The mechanics of crypto scams and the role of blockchain forensics

Source: Bloctopus Intelligence

Crypto scams today are far more sophisticated than most people imagine. They no longer rely solely on technical exploits, but primarily on psychology, manipulation and highly organised operational backgrounds. Fraudsters are experts at creating an illusion of legitimacy and building trust, gradually leading the victim to personally authorise the transfer of funds. This is precisely why swift and professional action is critical following an incident.

At Bloctopus Intelligence, we specialise in blockchain forensics. We analyse the flows of crypto-assets, link on-chain and off-chain data, prepare forensic reports, and assist victims, lawyers and law enforcement agencies in understanding what happened and whether there is a realistic possibility for further action, particularly regarding the recovery of stolen funds.

Two common mechanics: “Pig butchering” and “Advance fee scams”

“Pig butchering” is a long-term confidence trick. The scammer first establishes a relationship with the victim; romantic, friendly or seemingly professional, and then directs them toward a supposedly high-yield investment, often involving crypto assets. The victim sees fake profits on a professionally designed platform and is encouraged to invest more over time. The problem arises during withdrawal: suddenly, the victim faces blocks, “additional verifications”, alleged taxes or administrative fees.

”Advance fee scam” is a fraud based on upfront payments. The victim is promised a payout, the release of funds, loan approval or help recovering previously lost money, but they must first pay a specific “fee”. This may be presented as a tax, an Anti-Money Laundering check cost, a withdrawal commission or an administrative levy. Once the victim pays, a new condition and a new demand for payment invariably appear.

In practice, these models often overlap. “Pig butchering” frequently concludes with an “advance fee” phase: once the victim believes they have a profit on the platform, scammers convince them that additional costs must be paid to release those funds.

The value of blockchain forensics

While blockchain forensics cannot reverse a transaction on its own, it is essential for understanding the case. It enables the identification of relevant addresses, tracking of fund flows, analysis of wallet connections and the identification of actionable points - such as centralised exchanges or other identified service providers.

At Bloctopus Intelligence, we look beyond the technical description of transactions. The key question is whether an operational opening exists for further steps:

• Are the funds still traceable?

• Have they reached an exchange?

• Can a solid evidentiary basis be prepared for reporting, freezing or identifying the parties involved?

Case study

In a specific “pig butchering” case, Bloctopus Intelligence first identified and tagged the crypto wallets associated with the fraudulent network, then tracked the transfers between these addresses. We did not stop at on-chain analysis; as part of our investigative activities, we deployed a dedicated landing page and shared it with the scammers. Our goal was to obtain technical data regarding their access, such as device information and connection details.

The breakthrough occurred when we discovered that the funds were flowing into an account at a major crypto exchange. Further findings revealed that the account was linked to a citizen of an EU member state. We informed the Slovenian Police, who forwarded the case to the competent authorities. It was later discovered that, in a related matter, police had seized assets worth over ten million euros. This case demonstrates that blockchain forensics is not just retrospective analysis - it can significantly contribute to an actual operational resolution.

Immediate steps after an incident

First step is immediately stopping all further payments. If scammers demand additional fees for “unlocking” accounts, verification or taxes, it is almost certainly a continuation of the scam. Next step is securing all evidence: transaction hashes, wallet addresses, communication logs, screenshots, transfer confirmations and a timeline of events. Last step would be conducting a rapid forensic review; speed is often the deciding factor. If funds reach an identified exchange or relevant infrastructure, a realistic window for further action opens.

Conclusion

Crypto scams today are organised, cross-border and highly persuasive. They must be treated as a structured incident, not just an unfortunate loss. While blockchain forensics does not guarantee success, it significantly increases the chances that a case is correctly understood, documented and directed towards the right channels. This is often the difference between a total loss of control and a genuine opportunity for legal or operational recourse.