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Kraken fraud: immediate help through blockchain forensics

Kraken is one of the largest cryptocurrency exchanges worldwide, and fraudsters exploit this fact in various ways. Due to the manifold methods of fraud, it is not immediately apparent to unsuspecting users that they have fallen victim to scammers. Therefore, it often takes a while before they notice the fraud and respond accordingly.

The crimes related to Kraken can fundamentally be divided into three categories, which differ significantly from each other. However, they all have in common that they misuse the reputable name of Kraken, although the actual company obviously has no connection to it. The following will outline the methods used by the fraudsters and how best to protect oneself from them. Furthermore, we will show ways to get support and what options exist to reclaim lost money.

Account creation in the user's name

A common scam, not limited to Kraken but also occurring on other trading platforms like Binance, Coinbase, or Bitvavo, often begins through social media or messaging services. Here, the scammers first make contact with their victims.

They quickly steer the conversation towards investment topics and present various investment products, which they promote as particularly profitable. The target group of these scammers is usually inexperienced investors with limited knowledge of cryptocurrencies, who often do not fully comprehend the implications of their decisions. The scammers then instruct their victims to open an account at Kraken and ask them to make a deposit in euros after verification.

Up to this point, everything seems normal, but after the deposit, the victims are instructed to buy a specific cryptocurrency and transfer it to an external wallet. Since the affected individuals are usually not familiar with blockchain technology, the scammers give precise instructions for the transfer. This is done under the pretext that the deposited cryptocurrencies are to be invested profitably for the victim. After this action, there is often silence. The perpetrators later frequently demand more money, especially if the victim tries to get their money back. Then they require so-called mirror transactions to supposedly unlock the funds or cryptocurrencies.

Ultimately, the victims neither get back money nor cryptocurrencies and lose their deposited amounts. Kraken itself warns against opening accounts on behalf of third parties and sending cryptocurrencies to unknowns. The company is not at fault in such cases, as it cannot verify to whom the cryptocurrencies are sent.

To protect oneself from this type of fraud, one should observe some basic security rules when dealing with strangers on the Internet. Further details on protection on the Internet and safe handling of cryptocurrencies can be found in this article.

Money deposited on a fake website

The second method used by scammers is the creation of fake websites that mimic the user interface of Kraken to give the impression that it is the official platform of the company. Such fraudulent sites are indeed not connected to Kraken, which would never cause confusion among its customers regarding access to the exchange.

These fake sites can be created relatively quickly and offer similar functions as the real Kraken exchange after logging in. Here too, users are prompted to deposit cryptocurrencies or euros, with the money being lost after the deposit. Unlike the first method, however, these fraudulent platforms create the impression that regular profits are made, to lull the victims into a false sense of security and believe their money is safe. If the victims leave their funds on the platform, they are often encouraged by supposed customer advisors to deposit more money, as it seems plausible to invest more with achieved profits. But these amounts are also lost once they leave the checking account.

Regarding the selection of victims, the perpetrators use various methods. They send out mass emails, similar to phishing, and spread messages via social media or WhatsApp and SMS. The initial contact is not targeted but through automated distribution. Only in the further course do the scammers focus on the victim once they notice that they are taking the bait. In exceptional cases, however, personal contact exists from the beginning.

To protect oneself from this type of fraud, it is important to pay close attention to which websites one visits on the Internet and to verify their authenticity. Further details on how to do this and what to pay particular attention to are described in our article on phishing, as these methods have many similarities.

Fake trading bots on Kraken

Another scam targets the fraudulent marketing of so-called trading bots. Here too, the perpetrators make use of an otherwise harmless product. Such bots are programs that trade cryptocurrencies automatically. They usually execute certain strategies based on common indicators like the MACD. More complex products, however, use machine learning and AI.

With the promise of juicy profits, primarily inexperienced investors are lured into the trap and invest time and money in fraudulent bots. Similar to the other methods, it's either about linking fraudulent software to a real exchange account or transferring money to a fictitious platform. There, the bot then generates the supposed profits. These are booked on the website of the scammers but cannot actually be withdrawn. Victims who contact the scammers to get their money back are either put off or asked to pay another fee. In reality, however, nothing happens for them, as the scammers only stall the victims and try at best to extract even more money from them.

Overall, it shows that interested parties should inform themselves very carefully about the software or the platforms before they take the plunge. As so often, in the crypto market, the chaff is only separated from the wheat upon closer inspection.

I became a victim of fraud, how can I find support?

Kraken usually does not intervene if the victim was not registered on the platform themselves and transactions related to the fraud were made there. Even in such cases, one should be aware that the exchange's options for action are quite limited. Since cryptocurrency transactions, like those of Bitcoin, are irreversible, it is advisable to seek external help.

Crypto-Tracing specializes in such cases and more, securing traces and evidence left by the fraudsters through blockchain forensics. This technique can reveal to which addresses the fraudsters have sent the cryptocurrencies and allows for an immediate picture of the situation to be created. We document your transactions as well as those of the fraudsters and prepare a detailed report for law enforcement authorities. In cooperation with attorney Dr. Maisch, we also offer comprehensive and expert legal advice. Dr. Maisch specializes in cases of cybercrime and is ready to represent you in all relevant matters and legally enforce your claims if necessary.

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