It’s quite rare for victims of crypto scams to ever see a single cent of their money recovered.

But this week, the US Department of Justice said it had clawed back $7 million stolen through a crypto investment fraud and will begin returning it to victims.

The scammers used social engineering to build trust with victims, eventually directing them to professional-looking websites mimicking real crypto investment platforms.

These sites showed fake profits, encouraging further deposits — but when victims tried to cash out, they were told they owed taxes or fees.

The funds were funneled through more than 75 shell company accounts and disguised as domestic transfers before being laundered overseas.

In 2023, Secret Service agents seized a portion of the stolen funds from a foreign bank, according to the press release.

Crypto investment fraud comes in many forms — one of the most common is known as pig butchering, in which scammers cultivate long-term personal or romantic connections before introducing victims to fraudulent investment platforms.

In a case from last December, a Wisconsin detective helped trace $4.6 million in stolen assets linked to one such scheme.

Recoveries are still rare, but they’re slowly increasing as law enforcement gets better at tracking crypto transactions.

“We are clawing back every dollar we can — even when criminals are located abroad,” US Attorney Michael Easley said last year.

These scams are getting more sophisticated.

Blockchain analytics firm Chainalysis recently warned of a 1,900% rise in revenue from AI-powered scam software since 2021, with scammers now using tools to impersonate people and fabricate investment materials in seconds.

Crypto market movers

• Bitcoin has lost 0.2% over the past 24 hours and is trading at $84,330.
• Ethereum is up 0.5% over the same period to $2,015.

What we’re reading

Kyle Baird is Inside Solana’ Weekend Editor. Got a tip? Email at kbaird@dlnews.com.