitive, trying to sell their services “hard,” and trying to get as much money from clients as payment for their services while sometimes making misleading statements in the process that entices victims to “buy-in” e.g., being overly optimistic about the prospects of recovery is the biggest issue.
Additionally, these firms sometimes sell their services to victims that shouldn’t be engaging the firm to begin with, either because the loss is far too low to make an engagement worthwhile, or because it’s very unlikely to have a positive outcome for the client, or because the victim has psychological issues (which can unfortunately sometimes be a factor that causes them to lose hundreds of thousands of dollars to begin with).
Cryptocurrency fraud victims are subject to a simple psychological concept known as loss aversion that makes them predisposed to find a way to avert their loss. This can make it ‘easy’ to sell victims an assistance package which they are inclined to accept in an effort to avert their loss or some of it. And the more they lost, the more they can psychologically justify spending to attempt to avert it.
It is an unfortunate reality that some firms like to take advantage of that to sell their services, making as much money as they can in the process – even though there may be tangible things they can do to assist and pursue the matter.
If an investigative firm fits this categorization, it doesn’t always mean it’s a bad idea to hire them since they may still have good investigators or a wealth of expertise that could prove useful. It’s just not the most ethical way to operate, and victims may wish to ponder whether they still want to engage the firm given that.
Additionally, given that they have a tendency to accept engagements that are not worth it for victims to engage them on, for their own financial gain, one should question whether their own case fits that categorization, and they may wish to seek a second opinion.
As a piece of advice to victims, if respected investigative firms are telling your that your loss level isn’t high enough to make an engagement financially advisable, and you then manage to find a firm that’s willing to take your case in exchange for an upfront payment, that doesn’t change the reality that engaging a professional investigative firm probably isn’t financially worthwhile in your situation.
Below are the hallmarks and red flags of firms that tend to be exploitative, profit-oriented, or misleading to look out for, even though they may still technically provide helpful services once engaged:
- They are overly optimistic about the chances of cryptocurrency recovery. While cases may naturally vary in how promising the odds are with respect to potential recovery, even in the most promising cases recovery is FAR from certain, and the odds are still a gamble.
- They sell/push their services ‘hard.’
- You are dealing with a “sales rep,” “business development representative,” or “client onboarding specialist” rather than an actual investigator during the pre-engagement phase.
- Prior to an engagement, they are usually happy to have phone calls, and especially video calls (which is very much unlike the fake recovery service). There are two primary reasons for this. First, sales tend to be easier to “close” with a call as it allows the victim to have a discussion whereby, they ask all their questions giving them a sense of piece of mind that some people simply won’t have if correspondence is in writing. Second, because there is no written record a victim can reference back to that could show the ‘hard’ sales tactics, misleading statements, or overly optimistic chances they presented with respect to recovery.
- On calls, they’ll generally be happy to show you impressive-looking forensics graphs. This is a way for them to get you to trust their expertise with things you don’t understand. The reality is that any blockchain forensics firm can produce a forensics graph.
- They tend to have retainers or fees that are both high and non-refundable (i.e., any unused time on the retainer will not be refunded, regardless of whether you discontinue the engagement or not, or if they charged you for more time than they actually need).
The Problem with the Term ‘Cryptocurrency Recovery Agency’
In our opinion, there is no such thing as a ‘legitimate’ cryptocurrency recovery agency. The problem is that the term and notion is itself misleading to prospective clients, even for legitimate firms who use the term.
The reality is that cryptocurrency forensics experts and investigative firms generally do not have the ability to effectuate recovery on their own for their clients. They investigate, and sometimes they may liaise with third parties. Obviously, they hope that their efforts will lead to improved recovery chances, but there are many factors that massively affect how much or how little (if anything) a victim might get back depend on a myriad of factors that are primarily or wholly outside of the control of any investigative professionals, including:
- What methods, practices, procedures, and services a perpetrator uses to launder the ill-gotten cryptocurrency
- What ‘mistakes’ a perpetrator might make when laundering
- Cooperativeness of applicable cryptocurrency exchanges and their compliance policies and procedures
- Responsiveness of applicable cryptocurrency exchanges
- Law enforcement’s willingness to pursue the matter, and to what end they are willing to pursue it to
- Jurisdictional challenges based on where the perpetrator may reside.
- Budgetary constraints of the victim
Whether or not a recovery is ‘successful’ depends on a variety of the factors detailed above, which are largely outside of the control of any recovery agency. Furthermore, for recoveries to actually occur, they generally require the participation and cooperation of other parties, such as exchanges, and law enforcement. Thus, attributing the recovery to the ‘recovery agency’ in such a situation is frankly an insult to other parties that played a crucial role in the process.
It should also be noted that “full recoveries” are incredibly rare. They almost never happen. Partial recoveries are notably more common (in cases where engagements actually make sense), but even still there are a very large portion of cases where there ends up being no recovery at all. And that’s not the fault of the investigator in most cases, as it’s usually out of their control.
For these reasons, we’re of the opinion that the term ‘cryptocurrency recovery agency’ is a misnomer, as it is suggestive to victims that they can hire someone to recover their cryptocurrency, when that technically isn’t possible. This is why you’ll never see our company claim to offer a ‘recovery service’, even though the work our investigators have done has played a key role that has historically led to millions of dollars being recovered.
In contrast, the term ‘cryptocurrency investigative professional’ or ‘blockchain forensics expert’ is not inherently misleading. Such experts can play a pivotal role with their investigative work and services that can sometimes lead to improved (or at least less abysmal) recovery prospects, depending on the specifics of the case.
There are many situations where it simply doesn’t make financial sense for a victim to hire any professional investigative service, since the prospects simply are too poor to warrant any engagement and may just end resulting in money being thrown down the drain, nonetheless, some firms may be still offer victims their services anyway, despite the low likelihood of anything useful coming out of it for the victim.
Operating ethically is a core part of our values and ethos – it’s why we don’t have sales reps, why any retainer with any of our clients is refundable (less time billed to the retainer), and when people ask us about recovery prospects, we try to give an honest answer, but one that sets reasonably low expectations, and hopefully things end up working out for the better.