Could your cryptocurrency disappear overnight — and if it did, would anyone be responsible? As digital assets become more mainstream, so do the scams, security failures, and legal questions surrounding them…
In this episode of The Agent of Wealth Podcast, host Marc Bautis is joined by Courtney M. Werning, Principal at Meyer Wilson Werning and leader of the firm’s cryptocurrency litigation practice. Courtney has spent more than a decade helping investors recover losses caused by financial institutions, securities fraud, and cryptocurrency-related misconduct.
Together, they explore the hidden risks of crypto investing, the rise of increasingly sophisticated scams, and what investors should know if their digital assets are compromised.
In this episode, you will learn:
- Why many crypto losses aren’t simply the result of market volatility — and when investors may have legal options.
- The most common cryptocurrency scams, including social engineering attacks, account takeovers, phishing schemes, and recovery scams.
- Why Gen Z is being targeted by scammers more frequently than any other generation, despite growing up in a digital-first world.
- Practical steps investors can take to better protect themselves from fraud, AI-powered scams, and cybersecurity threats.
- And more!
Resources:
meyerwilson.com | Bautis Financial: 8 Hillside Ave, Suite LL1 Montclair, New Jersey 07042 (862) 205-5000 | Schedule an Introductory Call
Disclosure: The transcript below has been edited for clarity and content. It is not a direct transcription of the full episode, which can be listened to above.
Welcome back to The Agent of Wealth Podcast, this is your host Marc Bautis. Today, I’m joined by a special guest, Courtney M. Werning.
Courtney is a Principal at Meyer Wilson Werning, one of the country’s leading investor rights law firms, and the driving force behind the firm’s cryptocurrency litigation practice.
She has spent her career representing investors who have been harmed by financial institutions, scams, and securities fraud, recovering millions of dollars for victims. Courtney currently serves on the Board of Directors of PIABA and on FINRA’s National Arbitration and Mediation Committee.
Today, we’re going to discuss two important topics impacting investors today: crypto’s dirty secret — the risks and failures within crypto platforms and exchanges — and why Gen Z may be uniquely vulnerable to crypto fraud despite growing up in a digital-first world.
Courtney, welcome to the show.
Thanks so much for having me.
Can you start by telling us a little bit about your background and your journey into securities law, investor advocacy, and eventually specializing in cryptocurrency litigation?
From Traditional Securities Law to Crypto Litigation
I’ve been a practicing attorney for about 13 or 14 years now, and my entire career has been devoted to representing investors who have claims against financial institutions.
For most of my career, those cases involved U.S.-based brokerage firms and investment advisory firms. They included things like the negligent sale of securities, Ponzi schemes, broker theft, and the misrepresentation or omission of material facts — what I’d consider my bread-and-butter investment misconduct cases.
Over the last few years, though, we’ve seen a shift in the types of investment losses people are experiencing. More and more clients are coming to us with losses involving digital assets instead of traditional securities. As a result, we’ve jumped into cryptocurrency litigation, handling cases against cryptocurrency exchanges, U.S.-based brokerage firms connected to pig butchering scams, and cybersecurity breaches and security failures at the exchange level.
I’ve been doing this for over a decade now, and I wouldn’t want to be doing anything else. It’s a relatively small area of the law, and many people don’t realize they may have valid legal claims when they suffer investment losses because of someone else’s misconduct. A big part of what we do is determine what happened and who’s responsible.
The topic really caught my attention because I’m hearing about it more and more from clients. They’ll tell me, “I lost money because a brokerage froze my account and wouldn’t let me access it,” or, “Someone stole the cryptocurrency right out of my account.”
We’ve seen a lot of account takeover cases as well. The account holder suddenly can’t access their account, while an outside party is able to get in and make trades or withdrawals.
Those are the situations where we often see failures in security protocols. There are frequently red flags that should have triggered additional verification, but instead, unauthorized transactions are allowed to go through without anything being done to stop them.
The Biggest Misconceptions About Crypto Losses
When people hear about crypto fraud or investors losing money in cryptocurrency, they often assume it was simply a bad investment decision — that the market was volatile and that’s just what happened.
What are some of the biggest misconceptions people have about crypto-related losses?
I think that’s exactly right. People view cryptocurrency as a highly speculative investment, and it is. It’s extremely volatile and carries significant risk.
But regardless of what you’re investing in, companies still owe their customers a duty of care. They have to operate in a commercially reasonable manner and implement appropriate safeguards.
You’re choosing to invest in something that’s risky, but you still have the right to expect proper account security, fraud prevention measures, and truthful representations about how your assets are protected.
For example, Coinbase has told Congress — and markets itself — as having bank-level security. In many cases, we argue that the reality doesn’t match those claims.
The biggest misconception is that if you invested in a digital asset and lost money, there’s automatically nothing you can do. If your losses were simply the result of market fluctuations, that’s generally true.
But if you lost money because you were the victim of a social engineering scam, an account takeover, a phishing attack, or another type of fraud, it’s worth investigating whether the platform met its duty of care. Sometimes it did, and sometimes it didn’t.
We’ve even handled cases involving insider misconduct, where employees at cryptocurrency exchanges allegedly sold customer data or were directly involved in compromising customer accounts.
So it’s not always as simple as, “I lost money, and that’s the end of the story.” Sometimes there isn’t a legal claim — but sometimes there is. The key question is whether the company fulfilled its obligations to protect you as a customer, and that’s exactly the kind of question someone like me helps answer.
What To Do If Your Crypto Is Stolen
How does the process typically start?
Let’s say someone realizes they’ve lost money. Maybe they log into their account — or can’t log in at all — and discover something’s wrong. What’s the first step they should take, and at what point do you get involved?
The first thing to do if you realize you’ve been the victim of a scam — whether you’ve transferred money to the wrong place or your account has been compromised — is to act quickly.
A common example involves social engineering scams. Coinbase, for instance, experienced a major data breach last year in which customer information was stolen. That data was then used to target customers with convincing scams.
Imagine it’s a Tuesday afternoon and you get a phone call from someone claiming to be “Marcus from Coinbase Security.” They tell you your account is being hacked and that you need to move your assets to a “safe wallet.” They know your recent transactions, how long you’ve been a customer, and other personal details, making the call seem completely legitimate.
Naturally, you think, “Thank goodness they caught this.” So you follow the instructions, only to discover you’ve just transferred your assets directly to a scammer.
We see this over and over again.
People immediately contact the exchange and say, “This was fraud. Can you reverse the transaction?” Unfortunately, the answer is usually no — and in most cases, that’s true. Once cryptocurrency is transferred on the blockchain, those transactions are irreversible. That’s part of what makes crypto such a paradise for scammers. Unlike money sitting in a bank account, it can’t simply be frozen or recovered.
The exchange can usually lock down your account fairly quickly, which is important. You should also contact law enforcement and file an IC3 report with the FBI.
The challenge is that the IC3 system is primarily a data collection tool. If someone loses $200,000 or $300,000 in cryptocurrency, that’s devastating for the individual, but the FBI is often focused on much larger operations involving wallets containing hundreds of millions — or even billions — of dollars. They simply don’t have the resources to investigate every individual case.
That said, filing the report is still important. If enough people report the same wallet or scam, it helps authorities identify larger criminal operations and potentially take action.
You should also preserve everything — keep the device you were using, save emails, text messages, screenshots, transaction records, and any other communications related to the incident.
Realistically, though, those steps alone are unlikely to recover your money. That’s when it’s worth contacting a securities attorney or cryptocurrency attorney to evaluate whether there’s a legal claim against another party involved.
One other thing I always warn people about is the recovery scam.
After someone loses money, they’re understandably desperate to get it back. Then another person comes along claiming to be a recovery expert who says, “Pay us $25,000 and we’ll recover your Bitcoin.”
Unfortunately, that’s often just another scam — sometimes even run by the same criminal organization.
In fact, I’m currently representing someone in a case against Fidelity. Their IRA was emptied in a single day and transferred into cryptocurrency, despite what we believe were significant red flags. We’re pursuing the case based on Fidelity’s handling of those transactions.
Recently, that same client told me someone offered to recover the stolen funds for $25,000.
I told them, “Please don’t do it.”
At that point, the cryptocurrency has likely moved through thousands of wallets, mixers, and decentralized exchanges. Recovering it directly is extraordinarily unlikely.
That’s why I caution anyone who’s already been victimized not to fall into the second phase of the scam by paying someone who promises to recover the funds.
At our firm, we handle these cases on a contingency basis. Clients don’t pay us upfront — we only get paid if we’re able to recover money on their behalf. I hate seeing people lose even more after they’ve already experienced such devastating losses.
Who’s Really Behind Cryptocurrency Scams?
When you get involved, are you primarily looking at companies like Fidelity, Coinbase, or other brokerages and exchanges? Or do you ever pursue the actual person behind the scam?
You mean the actual criminal?
Exactly.
I wish. The reality is, we’ve never pursued the individual scammers because it’s incredibly difficult to identify them.
Do you think most of these scams originate in the United States or overseas?
Mostly overseas. If you’ve looked into how these criminal organizations operate, many are based in Southeast Asia. They often run large compounds where the people carrying out these scams are themselves victims of human trafficking. They’re forced to participate in these operations, which makes the situation even more disturbing.
The money is then funneled through decentralized exchanges and other mechanisms that make it virtually impossible to trace.
The scale is staggering. According to the FBI’s IC3 report, cybersecurity-related losses reached approximately $22 billion in 2025. The report also introduced a brand-new category for AI-driven scams, reflecting just how quickly these schemes are evolving.
AI has made scams dramatically more convincing. Gone are the days of poorly written phishing emails full of spelling mistakes. Today’s scams look polished, professional, and highly believable — and artificial intelligence is helping scammers create them.
Why Gen Z Is Especially Vulnerable to Crypto Fraud
I know Gen Z is often targeted because they’re more likely to use digital assets. Are there other reasons younger investors seem especially vulnerable?
I’ve thought about that a lot.
Most of our clients are actually older Americans, largely because when they lose money, the dollar amounts tend to be much larger. They’ve spent decades building retirement savings, so when they’re targeted, the losses can be catastrophic.
Statistically, though, younger people are scammed more frequently. That surprised me because they’re digital natives. You’d expect them to be better at recognizing online threats and protecting themselves.
I don’t know that there’s one definitive answer, but I suspect it has something to do with trust.
Older generations generally grew up conducting financial transactions face-to-face. They visited their bank, met with their financial advisor, and tended to approach unfamiliar situations with more skepticism.
Of course, that’s a generalization. We’ve represented plenty of older clients who were scammed through online messages.
But overall, younger generations have lived much more of their lives online. They’re comfortable interacting with people digitally and may be more willing to trust a direct message, click a link, or engage with someone they’ve never met.
I think that’s part of what’s driving the trend.
Cryptocurrency itself is also much more mainstream among younger investors. There’s often a fear of missing out — they don’t want to be left behind.
As crypto becomes more widely accepted, including through ongoing discussions in Congress about market structure and regulation, younger investors increasingly see it as a normal part of the financial landscape. They’ve grown up with it as an option for investing, spending, and transferring money.
That familiarity can sometimes reduce the level of skepticism they bring to cryptocurrency investments or platforms.
My clients really span the entire spectrum.
On one end, I recently represented a 93-year-old woman who lost $1.5 million in a government impersonation scam. She withdrew nearly all of her brokerage assets and deposited them into Bitcoin ATMs that sent the funds directly to a scammer’s wallet. It was devastating.
On the other end, I represent experienced cryptocurrency traders who’ve been investing in digital assets for years but later become victims of cybersecurity breaches and lose substantial amounts that way.
It’s fascinating to see the differences between those groups, but the data is clear: Gen Z is being scammed more often than older Americans, even if older victims tend to lose more money when they are targeted.
Yeah, I can definitely see how growing up in a digital world could contribute to that. My daughter’s still too young to have a crypto account, but she’s constantly asking me to approve downloads for different apps.
I always find myself wondering, “Why do you even want this app?” But beyond that, I wonder what the app is actually doing with your data. I think when you’re older, you’re naturally a little more skeptical. Younger generations have grown up with everything happening online, so they’re more comfortable in that environment — and sometimes maybe a little too comfortable.
That’s exactly right. The scams are built into the platforms they already use every day, so they feel very natural.
Holding Crypto Platforms Accountable
We’ve talked a lot about social engineering scams. But what about situations where someone legitimately stores cryptocurrency on a financial platform and then, one day, the platform says, “Sorry, your assets are gone,” whether because of fraud, a hack, or some other issue?
Many investors assume these platforms should operate like banks and wonder, “How can they just freeze or lose my assets?”
How do cases like that work, and how do you get involved?
Those cases happen too. For example, we’ve handled situations where someone gains unauthorized access to an account and executes trades or withdrawals without the account owner’s knowledge.
I have cases right now involving accounts where an API was somehow connected and executed thousands of trades within minutes. It’s obviously not human behavior, and it’s certainly not something my client did.
The question then becomes: How did someone gain access, and were there security measures the exchange should have had in place to prevent it?
That’s a complicated analysis, and often we can’t answer those questions just by looking at the surface facts.
We also see many cases involving phishing attacks. But just because someone clicked on a phishing link doesn’t automatically absolve the financial institution of responsibility.
These platforms are supposed to have systems that detect suspicious activity — things like impossible travel, unusual IP addresses, or transactions originating from different parts of the world within minutes of each other. Those alerts are designed to stop fraudulent activity before money leaves the account.
Determining what happened usually requires a detailed forensic investigation.
Initially, I can identify the signs of fraud, but we often don’t know exactly what happened until litigation begins and we receive discovery from the other side. That’s when we obtain access logs, activity records, and other technical data that show what actually occurred behind the scenes.
From there, we can demonstrate what the institution knew — or should have known — and explain what it should have done differently.
Many of these disputes are resolved through arbitration, and we’ve had success holding institutions accountable.
After all, every major cryptocurrency exchange markets itself as the safest platform available. If they’re making those promises to customers, then they need to deliver on them.
The challenge is that we still don’t have a fully developed regulatory framework defining exactly what those obligations should be.
That’s changing, and we’re watching it closely. Questions like who’s going to regulate these platforms, what investor protections will be required, and what kinds of audits regulators can conduct are all still evolving.
But regardless of the regulations, I believe every customer of a cryptocurrency platform deserves reasonable care.
Our argument is often that whatever happened — whether it involved compromised passwords, unauthorized API access, or something else — the platform had both the tools and the obligation to prevent it.
Does cryptocurrency currently fall under the same securities laws that govern a traditional brokerage account at Fidelity, or are there separate laws for digital assets?
Not yet. Right now, Congress is considering legislation called the CLARITY Act, which is intended to answer exactly that question.
Both the CFTC and the SEC have asserted authority over different aspects of cryptocurrency regulation. The SEC, in particular, pursued a number of enforcement actions arguing that certain crypto assets were unregistered securities or that companies were operating as unregistered broker-dealers.
With the change in administration, though, we’ve seen the SEC pull back from that regulation-by-enforcement approach. Several high-profile cases were even dropped before they were resolved.
Hopefully, the CLARITY Act will establish who regulates these firms and what standards they’ll be required to follow.
My biggest hope is that the legislation also includes meaningful investor protections.
Under the Securities Act of 1933, investors have a private right of action when securities are improperly sold or laws are violated. I’d like to see similar protections built into whatever regulatory framework ultimately governs cryptocurrency.
We’ll have to see what Congress ultimately passes.
Protecting Yourself as Crypto Fraud Evolves
What can investors do to reduce the chances of becoming victims of scams, fraud, or other types of financial loss — whether that’s evaluating a platform or protecting themselves from social engineering attacks?
It’s really a combination of things. I often tell people that about 95% of investment scams — not just crypto scams — begin with an unsolicited message on social media.
If you receive a random message, even something as simple as a wrong-number text, assume you’ve been targeted. It’s almost never accidental.
Even if the message appears to come from someone you know, verify it through another channel.
For example, I could receive what looks like a LinkedIn message from you tomorrow saying, “Hey, here’s the podcast link.” Before clicking, I’d want to confirm it by calling or emailing you directly.
We’re also seeing more AI-generated deepfake scams.
Someone’s “granddaughter” calls asking for money, and it actually sounds like her voice.
One suggestion I make is creating a family safe word. If someone calls claiming to be a relative in an emergency, ask for the safe word. It’s something a scammer — or AI — wouldn’t know.
I also encourage people to thoroughly research any investment platform or opportunity before sending money. And be extremely cautious anytime someone creates urgency.
Legitimate investment opportunities don’t disappear in 24 hours. If someone tells you that you have to act immediately or you’ll miss out, that’s a major red flag.
Take your time. Slow down. Do your research.
Looking ahead, where do you see financial fraud going?
Digital assets seem like they’re only becoming a bigger part of our financial lives, so I imagine these issues are only going to become more common.
Unfortunately, I do.
I think lawmakers and regulators are working hard to catch up, but criminals simply move much faster.
Because of that, I expect the roughly $22 billion in cybercrime losses reported in 2025 to increase significantly in 2026.
I’m honestly not sure there’s a simple way to stop it.
We’ve embraced digital assets and AI, and while those technologies provide tremendous benefits, they’ve also made it much easier for criminals to scam people.
Going forward, I think one of the biggest opportunities lies in training frontline financial professionals.
The people working at banks, brokerage firms, and advisory firms need to recognize the warning signs and know when to intervene.
We’ve already seen some progress through measures like temporary disbursement holds, trusted contact rules, and other safeguards that give financial institutions more authority to pause suspicious transactions.
I think those protections will continue to expand.
I can’t tell you how many cases I’ve seen where someone emptied an account through a series of unusual withdrawals to fund cryptocurrency purchases, and afterward the broker says, “I thought it looked suspicious, but it was their money.”
That shouldn’t be the standard.
Financial professionals need better training and better tools to recognize when something doesn’t look right — and the confidence to act on it.
When those safeguards are used appropriately, they really can prevent losses.
So I think education is critical — educating financial professionals, educating investors, and continuing to strengthen regulations.
Unfortunately, I don’t see the criminals slowing down anytime soon.
It’s definitely scary.
Courtney, those are all the questions I have today. Thank you so much for joining me on The Agent of Wealth Podcast.
Before we wrap up, where can listeners learn more about your work or get in touch with you?
You can visit our website at meyerwilson.com to learn more about what we do.
If you think you’ve experienced something similar or have questions about your situation, you can fill out our contact form. Those inquiries come directly to me, and I’d be happy to talk through what happened.
Great. We’ll include that information in the resources section of the show notes.
Thanks again, Courtney, and thanks to everyone who tuned in today.
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Bautis Financial LLC is a registered investment advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.
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