Source: Cointelegraph Original: "{title}"

If you've been scammed, you might feel like your cryptocurrency is lost forever. Decentralized blockchain wallets cannot be frozen like bank accounts. Even if scammers try to withdraw funds at regulated exchanges, law enforcement may miss the opportunity to freeze the funds due to slow action.

However, some private investigation firms claim to have had success in recovering funds. A company calling itself "Crypto Crime Stoppers," Lionsgate Network, claims to have successfully recovered at least $4 million in stolen and lost cryptocurrency funds.

Lionsgate states that they leverage their connections with law enforcement agencies in various U.S. states and countries around the world to freeze and return stolen cryptocurrency to its owners.

Bezalel Eithan Raviv, the company's founder and CEO, told Cointelegraph in an interview that while tracking and freezing funds is difficult, it is not impossible. "It all starts with analysis, because that's what our business is about," he said. "This is our core service, and we use the most advanced technology in the crypto space or blockchain analysis."

Locating funds is one thing, but recovering them is another.

"If you hand our analysis over to law enforcement personnel, whether in the UK or the US, you will get the same feedback; you will be misled and receive incorrect information," Raviv stated. Police will tell victims, "Your money is in China, your money is in Russia, or the cryptocurrency can never be recovered." However, Raviv noted that most attackers eventually try to cash out their ill-gotten gains through regulated exchanges like Binance.

"What we see most often is that funds are transferred through mixers to a centralized wallet… After reviewing over $1 billion in cases, we found that most cases are related to Binance."

However, once the scammed funds enter a centralized exchange, police need to act quickly to freeze the scammer's account. To facilitate this process, Lionsgate hands over its analysis reports to cybercrime experts in the jurisdiction where the victim is located. He stated that this process is surprisingly simple.

How criminals initiate pig-butchering scams: Source: CFTC

Raviv mentioned that victims often report to the wrong law enforcement personnel or fail to do the necessary groundwork to help the right people understand the case. As a result, they end up being "ignored." He said, "If you go to the police with no clue, they will completely ignore you."

Recovering $100,000 for a Florida surgeon

Lionsgate claims to have recovered over $100,000 in scammed funds for a surgeon in Florida. According to a report issued by the company and shown to Cointelegraph, the surgeon received a call from "a seemingly friendly Asian woman" who claimed she had "dialed the wrong number" and accidentally reached him.

The woman engaged in a lengthy personal conversation with the victim and ultimately gained his trust, then used that trust to persuade him to invest in an "opportunity," transferring $100,000 in cryptocurrency to her wallet account.

This investment opportunity was fake, and Lionsgate later determined that the caller was "part of a larger organized crime network aimed at stealing funds and covering their tracks." The $100,000 represented a significant portion of the surgeon's savings.

This type of scam, known as a "pig-butchering scam," involves scammers luring victims through dating or social media sites and then persuading them to invest in a fictitious long-term investment plan. These scams often promise high returns from cryptocurrency projects, but the projects are usually non-existent or fail to deliver on their promises.

Lionsgate tracked the funds and found they entered a wallet containing over $30 million in cryptocurrency, likely representing the proceeds of multiple scam cases from the criminal network. The surgeon then showed Lionsgate the tracked analysis report, which indicated that the scammer was still trying to raise funds from the victim. Faced with blockchain evidence and the potential for "legal consequences," the scammer returned the $100,000 to the victim.

Recovering $1.7 million in cryptocurrency

In another report, Lionsgate claimed to have tracked down $1.7 million in cryptocurrency for an investment banker in North Carolina. The victim met a woman through Facebook who claimed to be looking for friends. Over time, the woman gained the investment banker's trust and persuaded him to invest $5,000 in a cryptocurrency trading scheme. The fake "profits" helped convince the banker to gradually increase his investment until he had invested $1.7 million. Eventually, he realized that these trades were fake and that his cryptocurrency had been stolen.

Lionsgate stated that they have tracked the final location of the funds but have not yet been able to recover them. However, they have handed the case over to the U.S. Department of Homeland Security (DHS), which is continuing the investigation.

Lionsgate initially sought help from the local police department and the FBI, but they "ignored" the case. Therefore, Lionsgate brought the case to the media, attracting public attention, which ultimately prompted DHS to intervene and provide assistance.

Funds may not always be recoverable

Raviv warned victims that Lionsgate cannot always recover funds, especially when law enforcement is uncooperative. "We cannot guarantee any client that law enforcement will do their job." However, he believes that law enforcement is entering a "new era," becoming increasingly willing to collaborate with private companies to help scam victims.

In April of this year, Cointelegraph interviewed the founder of Crypto Asset Recovery, a company specializing in recovering lost seed phrases and private keys. One of the founders, Charles Brooks, stated that when funds are stolen (rather than just lost), the chances of recovery are "very low." Nevertheless, the company offers similar blockchain analysis services that can provide law enforcement with reports on the flow of stolen funds.

Cryptocurrency scams continue to threaten crypto users and the broader investing public

Cryptocurrency scams remain a threat to crypto users and the broader investing public. On September 12, the U.S. Commodity Futures Trading Commission (CFTC) warned investors that crypto "pig-butchering scams" are becoming increasingly common. On September 19, the U.S. Securities and Exchange Commission (SEC) charged five entities and three individuals in connection with two completely fraudulent cryptocurrency exchanges, claiming that these two projects had stolen over $3.2 million from victims.

Today we charged multiple entities and individuals in connection with two relationship investment scams involving fake crypto asset trading platforms NanoBit and CoinW6, respectively. https://t.co/TSNv0X8aN8 pic.twitter.com/cSPhTQt3Aj

Related: Hashed co-founder: The attention economy drives the development of meme coins

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