Scammer’s control of crypto account left victim $45,000 out of pocket

Categories:

Fraud and scams, Service problems, Delays, Investment,

Summary:

Xanthe met someone online who encouraged her to invest in cryptocurrency. She transferred $1,500 to a cryptocurrency trading company and was gradually induced to transfer more money until eventually she had invested $45,000. When Xanthe sought to withdraw the money, the company said she had breached a trading rule and would have to deposit more funds before she could withdraw any money. At that point, she realised she had been scammed and contacted the bank. The bank was unable to recover any money and refused to reimburse her loss, saying nothing about the transactions had given it any grounds to suspect she was being scammed. Xanthe replied that the transactions should have triggered warning signs, or “red flags”, particularly since she had made several $5,000 payments over consecutive days. She also complained about the bank’s lengthy delay in investigating her case, which had caused her additional stress.

Published:

May 2025

Our investigation

We looked into the transactions and found nothing that would have suggested to the bank that Xanthe was a potential victim of a scam. Her initial transaction of $1,500 had been to a legitimate cryptocurrency trading company. The scammer used a fake website to show an immediate apparent profit of $400. This encouraged her to keep “investing” until she had purchased $45,000 of cryptocurrency through the same company. The funds were then transferred – by what means we could not establish – to another legitimate cryptocurrency trader the scammer had access to. The transactions Xanthe made to the first cryptocurrency trader had not triggered any red flags to the bank because they had all been made to a legitimate cryptocurrency trading company. Although the transactions of $5,000 over consecutive days were outside her usual pattern of spending, the earlier smaller transaction of $1,500 had created a banking transaction history indicating she was a purchaser of cryptocurrency. This meant that the later, larger amounts did not trigger any red flags.

We did, however, find that the bank’s investigation of her case was far from satisfactory. She had contacted the bank’s fraud team on numerous occasions over four months seeking an update on its investigation. The bank provided no information and failed to call back when asked. The bank offered her $2,000 and an apology for its poor service and the stress and inconvenience it had caused.