UK investor loses $2.8M in high-stakes crypto impersonation scam

UK police are investigating a crypto impersonation scam that cost a victim £2.1 million ($2.8 million) in Bitcoin, after fraudsters posed as senior law enforcement officials to execute a highly targeted theft.

The North Wales Police Cyber Crime team called the case a “disturbing escalation” in tactics used against long-term holders, raising fresh alarms over investor security in the digital asset sector.

“This case is a stark reminder that criminals are adapting quickly and exploiting trust in institutions,” said Detective Superintendent Paul Peters, head of the Cyber Crime Unit at North Wales Police.

How the scam unfolded

According to police, the crypto impersonation scam began when the victim was contacted by someone claiming to be a senior UK officer. The caller alleged that an individual in custody had the victim’s identification documents, warning of possible security threats.

The scammer urged the victim to “secure” their digital assets by logging into their cold storage wallet via a link provided. Believing they were following legitimate police instructions, the victim entered their seed phrase into a sophisticated fake website. This handed the fraudsters complete control of the wallet, allowing them to withdraw $2.8 million worth of Bitcoin.

“By creating a sense of urgency and fear, scammers can bypass even strong security awareness,” Peters said. “In this crypto impersonation scam, the victim thought they were protecting themselves, but in reality, they were handing over the keys.”

Police issue urgent warnings

North Wales Police confirmed they are working to trace the stolen funds, though recovery remains uncertain. The force also issued direct warnings to crypto investors about how to spot and avoid a crypto impersonation scam.

“Police will never call you unexpectedly to discuss your cryptocurrency holdings or instruct you to access your cold wallet,” the Cyber Crime Unit said in a public advisory. “Anyone asking for your seed phrase is attempting fraud—law enforcement does not need this information.”

The advisory urges individuals to hang up on unsolicited calls and verify legitimacy by contacting police directly through official channels. Officers emphasized that real investigators would never ask investors to take immediate action on wallets, nor would they request private security details.

“Scammers are constantly refining their social engineering techniques,” the police statement added. “This crypto impersonation scam shows they are targeting experienced investors, not just beginners.”

Global trend of impersonation fraud

The UK case aligns with a broader rise in impersonation-based crypto fraud worldwide. Earlier this month, the US Federal Bureau of Investigation (FBI) warned that fraudsters posing as exchange employees have been contacting investors with claims of account problems, tricking them into sharing login credentials.

In May, the FBI also highlighted the use of AI-driven deepfake voice messages to impersonate senior US officials. These campaigns, while initially aimed at government staff, illustrate how emerging technology is being adapted for scams that could easily spill over into the crypto sector.

“Impersonation attacks are increasingly sophisticated and often involve multiple stages of manipulation,” said Christopher Ahlberg, CEO of cyber intelligence firm Recorded Future.“The North Wales case shows how quickly a crypto impersonation scam can escalate into multimillion-dollar theft.”

What investors should do next

For crypto investors, the North Wales case underlines the importance of verifying all unexpected communications whether they appear to come from police, government agencies, or crypto exchanges.

Experts stress that seed phrases should never be shared under any circumstances. Investors are also encouraged to maintain strict offline security practices, use hardware wallets purchased directly from official vendors, and enable multi-factor authentication where possible.

As police investigations continue, the incident serves as a cautionary tale for the growing crypto market. For now, law enforcement is urging vigilance: if a call feels urgent, suspicious, or too authoritative to question, it may be the start of a crypto impersonation scam.