Tornado Cash Sanctions and the Fifth Circuit’s Landmark Decision: Will OFAC Remove Tornado Cash Addresses from the SDN List?

Summary

– Landmark Court Ruling: The Fifth Circuit struck down OFAC’s designation of Tornado Cash’s immutable smart contracts, finding they are not “property” under IEEPA.

– Immutable vs. Mutable: The court distinguished immutable contracts (which cannot be altered or owned by anyone) from mutable ones; only the former fell outside OFAC’s sanctions scope.

– SDN List Status: Tornado Cash’s Ethereum addresses remain on the SDN List pending further action. U.S. persons are still broadly prohibited from transacting with these addresses.

– Ongoing Legal Complexity: A parallel Eleventh Circuit case and potential appeals could escalate the issue to the Supreme Court, leaving the ultimate fate of these sanctions uncertain.

– Regulatory Tension: The ruling underscores the difficulty of applying existing sanctions laws to decentralized technologies, possibly prompting new legislative or regulatory measures.

– Risk to Users: Anyone engaging with sanctioned Tornado Cash addresses—knowingly or unknowingly—faces potential legal repercussions, including heavy fines and other sanctions.

Key Q&A Highlights

What Is Tornado Cash?
A privacy-focused Ethereum mixer alleged to launder billions in illicit funds.

Why Did the Fifth Circuit Overturn Part of the Sanctions?
It held that immutable smart contracts are not “property” because no one can own or control them.

Are Sanctions Still in Effect?
Yes. Tornado Cash’s addresses remain sanctioned on the SDN List, and OFAC has not yet removed them.

Legal Next Steps:
The ruling may be appealed, and parallel court cases could produce a circuit split, potentially leading to Supreme Court review.

On November 26, 2024, the United States Court of Appeals for the Fifth Circuit issued a landmark ruling in Van Loon et al. v. Department of the Treasury, challenging the U.S. Department of the Treasury’s designation of Tornado Cash—a popular yet controversial cryptocurrency mixing service—on the Specially Designated Nationals and Blocked Persons List (“SDN List”). This decision has attracted significant attention for its implications on how decentralized technologies and immutable smart contracts can (or cannot) be sanctioned under existing U.S. law.

Below, we explore how Tornado Cash became a target of sanctions, the court’s rationale in striking down OFAC’s designation of immutable smart contracts, and the looming question: Will the government remove the Tornado Cash addresses from the SDN List?

Background: Tornado Cash and Its OFAC Designation

1. What Is Tornado Cash?
Tornado Cash is an open-source, decentralized software protocol that uses “smart contracts” on the Ethereum blockchain to mix cryptocurrencies, obfuscating the transaction trail between senders and recipients. Tornado Cash offers:

  • – Privacy: Users deposit their crypto assets into a “pool,” withdraw them to new addresses, thus breaking the public chain of custody.
  • – Autonomy: Its immutable smart contracts, once deployed, cannot be controlled, altered, or owned by any single entity.

2. OFAC’s Initial Sanctions
On August 8, 2022, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash, alleging that it had been used to launder over $7 billion in illicit funds—most notably, $455 million allegedly stolen by the North Korean Lazarus Group.1 OFAC’s action placed Tornado Cash and numerous Ethereum addresses associated with its smart contracts on the SDN List.

3. Legal Challenges
Soon after OFAC’s designation, a group of Tornado Cash users (financially backed by Coinbase) sued, arguing that immutable smart contracts, which cannot be owned or controlled, are not “property” and therefore fall outside the scope of the International Emergency Economic Powers Act (IEEPA). This challenge culminated in the Fifth Circuit’s November 2024 ruling, which overturned the designation related to Tornado Cash’s immutable smart contracts.

The Fifth Circuit’s Decision: Why Immutable Smart Contracts Are Not “Property”

In Van Loon et al. v. Department of the Treasury, the court concluded that Tornado Cash’s immutable smart contracts:

  1. Lack Ownership and Control

    • – IEEPA requires that sanctioned “property” be capable of being owned or controlled by someone.
    • – Immutable smart contracts operate autonomously on the blockchain and cannot be changed or withdrawn by any individual or entity.

  2. Cannot Be Excluded from Public Use

    • – A key feature of “ownership” often includes the right to exclude others.
    • – Because anyone with an internet connection can use these immutable contracts, they are not subject to traditional property rights.

  3. Are Not “Services” Provided by Tornado Cash

    • – OFAC tried to argue that these smart contracts fell under its expansive definition of “property” or “property interests.”
    • The Fifth Circuit found that they merely facilitate a “mixing” function and are not themselves “services” that Tornado Cash (or anyone else) owns or provides.

This reasoning placed real limitations on OFAC’s authority, at least with regard to truly immutable smart contracts.

Do the Tornado Cash Addresses Remain on the SDN List?

Despite the court’s decision striking down the designation of immutable contracts, several factors cloud the question of whether OFAC will actually remove these addresses from the SDN List:

  1. Ongoing Legal Uncertainty

    • – The Treasury Department could appeal the ruling.
    • – A parallel challenge is pending in the Eleventh Circuit (Coin Center, et al. v. Secretary, U.S. Department of the Treasury, et al.), where a lower court initially upheld OFAC’s actions.
    • – A circuit split could escalate the issue to the U.S. Supreme Court.

  2. Partial Scope

    • – The Fifth Circuit ruling focused specifically on immutable smart contracts, not mutable contracts that Tornado Cash or any group of developers might control.
    • – OFAC retains the authority to sanction any person or entity—human or corporate—that facilitates illicit transactions, so it is not obligated to delist the addresses until it takes separate administrative action.

  3. Existing Framework Remains

    • – OFAC’s broader sanctions regime against the founders of Tornado Cash or any user who intentionally launders illicit funds still stands.
    • – The core principle of “strict liability” for sanctions violations remains intact, meaning U.S. persons (or foreign persons dealing in U.S. jurisdictions) must still tread carefully.

At this juncture, OFAC has not announced the removal of any Tornado Cash Ethereum addresses from its SDN List. Until or unless OFAC issues official guidance reversing or updating its listings, the addresses remain under sanction. Businesses and individuals should not assume they can freely interact with these addresses without risk.

Tornado Cash Addresses on the SDN List

As of the last published update, the following Ethereum addresses remain associated with the Tornado Cash designation. Users should treat all dealings with these addresses as potentially sanctionable:

  • – 0x12D66f87A04A9E220743712cE6d9bB1B5616B8Fc
  • – 0x47CE0C6eD5B0Ce3d3A51fdb1C52DC66a7c3c2936
  • – 0x910Cbd523D972eb0a6f4cAe4618aD62622b39DbF
  • – 0xA160cdAB225685dA1d56aa342Ad8841c3b53f291
  • – 0xD4B88Df4D29F5CedD6857912842cff3b20C8Cfa3

View All

Key Takeaways for Crypto and DeFi Participants

  1. Mutability Matters

    • – The Fifth Circuit’s decision is narrow and specifically concerns immutable smart contracts. If a protocol or developer group can still update the code, that contract could be subject to sanction.

  2. Regulatory Risks Remain

    • – Even if the government ultimately removes Tornado Cash’s immutable contracts from the SDN List, other aspects of the protocol (including developers, founders, or controlled contracts) may stay sanctioned.
    • – Users who intentionally engage with sanctioned entities to launder money can still face serious legal consequences.

  3. Potential Legislative Update

    • – The court emphasized the difficulty in applying older laws like IEEPA to modern blockchain technology.
    • – We may see Congress or regulatory agencies move to fill the gap, potentially introducing more tailored legislation for decentralized protocols.

  4. Multifaceted Sanctions Framework

    • – Nothing in this ruling prevents OFAC from designating other mixers or addresses under different legal rationales, especially if they are mutable, controlled by identified persons, or used by known illicit actors.
Conclusion

The Fifth Circuit’s recent ruling on Tornado Cash marks a watershed moment in the evolving relationship between decentralized finance (DeFi) and U.S. sanctions law. By holding that immutable smart contracts cannot be considered “property” under IEEPA, the court has significantly limited OFAC’s ability to target certain decentralized technologies. However, the ruling leaves many legal questions unresolved and remains subject to appeal. Until OFAC updates its designations, all listed Tornado Cash addresses remain on the SDN List—and U.S. persons are still broadly prohibited from engaging in transactions with those addresses.

Whether OFAC will remove any of the sanctioned Tornado Cash addresses now hinges on continued litigation, possible appeals, and the Treasury Department’s administrative actions. In the meantime, the case underscores the tension between protecting privacy, fostering innovation, and preventing illicit financing in the ever-changing world of crypto.

Frequently Asked Questions (FAQ)

Q: What is Tornado Cash, and why was it sanctioned?
A: Tornado Cash is an open-source mixing protocol on the Ethereum blockchain. It was sanctioned by the U.S. Treasury’s Office of Foreign Assets Control (OFAC) in August 2022 for allegedly facilitating the laundering of more than $7 billion in illicit cryptocurrency, including funds stolen by the North Korean Lazarus Group.

Q: How did the Fifth Circuit’s decision affect the sanctions on Tornado Cash?
A: In Van Loon et al. v. Department of the Treasury, the Fifth Circuit held that immutable smart contracts associated with Tornado Cash are not “property” under the International Emergency Economic Powers Act (IEEPA). This ruling limits OFAC’s authority to sanction certain decentralized technologies, although it does not fully remove Tornado Cash from the Specially Designated Nationals (SDN) List.

Q: Are Tornado Cash’s Ethereum addresses still on the SDN List?
A: Yes. Despite the Fifth Circuit’s ruling, OFAC has not removed any Tornado Cash Ethereum addresses from the SDN List. Until OFAC takes further action, U.S. persons and entities remain prohibited from dealing with these addresses.

Q: Does the ruling mean it’s now legal to use Tornado Cash?
A: No. The decision only addressed whether immutable smart contracts can be sanctioned as “property.” All Tornado Cash addresses on the SDN List remain sanctioned, and U.S. persons are still subject to potential penalties if they transact with them.

Q: Why does “immutability” matter in this case?
A: An immutable smart contract cannot be altered, controlled, or owned by any individual or group after deployment. The Fifth Circuit concluded that such autonomous code is not “property” under IEEPA because it lacks the element of control that typically defines ownership.

Q: What risks do crypto users face if they interact with sanctioned addresses?
A: Anyone—U.S. persons or otherwise—who transacts with sanctioned addresses could be in violation of U.S. sanctions laws. Violations can result in severe penalties, including fines and other legal consequences, even if the user unknowingly interacts with a sanctioned address.

Q: What happens next for Tornado Cash and OFAC?
A: The Treasury Department may appeal the Fifth Circuit ruling, or a similar case in another jurisdiction (the Eleventh Circuit) could create a circuit split. Any final outcome may prompt OFAC to revise its stance or lead to new legislation clarifying sanctions authority over decentralized protocols.

Q: How does this ruling impact the broader crypto and DeFi space?
A: The ruling suggests that U.S. sanctions laws might not seamlessly apply to certain decentralized, autonomous technologies. However, mutable smart contracts, project developers, or platform operators can still face sanctions. This drives home the point that legal and regulatory clarity remains a top concern for the DeFi industry.

All current Tornado Cash OFAC listed addresses:
  • – 0x12D66f87A04A9E220743712cE6d9bB1B5616B8Fc
  • – 0x47CE0C6eD5B0Ce3d3A51fdb1C52DC66a7c3c2936
  • – 0x910Cbd523D972eb0a6f4cAe4618aD62622b39DbF
  • – 0xA160cdAB225685dA1d56aa342Ad8841c3b53f291
  • – 0xD4B88Df4D29F5CedD6857912842cff3b20C8Cfa3
  • – 0xFD8610d20aA15b7B2E3Be39B396a1bC3516c7144
  • – 0x07687e702b410Fa43f4cB4Af7FA097918ffD2730
  • – 0x23773E65ed146A459791799d01336DB287f25334
  • – 0x22aaA7720ddd5388A3c0A3333430953C68f1849b
  • – 0x03893a7c7463AE47D46bc7f091665f1893656003
  • – 0x2717c5e28cf931547B621a5dddb772Ab6A35B701
  • – 0xD21be7248e0197Ee08E0c20D4a96DEBdaC3D20Af
  • – 0x4736dCf1b7A3d580672CcE6E7c65cd5cc9cFBa9D
  • – 0xDD4c48C0B24039969fC16D1cdF626eaB821d3384
  • – 0xd96f2B1c14Db8458374d9Aca76E26c3D18364307
  • – 0x169AD27A470D064DEDE56a2D3ff727986b15D52B
  • – 0x0836222F2B2B24A3F36f98668Ed8F0B38D1a872f
  • – 0x178169B423a011fff22B9e3F3abeA13414dDD0F1
  • – 0x610B717796ad172B316836AC95a2ffad065CeaB4
  • – 0xbB93e510BbCD0B7beb5A853875f9eC60275CF498
  • – 0x84443CFd09A48AF6eF360C6976C5392aC5023a1F
  • – 0xd47438C816c9E7f2E2888E060936a499Af9582b3
  • – 0x330bdFADE01eE9bF63C209Ee33102DD334618e0a
  • – 0x1E34A77868E19A6647b1f2F47B51ed72dEDE95DD
  • – 0xdf231d99Ff8b6c6CBF4E9B9a945CBAcEF9339178
  • – 0xaf4c0B70B2Ea9FB7487C7CbB37aDa259579fe040
  • – 0xa5C2254e4253490C54cef0a4347fddb8f75A4998
  • – 0xaf8d1839c3c67cf571aa74B5c12398d4901147B3
  • – 0x6Bf694a291DF3FeC1f7e69701E3ab6c592435Ae7
  • – 0x3aac1cC67c2ec5Db4eA850957b967Ba153aD6279
  • – 0x723B78e67497E85279CB204544566F4dC5d2acA0
  • – 0x0E3A09dDA6B20aFbB34aC7cD4A6881493f3E7bf7
  • – 0x76D85B4C0Fc497EeCc38902397aC608000A06607
  • – 0xCC84179FFD19A1627E79F8648d09e095252Bc418
  • – 0xD5d6f8D9e784d0e26222ad3834500801a68D027D
  • – 0x407CcEeaA7c95d2FE2250Bf9F2c105aA7AAFB512
  • – 0x833481186f16Cece3f1Eeea1a694c42034c3a0dB
  • – 0xd8D7DE3349ccaA0Fde6298fe6D7b7d0d34586193
  • – 0x8281Aa6795aDE17C8973e1aedcA380258Bc124F9
  • – 0x57b2B8c82F065de8Ef5573f9730fC1449B403C9f
  • – 0x05E0b5B40B7b66098C2161A5EE11C5740A3A7C45
  • – 0x23173fE8b96A4Ad8d2E17fB83EA5dcccdCa1Ae52
  • – 0x538Ab61E8A9fc1b2f93b3dd9011d662d89bE6FE6
  • – 0x94Be88213a387E992Dd87DE56950a9aef34b9448
  • – 0x242654336ca2205714071898f67E254EB49ACdCe
  • – 0x776198CCF446DFa168347089d7338879273172cF
  • – 0xeDC5d01286f99A066559F60a585406f3878a033e
  • – 0xD692Fd2D0b2Fbd2e52CFa5B5b9424bC981C30696
  • – 0xca0840578f57fe71599d29375e16783424023357
  • – 0xDF3A408c53E5078af6e8fb2A85088D46Ee09A61b
  • – 0x743494b60097A2230018079c02fe21a7B687EAA5
  • – 0x94C92F096437ab9958fC0A37F09348f30389Ae79
  • – 0x5efda50f22d34F262c29268506C5Fa42cB56A1Ce
  • – 0x2f50508a8a3d323b91336fa3ea6ae50e55f32185
  • – 0xCEe71753C9820f063b38FDbE4cFDAf1d3D928A80
  • – 0xffbac21a641dcfe4552920138d90f3638b3c9fba
  • – 0x179f48c78f57a3a78f0608cc9197b8972921d1d2
  • – 0xb04E030140b30C27bcdfaafFFA98C57d80eDa7B4
  • – 0x77777feddddffc19ff86db637967013e6c6a116c
  • – 0x3efa30704d2b8bbac821307230376556cf8cc39e
  • – 0x746aebc06d2ae31b71ac51429a19d54e797878e9
  • – 0xd90e2f925DA726b50C4Ed8D0Fb90Ad053324F31b
  • – 0x5f6c97C6AD7bdd0AE7E0Dd4ca33A4ED3fDabD4D7
  • – 0xf4B067dD14e95Bab89Be928c07Cb22E3c94E0DAA
  • – 0x58E8dCC13BE9780fC42E8723D8EaD4CF46943dF2
  • – 0x01e2919679362dFBC9ee1644Ba9C6da6D6245BB1
  • – 0x2FC93484614a34f26F7970CBB94615bA109BB4bf
  • – 0x26903a5a198D571422b2b4EA08b56a37cbD68c89
  • – 0xB20c66C4DE72433F3cE747b58B86830c459CA911
  • – 0x2573BAc39EBe2901B4389CD468F2872cF7767FAF
  • – 0x527653eA119F3E6a1F5BD18fbF4714081D7B31ce
  • – 0x653477c392c16b0765603074f157314Cc4f40c32
  • – 0x88fd245fEdeC4A936e700f9173454D1931B4C307
  • – 0x09193888b3f38C82dEdfda55259A82C0E7De875E
  • – 0x5cab7692D4E94096462119ab7bF57319726Eed2A
  • – 0x756C4628E57F7e7f8a459EC2752968360Cf4D1AA
  • – 0x722122dF12D4e14e13Ac3b6895a86e84145b6967
  • – 0x94A1B5CdB22c43faab4AbEb5c74999895464Ddaf
  • – 0xb541fc07bC7619fD4062A54d96268525cBC6FfEF
  • – 0xD82ed8786D7c69DC7e052F7A542AB047971E73d2
  • – 0xF67721A2D8F736E75a49FdD7FAd2e31D8676542a
  • – 0x9AD122c22B14202B4490eDAf288FDb3C7cb3ff5E
  • – 0xD691F27f38B395864Ea86CfC7253969B409c362d
  • – 0xaEaaC358560e11f52454D997AAFF2c5731B6f8a6
  • – 0x1356c899D8C9467C7f71C195612F8A395aBf2f0a
  • – 0xA60C772958a3eD56c1F15dD055bA37AC8e523a0D
  • – 0xBA214C1c1928a32Bffe790263E38B4Af9bFCD659
  • – 0xb1C8094B234DcE6e03f10a5b673c1d8C69739A00
  • – 0xF60dD140cFf0706bAE9Cd734Ac3ae76AD9eBC32A
  • – 0x8589427373D6D84E98730D7795D8f6f8731FDA16

Crypto and Blockchain Scam Glossary

Crypto scams exploit trust, anonymity, and a general lack of industry regulation. In this post, we’ll explore common crypto scam terminology—from Pig Butchering (one of the most prevalent scams) to lesser-known schemes—and provide real-world examples to help you stay alert.

Glossary

Pig Butchering Scams
Rug Pull
Pump and Dump
Ponzi/ Pyramid Schemes
Phishing
Fake Airdrops & Giveaway Scams

Social Engineering/ Impersonation
SIM Swapping
Front-Running
Malware & Remote Access
Fake Exchange/ Broker 
Exit Scams

Pig Butchering Scams

Pig Butchering is a long-con in which the scammer (“butcher”) forms a fake relationship with the victim (“pig”), often romantic or friendly. Over time, the scammer encourages the victim to invest in a fake or manipulated crypto scheme. Once the scammer deems the victim “fat” enough with trust and money, they disappear with all funds.

Example Situations

  1. Romantic Approach
    • You match with someone on a dating app.
    • Over weeks, they share personal stories and “insider tips” about crypto.
    • They convince you to invest in their special trading platform, and initially, you see fake profits.
    • When you try to withdraw, both your money and your new “friend” vanish.
  2. Business Mentorship
    • A seemingly successful professional on LinkedIn starts offering “VIP investment advice.”
    • You see screenshots of their “profits” and eventually deposit funds into a questionable exchange.
    • The scammer then blocks you or the website suddenly goes offline.

Red Flags

  • – Rapid emotional connection paired with immediate investment proposals.
  • – Unrealistically high returns or secret “VIP” opportunities.
  • – Pressure to deposit large sums quickly.
  • – Sudden radio silence once you attempt a withdrawal.

Rug Pull

A Rug Pull happens when developers create a new token or DeFi project, hype it up, and encourage mass buying. Once the token’s price surges, the team drains liquidity or sells their holdings, causing the token price to crash.

Example Situation

  1. A new token is promoted heavily on social media.
  2. Early investors see rapid price increases, but the founding team suddenly sells off their entire stake.
  3. The token’s value plummets, leaving investors with worthless coins.

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Pump and Dump

A Pump and Dump is a coordinated effort to purchase a large quantity of a low-cap token, spread hype (often via social media), and inflate the price artificially. When enough new investors buy in, the perpetrators sell off their tokens, causing the price to crash.

Example Situation

  1. A Telegram group claims they have insider info about a major exchange listing.
  2. Members rush to buy the coin, creating a spike in value.
  3. The group admins then sell at the peak, leaving latecomers holding the bag.

Ponzi / Pyramid Schemes

A Ponzi scheme pays existing investors with the capital of new investors. Eventually, when no new funds arrive, the scheme collapses. In crypto, these often appear as “high-yield investment programs.”

Example Situation

  1. A platform promises 10% weekly returns.
  2. Payouts to older members come directly from new members’ deposits.
  3. When growth slows, withdrawals cease, and the entire scheme unravels.

Phishing Scams

Phishing involves masquerading as a trusted entity—an exchange, wallet provider, or official support team—to trick you into revealing private information such as login details or seed phrases.

Example Situation

  1. You receive an urgent email from “Binance” saying your account has been compromised.
  2. The link directs you to a fake login page that steals your credentials.

Fake Airdrops & Giveaway Scams

Scammers promise free tokens (airdrops) or giveaways but require you to connect your wallet or send a small “activation fee.” You either lose funds, grant malicious smart contracts access, or both.

Example Situation

  1. A tweet announces a “limited-time” free token drop.
  2. You connect your MetaMask and approve a transaction.
  3. Scammers drain your funds or compromise your wallet.

Social Engineering / Impersonation

Social engineering relies on psychological manipulation. Scammers impersonate support staff, project admins, or community members to coerce you into revealing private information or sending funds.

Example Situation

  1. You comment on a crypto forum about a wallet issue.
  2. Someone posing as “official support” DMs you, requesting your seed phrase.
  3. They drain your wallet within minutes.

SIM Swapping

SIM Swapping is when a fraudster convinces your phone carrier to transfer your phone number to their SIM. They then bypass two-factor authentication or password resets, accessing your exchange accounts.

Example Situation

  1. Your phone unexpectedly loses service.
  2. The scammer uses your number to reset exchange logins.
  3. Funds are withdrawn before you can regain control of your account.

Front-Running Scams (DeFi)

Malicious front-running bots scan pending blockchain transactions and insert higher-fee trades just before yours, profiting from the price movements you trigger.

Example Situation

  1. You place a large buy order on a DEX.
  2. A bot pays extra gas to front-run your order, buying cheaper and then instantly selling at a higher price once your order goes through.

Malware & Remote Access Scams

Scammers distribute crypto-focused malware or convince victims to install remote access software, allowing them to hijack wallet addresses or control the entire device.

Example Situation

  1. You download a “free trading bot” from an unverified website.
  2. It includes a clipboard hijacker that swaps your wallet address for the scammer’s whenever you send funds.

Fake Exchange / Broker Scams

A Fake Exchange or Broker Scam involves cybercriminals creating a highly professional-looking website or mobile app that appears nearly identical to a legitimate trading platform. The design often includes accurate-looking real-time price charts, flashy marketing materials, and claims of quick, effortless returns. Scammers are meticulous in crafting the user interface, featuring well-designed dashboards, instant notifications, and even fake trade volume to convince unsuspecting visitors that they are engaging with a real, reputable exchange.

Once victims deposit funds—whether in cryptocurrency or traditional currency—these platforms either prevent withdrawals entirely or subject users to a series of dubious requirements and “fees” before finalizing any withdrawal request. Common excuses include “verification pending,” “platform maintenance,” or “compliance checks.” In many cases, the withdrawal interface will show repeated delays or remain indefinitely “under review,” prompting victims to pay extra for expedited processing or “tax fees.” By the time users realize the withdrawal obstacle is insurmountable, the scam site typically goes offline or blocks access, leaving victims unable to recover their funds.

Example Situation

  1. Polished Web Platform

    • You discover a sleek website—XYZExchange.org—advertising competitive trading fees and seamless crypto/fiat deposits.
    • The site features a busy “order book,” real-time charts, and even a list of trading pairs that mimic those on major exchanges.

  2. Initial Deposit & Trading Success

    • Intrigued, you deposit a small amount of BTC to test the platform.
    • After placing a few trades, you seemingly make a profit and see your balance increase on the platform dashboard.
    • Because of the initial “success,” you feel confident and deposit even more funds.

  3. Suspicious Withdrawal Delays

    • Eventually, you decide to withdraw your BTC or cash out some gains.
    • The withdrawal request is marked as “under review.” Days pass, and there is no progress.
    • A support representative contacts you, claiming you need to pay a “verification fee” or “tax fee” to proceed.

  4. Site Suddenly Disappears

    • You reluctantly pay additional charges, hoping it will allow you to withdraw.
    • The platform continues to block your request or provides new reasons you must pay more.
    • As doubts grow, you try to contact support again, only to find they have deactivated their live chat or removed the site entirely.
Typical Red Flags
  • – Overly Professional but Unverified: A visually stunning website that lacks genuine reviews, social media presence, or any verifiable corporate background.
  • – No Real Regulation: Claimed licenses or certifications often can’t be verified with official regulatory bodies (e.g., SEC, FCA).
  • – Excessive ‘Fees’: Repeated demands for administrative or clearance fees before releasing funds.
  • – Lack of Transparency: Hidden or vague ownership information, with no official company registration details.
  • – Hyped Marketing: Promises of guaranteed returns or substantial profits in a short time, a major red flag in any legitimate financial market.
How to Protect Yourself
  • – Check Licenses and Registration: Real exchanges provide verifiable information on regulatory approval and corporate identity.
  • – Look for Reviews: Search forums like Reddit or reputable crypto review websites to read user experiences.
  • – Use Trusted Platforms: Stick with well-known exchanges that have a track record of successful operation, responsive customer support, and comprehensive security measures.
  • – Test Before Trusting: If you must try a new platform, start with a very small amount and attempt an immediate withdrawal to verify legitimacy.
  • – Be Skeptical of High Returns: Anything promising low risk and high, guaranteed profits is almost certainly a scam.

In summary, Fake Exchange / Broker Scams rely on creating a deceptive sense of authenticity through professional design and false trading data. The criminals behind these scams know that once people see “profits,” they will be more inclined to deposit larger amounts. Recognizing the warning signs early—such as endless withdrawal hurdles and excessive fees—can save you from substantial financial losses.

Exit Scams

In an Exit Scam, a previously “legitimate” project suddenly disappears with user funds. This can occur with lending platforms, mining operations, or NFT marketplaces.

Example Situation

  1. A well-marketed cloud mining company pays out for a few weeks.
  2. Suddenly, withdrawals halt, and the team deletes all social media.
  3. Investors are left with nothing.

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Conclusion

Crypto scams are constantly evolving, and pig butchering stands out for its emotional manipulation and the level of trust it builds before stealing funds. Recognizing the red flags can save you or your community from significant losses. If you ever feel pressured to invest or are promised unrealistic gains, take a step back, do thorough research, and remember: if it sounds too good to be true, it likely is.