Financial fraudCrypto investment fraud
Crypto fraud can take several forms, but a Luxembourg Police example involves fake security alerts and social engineering.
The victim receives a message suggesting that their cryptocurrency account has been compromised. They are instructed to call a number or follow a procedure to “protect” their assets.
The fraudster then persuades the victim to transfer cryptocurrency to a supposedly secure or trust wallet.
The wallet is actually controlled by the criminal.
The Luxembourg Police specifically warns about this type of crypto scam and advises that legitimate crypto platforms do not ask customers to transfer crypto to another wallet or disclose sensitive credentials such as private keys or seed phrases.
Why crypto is particularly attractive to fraudsters?
- Transfers can be rapid.
- Transactions may be irreversible.
- Victims may have difficulty identifying the recipient.
- Cross-border transfers are easy.
- Victims may not understand wallet mechanics.
Concrete example
A Luxembourg resident receives an SMS claiming that an unusual login has been detected on their cryptocurrency account. The message provides a telephone number for the “security department”. The victim calls and speaks with someone who appears knowledgeable about crypto-assets. The fraudster says the account is under attack and instructs the victim to move their crypto-assets to a secure wallet. The victim follows the instructions. The assets are transferred to a wallet controlled by the fraudster and cannot be recovered through the supposed security process.
Red flags,
stop if
- You were contacted unexpectedly by WhatsApp, SMS, Telegram, social media or telephone with an investment opportunity.
- You are promised guaranteed or unusually high returns with little/no risk.
- Someone asks for your seed phrase, private key, password or authentication code.
- Someone tells you to transfer your crypto to a “secure”, “trust” or “recovery” wallet.
- The platform shows large profits but you cannot independently verify where your money is actually invested.
- You cannot withdraw your crypto unless you first pay a tax, fee, deposit or “unblocking” charge.
- An adviser asks you to install remote-access software or give them control of your device.
- The platform claims to be Luxembourg/EU regulated, but you cannot independently verify the legal entity and regulatory authorisation.