Fake Law Firms Con Victims of Crypto Scams, Warns FBI

Victims of cryptocurrency scams have lost nearly $10m over the past year to fraudsters claiming to be lawyers who can help them recover their losses, the FBI has warned.

The law enforcement agency has issued a new Public Service Announcement (PSA) urging victims to be on the lookout for predatorial scammers.

“Using social media or other messaging platforms, fraudsters posing as lawyers representing fictitious law firms may contact scam victims and offer their services, claiming to have the authorization to investigate fund recovery cases,” the PSA noted.

“To validate the contact, the ‘lawyers’ claim they are working with, or have received information on, the scam victim’s case from the FBI, Consumer Financial Protection Bureau (CFPB), or other government agency. In some instances, scam victims have contacted fraudsters on fake websites, which appear legitimate, hoping to recover their funds.”

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Once they’ve made contact, the fake lawyers may try to:

• Trick the victim into handing over personal and/or financial information to ‘help them recover funds’
• Request that the victim pay upfront legal fees in order to get their money back
• Request that the victim pays back taxes or other fees in order to proceed with recovering their funds
• Cite legitimate financial institutions and money exchanges to build credibility

Between February 2023 and February 2024, crypto scam victims lost $9.9m in this way, according to data collected by the FBI’s Internet Crime Complaint Center (IC3). In total, reported digital crimes involving a cryptocurrency element resulted in losses of over $3.8bn last year, IC3 said.

ImmuniWeb CEO, Ilia Kolochenko, argued that such scams will begin to proliferate thanks to generative AI (GenAI) tools which enable fraudsters to quickly and professionally create legitimate-looking emails and websites.

He claimed that governments need to act now to head off a potential surge in GenAI-enabled fraud.

“First, law enforcement agencies should be provided with supplementary funding and additional resources to increase their capabilities to respond to this emerging type of crime. Second, GenAI vendors must be regulated in such a manner that their AI products cannot be misused, while access to the products is logged, controlled and audited on a regular basis,” Kolochenko said.

“Third, security training and awareness campaigns needs to be launched in partnership with the private sector to ensure that would-be victims will be properly educated and avoid falling victims to GenAI scams.”