Imagine an investment company has defrauded you, and you are seeking legal help to fight for your rights. Instead of assistance, however, the law firm turns out to be fake, and you lose more funds. This scenario affected hundreds of retail investors from Poland, who may have lost over PLN 9 million (€2.1) in the dishonest scheme.

Duped Again: Retail Investors Fall for Forex and Crypto Recovery Scam

The Warsaw regional prosecutor's office, along with the police central investigative bureau, announced today (Thursday) that they have dismantled a gang of fraudsters posing as law firms, offering their services to retail investors previously cheated in the forex (FX) and cryptocurrency markets.

The fraudsters contacted victims via the internet, through forums and social media channels, responding to their requests for help to recover funds from dishonest brokerage and crypto firms. However, they charged commissions upfront ranging from five to ten percent of the funds the investor wanted to recover.

In this way, the scammers are said to have defrauded over €2 million from at least several hundred people who were cheated for a second time. So far, the police have managed to arrest 14 people on charges of fraud and attempted money laundering.

The fake law firms engaged in a series of bogus legal steps to recover these funds. Investigators determined that the entire procedure was meant to convince the victims that the firm was actively working to reclaim the money.

"In reality, there was no real possibility of the victims recovering their funds," the Polish police commented in an official statement, automatically translated by Google Translate. "The individuals employed at the firm lacked legal education and were hired as telephone operators trained to conduct conversations with clients to persuade them to invest money."

Interestingly, some of those arrested were already known to Polish law enforcement, as they had been involved in crimes in the FX market in the past.

"Recovery Experts" Scam: A Longstanding Ruse

As it turns out, this fraudulent scheme is unfortunately more common than it might seem. Finance Magnates had already pointed out in 2018 the "recovery experts" who directed their services to those defrauded in financial markets, promising help in recovering funds.

A similar strategy was adopted in 2019 by fraudsters in Cyprus, who impersonated the local supervisory commission CySEC CySEC The Cyprus Securities and Exchange Commission (CySEC) is a financial regulatory authority of Cyprus. CySEC is one of the key watchdog authorities for brokerages in Europe, whose financial regulations and operations comply with the European MiFID financial harmonization law.Founded in 2001, CySEC is instrumental in providing licensing and registration for forex brokers and previously binary options providers.CySEC is responsible for a variety of different functions, which includes the supervision The Cyprus Securities and Exchange Commission (CySEC) is a financial regulatory authority of Cyprus. CySEC is one of the key watchdog authorities for brokerages in Europe, whose financial regulations and operations comply with the European MiFID financial harmonization law.Founded in 2001, CySEC is instrumental in providing licensing and registration for forex brokers and previously binary options providers.CySEC is responsible for a variety of different functions, which includes the supervision Read this Term. In messages sent to retail investors, they claimed they could offer assistance in recovering funds if there was a suspicion that the broker where they had deposited acted illegally.

"CySEC would like to remind the public that it never sends unsolicited correspondence to investors or members of the public, nor does it ever request any personal data, financial or otherwise," the regulator stated in its 2019 announcement.

Three years ago, the Belgian Financial Services and Markets Authority warned against similar practices, writing about "recovery rooms" fraud targeting citizens in the country.