Government and Authority Impersonation Crypto Scams: How They Work and What to Do

The scam usually starts with an unexpected phone call, text, email, or a pop-up warning on your screen. The person claims to be someone you would normally trust — the police, a tax authority (such as the IRS or HMRC), a Social Security or benefits office, or the fraud team at your bank or crypto exchange.

They tell you there is an emergency: your accounts have been hacked, your identity is being used for money laundering, or there is a warrant or fine in your name. The goal is to make you feel afraid and rushed so you stop thinking clearly. Then they offer "the only way to stay safe," which is almost always one of these:

• Move your money or crypto into a "safe wallet" or "secure government account" they control.
• Withdraw cash and feed it into a crypto ATM (Bitcoin ATM), then scan a QR code they send you.
• Read out your seed phrase (recovery phrase) or a one-time code so they can "verify" or "protect" your account.
• Install remote-access software so they can "secure" your device.

Often several "officials" are involved in sequence — a tech-support contact hands you to your "bank," who hands you to a "government agency." The FBI has warned about exactly this multi-step pattern, sometimes called the Phantom Hacker scam, in which victims are told to move funds to a "safe" account to protect them from a foreign hacker.

The single most reassuring fact to hold onto: no genuine police force, tax office, bank, or exchange will ever ask you to move money into crypto, pay through a Bitcoin ATM, or share your seed phrase. If someone asks, that alone proves it is a scam. Watch for these signs:

• They contact you out of the blue and create urgency — "act in the next hour or you'll be arrested or lose everything."
• They tell you to keep it secret and not to speak to family or bank staff.
• They mention a "government wallet," "safe wallet," or Bitcoin "safety locker." These do not exist.
• They demand payment or transfers in cryptocurrency, gift cards, or wire transfers.
• They ask for your recovery phrase, passwords, or one-time verification codes.
• The caller ID or email looks official — but phone numbers, names, and letterheads are easily faked (spoofed).

As the U.S. Federal Trade Commission puts it plainly, real businesses and government agencies will never tell you to buy cryptocurrency, use a crypto ATM, or move money to "protect" it — and anyone who does is a scammer.

If you are on the call as you read this: hang up. You do not owe a stranger politeness, and you will not be arrested for ending a call. Then work through these steps.

• Do not move any money or crypto, and do not go to a crypto ATM, no matter what you were told.
• Never share your seed phrase or one-time codes. Anyone with your recovery phrase can drain your wallet.
• If you installed any software or app at their request, disconnect from the internet and remove it, and treat your device as compromised.
• Change the passwords on your bank, email, and exchange accounts from a device you trust, and turn on two-factor authentication.
• If you already sent crypto or used an ATM, act quickly: contact your bank and your crypto exchange right away and ask them to freeze or flag the transaction. Speed can occasionally make a difference, especially with wire transfers or funds still sitting on an exchange.
• Write down everything you remember — numbers, names, wallet addresses, times — while it is fresh. This helps investigators.

Then tell someone you trust. Scammers rely on secrecy and isolation, and saying it out loud breaks their hold.

Reporting will not always recover your money, but it helps authorities track these networks, may support freezing funds, and protects other people. Reporting is always free.

• United States: Report to the FTC at reportfraud.ftc.gov and to the FBI's Internet Crime Complaint Center at ic3.gov.
• United Kingdom: Report to Action Fraud (or Police Scotland on 101).
• Your bank and exchange: Contact them directly using the phone number on the back of your card or on their official website — never a number the scammer gave you.
• The ATM operator: If a Bitcoin ATM was used, note the machine's location and operator, as some report suspected fraud.

If you are elsewhere in the world, search for your national fraud reporting line or cybercrime unit, and always contact your bank first.

We won't give you false hope. Cryptocurrency transactions are designed to be irreversible, and once funds move to a scammer's wallet — especially overseas — recovery is often impossible. Reporting quickly and contacting your exchange gives you the best chance, but many victims do not get their money back, and that is a painful truth rather than a personal failing.

This is exactly why you must be on guard for a second wave of fraud. After a loss, people are often contacted by a "recovery agent," "crypto tracing firm," or even a fake official who promises to get the money back — for an upfront fee, a "tax," or a "deposit." This is a recovery scam, and it deliberately targets people who have already been hurt.

• No legitimate party ever charges an upfront fee to return stolen funds. Government agencies and real firms will not guarantee recovery or ask you to pay first.
• Never pay to get money back, and never hand over new bank details, ID, or your seed phrase to anyone offering to help.
• Be sceptical of anyone who found you online, promises fast results, or shows "testimonials" and screenshots.

Both the FTC and the CFTC warn that scammers buy lists of past victims specifically to re-target them. If in doubt, the answer is no.

These scams work on anyone under enough pressure, but older adults are targeted especially hard — in the U.S., people 60 and over were more than three times as likely as younger adults to report losing money at a Bitcoin ATM. A few simple habits stop almost every version of this scam:

• Hang up and verify independently. If a "bank" or "agency" calls, end the call and phone the official number yourself. Real organisations are happy for you to do this.
• Agree a family rule: no real authority ever asks for crypto, gift cards, or a seed phrase. If someone does, it is a scam — full stop.
• Never install remote-access software or apps because a caller told you to.
• Slow down. Urgency and secrecy are the scam, and a genuine issue can always wait for you to check.
• Talk to older relatives and friends about this pattern before it happens, gently and without blame.

Keeping your recovery phrase offline and private, and treating every unexpected "emergency" contact with calm suspicion, protects you from the vast majority of crypto fraud.

No. This is one of the clearest signs of a scam. Genuine police, tax authorities, banks, and exchanges will never call and demand that you transfer crypto, buy Bitcoin at an ATM, or move money to a 'safe' or 'government' wallet. There is no such thing as a government crypto account or Bitcoin 'safety locker.' If anyone asks you to do this, hang up — you cannot get in trouble for refusing.

Often, yes — and we won't pretend otherwise. Crypto payments are usually irreversible, and funds that reach a scammer's wallet are frequently unrecoverable. That said, act immediately: contact your bank and exchange to try to freeze or flag the transaction, and report it to the authorities. Speed occasionally helps, especially if money is still sitting on an exchange. Whatever happens, do not pay anyone who promises to recover it for a fee.

No. This is a recovery scam — a second fraud aimed at people who have already lost money. No legitimate firm or government agency charges an upfront fee to return stolen funds or guarantees recovery. Scammers buy lists of prior victims and re-target them. Never pay upfront, and never share new bank details, ID documents, or your seed phrase with anyone offering to 'help.'

Unfortunately, no. Personal details are widely available from data breaches, and phone numbers, caller ID, names, and official-looking letterheads can all be faked (spoofed). Knowing your information is a tactic to gain your trust, not proof of identity. Always verify by hanging up and calling the organisation back on a number you look up yourself.

Never. Your seed phrase (recovery phrase) is the master key to your wallet — anyone who has it can take everything, instantly and permanently. One-time codes work the same way for bank and email logins. No legitimate person, agency, or support team will ever ask for them. A request for your recovery phrase or verification code is always a scam.