By Uzair Abbasi 
Cryptocurrency theft reached unprecedented levels in 2023, with fraudsters stealing a staggering $14 billion in digital assets. Though the numbers decreased to $2.57 billion in 2024, crypto users have lost nearly $2 billion to scams, rug pulls, and hacks in 2025.
The average loss per victim stood at $28,000 in 2025, making cryptocurrency the second-highest payment type for monetary losses, right after bank transfers. Consequently, the demand for legitimate crypto recovery companies has grown significantly as more people investing in digital assets become potential targets for scammers.
If you’re wondering how to recover stolen cryptocurrency, quick action is essential. Timely reporting critically increases your chances of asset recovery. Throughout this guide, we’ll walk you through CovaSecure’s proven 5-step process to recover scammed cryptocurrency, explain how to identify crypto recovery services that actually work, and provide practical advice on what to do if you’ve lost your digital assets to fraud.
Recognizing the Most Common Crypto Scams
Before attempting to recover stolen cryptocurrency, it’s crucial to understand how these scams operate. Recognizing the tactics scammers use can help protect your digital assets and improve recovery chances if you’ve already been victimized.
Pig butchering and social engineering scams
Originally from Southeast Asia, “pig butchering” scams have evolved into sophisticated operations that combine romance scams with investment fraud. The term refers to “fattening up the prey before slaughter” as scammers build relationships with victims before introducing fake crypto investments. These operations are often run by criminal enterprises using human trafficking victims to contact potential targets through social media, dating sites, and even random texts. Victims are gradually manipulated into investing in bogus platforms that initially show modest gains before locking them out completely.
Phishing and fake websites
Phishing attacks in cryptocurrency typically involve fraudsters creating deceptive emails, messages, or websites that mimic legitimate entities. These scammers send mass emails containing links to fake websites that look identical to real platforms like Coinbase or Crypto.com, then steal login credentials when users attempt to sign in. They commonly create urgency by claiming account problems require immediate attention or offering enticing fake bounties.
Watch for subtle URL differences, unsolicited communications, and requests for private keys – legitimate organizations never ask for this information.
Ponzi and pyramid schemes
Cryptocurrency Ponzi schemes promise eye-watering returns with minimal risk. However, these operations use new investor funds to pay earlier investors, creating an illusion of profitability. The SEC has identified several red flags, including guaranteed high returns, overly consistent performance regardless of market conditions, and secretive strategies.
Notable examples include Forsage, which raised approximately $340 million from victims before founders were indicted, and HyperFund, which allegedly defrauded victims of $1.7 billion.
Fake exchanges and wallets
Fake cryptocurrency exchanges mimic legitimate trading platforms but exist solely to steal users’ funds. These fraudulent platforms often display characteristics including lack of regulatory compliance, unrealistic promises, poor security measures, and artificial trading volume.
Similarly, fake crypto wallets appear legitimate but contain backdoors allowing scammers to steal cryptocurrency directly. They typically spread through phishing websites, malicious mobile apps, or fake wallet generators.
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Romance and giveaway scams
Romance scams occur when fraudsters develop emotional relationships with victims, usually through dating apps or social media, before requesting cryptocurrency payments. In “pig butchering” schemes, victims are gradually lured into making larger investments after seeing initial gains, only to lose everything. According to the FTC, romance scams cost older adults nearly $240 million in 2024.
Giveaway scams involve impersonating celebrities or companies offering to multiply cryptocurrency sent to them. These scams exploit FOMO (fear of missing out) and create artificial urgency. One notorious example involved Elon Musk impersonators who raised over $180,000 in Bitcoin from victims in 2024 alone.
CovaSecure’s 5-Step Process to Recover Stolen Cryptocurrency
Once you’ve fallen victim to a cryptocurrency scam, taking immediate action is vital. CovaSecure has developed a systematic 5-step approach that maximizes your chances of recovering stolen digital assets.
Step 1: Document the scam and gather evidence
Initially, preserve all communication with the scammer. Take screenshots of websites, emails, messages, and transaction details. Document exact times, dates, and amounts of transfers. Note wallet addresses involved in the fraud and save any promotional materials that lured you in. This documentation serves as crucial evidence for exchanges, law enforcement, and recovery specialists.
Step 2: Use blockchain explorers to trace transactions
Following this, use blockchain explorer tools like Etherscan, Blockchair, or Blockchain.com to track where your funds went. Enter the transaction hash or wallet address to visualize the movement of your assets across the blockchain. This creates a transaction trail that recovery experts can follow. Note that funds often move through multiple wallets rapidly in an attempt to obscure their destination.
Step 3: Report to exchanges and freeze assets
Next, contact any cryptocurrency exchanges involved immediately. If the stolen funds were transferred to a known exchange, their security teams can potentially freeze accounts. Many exchanges have dedicated forms for reporting suspicious activity. Provide them with all transaction details, wallet addresses, and evidence collected in Step 1.
Step 4: File a complaint with law enforcement
Additionally, report the theft to appropriate authorities. File reports with your local police, the FBI’s Internet Crime Complaint Center (IC3), and financial regulatory bodies. While cryptocurrency cases present unique challenges for law enforcement, these reports establish an official record and may connect your case to larger investigations.
Step 5: Work with legitimate crypto recovery companies
Finally, consider engaging a reputable legitimate recovery service like Covasecure. Legitimate companies employ blockchain forensics experts who use advanced tracing tools and have established relationships with exchanges.
How AI and Blockchain Tools Help in Recovery
Modern technology offers powerful tools for tracing and recovering stolen cryptocurrency. Specialized software combines blockchain analysis with artificial intelligence to improve recovery outcomes for victims.
Using blockchain analysis to trace stolen funds
Blockchain forensics has evolved into a sophisticated discipline capable of tracing funds across multiple chains and attributing pseudonymous wallets to real identities. Unlike traditional financial investigations, blockchain forensics benefits from complete transaction transparency, as every transfer is publicly recorded. Professional investigators utilize specialized tools like Chainalysis, Merkle Science, and Nansen to follow multi-hop wallet flows and detect when criminals attempt to obscure their tracks through mixing services.
AI-powered scam detection and pattern recognition
Furthermore, advanced AI models now monitor blockchain transactions in real-time to identify suspicious patterns linked to fraud. These systems combine machine learning with graph-based algorithms to process data instantly rather than in batches. AI detection tools can recognize various scam behaviors—including “pig butchering,” ice phishing, and rug pulls—without extensive manual analysis. By analyzing wallet connections across exchanges, AI helps compliance teams prevent illicit funds from reaching cash-out points.
Legal and Regulatory Options for Victims
Pursuing legal action becomes essential after documenting the theft and attempting to trace your assets. The right approach can substantially increase your recovery chances.
When to hire a crypto scam lawyer
Specialized attorneys become valuable allies when dealing with substantial losses or complex cross-border situations. Experienced crypto lawyers can help trace transactions, identify responsible parties, and gather evidence to build a strong case. Legal professionals can pursue claims for fraud, breach of contract, or negligence against scammers or entities that enabled the fraud. Indeed, victims with proper legal representation have successfully frozen wallet assets containing tens of millions in stolen cryptocurrency.
Reporting to financial authorities
Submit detailed reports to the FBI Internet Crime Complaint Center (IC3) immediately after discovering theft. Include transaction details (addresses, amounts, timestamps), communication with scammers, website information, and timeline of events. Essentially, the more information provided, the better chance authorities have of tracking down perpetrators. Additionally, file complaints with state financial regulators who may reach out to service providers on your behalf.
Understanding cross-border jurisdiction issues
Crypto theft frequently involves multiple countries, creating complex jurisdictional challenges. Courts determine jurisdiction based on several factors, including victim location, asset location, and connection to the jurisdiction. Previously, English courts accepted that crypto assets’ location was deemed to be the rightful owner’s place of domicile. Subsequently, some courts have approved innovative solutions like serving court documents via NFT airdrops directly to wallets containing stolen funds.
Conclusion
Cryptocurrency theft remains a significant threat in the digital asset landscape, with victims losing substantial amounts each year. Still, all hope is not lost for those who have fallen victim to crypto scams. The five-step recovery process outlined by CovaSecure offers a structured approach that maximizes your chances of retrieving stolen assets.
Quick action undoubtedly makes the difference between permanent loss and potential recovery. By thoroughly documenting evidence, tracing transactions through blockchain explorers, promptly reporting to exchanges, filing complaints with authorities, and working with legitimate recovery specialists, you can take back control after experiencing theft.
At the same time, the CovaSecure advanced technologies continue to evolve in our favor. Blockchain analysis tools coupled with AI-powered pattern recognition systems now make it increasingly difficult for criminals to hide stolen funds. These technological advancements, along with growing regulatory attention to cryptocurrency crime, create more pathways for victims to recover their assets.
While cryptocurrency theft presents unique challenges, the transparency of blockchain technology actually gives victims advantages not found in traditional financial fraud cases. We encourage anyone who has experienced crypto theft to act decisively using the framework provided in this guide. Your quick response, combined with professional assistance, gives you the best chance to recover what rightfully belongs to you.
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