Watch-only wallet scams: when untouchable balances are used to deceive

Fraudsters tempt victims with wallets full of crypto that can only be watched, never used.

Imagine opening a wallet app and seeing crypto assets worth thousands of dollars already inside. The balance looks real and updates in real time, but when you try to transfer the tokens, nothing happens.

This isn’t a hidden fortune waiting for you. It’s the classic setup for a watch-only wallet scam. 

What is a watch-only wallet?

A watch-only wallet is like a window into a blockchain address. You can see balances and transactions, but you cannot send, withdraw or swap funds.

The reason is simple: a watch-only wallet has no access to the private keys or recovery phrase associated with the address. Private keys are what directly control funds by signing transactions, while a recovery phrase can regenerate those keys. Without either, the wallet cannot authorize any transfers. You can read more about private keys and recovery phrases in this article.

Legitimate uses include:

• Monitoring balances on a hardware wallet without exposing keys
• Tracking whale wallets or other addresses of interest
• Keeping an eye on multiple wallets in one app

By design, watch-only wallets are safe and useful. The scam happens when fraudsters misrepresent them as fully functional wallets, tricking people into believing they can use the funds they see.

What are common watch-only wallet scams?

The “big balance” wallet: A scammer showcases a wallet address holding a huge balance and claims it can be sold or unlocked. In reality, the wallet is watch-only, meaning the funds are never accessible.

The “activation fee” trick: Victims are told they must pay a fee to unlock access to the wallet. Once the fee is sent, the scammer disappears and the promised funds remain untouchable.

The “unlocking service”: Fraudsters advertise a service that can release locked funds if you first send them a smaller amount. In truth, no transfer is possible, and the victim simply loses the money they sent.

The “investment scheme”: A scammer poses as a trader and asks the victim to import a wallet address that appears to contain large sums. This false balance is then used to pressure the victim into sending real funds.

Why can’t I withdraw funds from a watch-only wallet?

Because it has no access to private keys, a watch-only wallet cannot sign transactions. You can view balances and activity, but you cannot send, swap, or withdraw funds. The balance shown is real blockchain data, but without the keys it isn’t yours to use.

 What should I do if I get scammed?

• Stop sending funds immediately – never pay extra “fees” or respond to “unlock” requests.
• Report the scam – contact the wallet app provider, your payment platform, and consider filing a report with local authorities.
• Secure your real wallets – if you shared sensitive information like a recovery phrase, move your assets into a new wallet you fully control.
• Educate yourself – learn how watch-only wallets work so you can recognize and avoid similar tricks in the future.

How can I protect myself from these scams?

• Never trust anyone offering wallets that need “activation” or “unlocking.”
• Don’t pay fees or send funds in exchange for access to wallet balances.
• Only use wallets you set up yourself, from verified apps.
• Never share your private keys or recovery phrase.
• Remember: if you don’t control the keys, you don’t control the funds.

 Are watch-only wallets useful?

At first glance, a watch-only wallet may seem restrictive because it doesn’t allow you to send or swap tokens. But this limitation is also its strength. By design, watch-only wallets give you visibility without exposure, and that makes them useful in several ways:

• Extra security for hardware wallets. You can check balances without connecting the device to the internet or revealing private keys.
• Tracking whales or companies. Want to monitor high-value wallets or follow blockchain projects? A watch-only setup gives you live insights without risk.
• Simplified wallet management. Families, DAOs or organizations can keep an eye on balances without sharing sensitive recovery phrases.
• Business transparency. Companies can showcase funds publicly while keeping real control secure.
• Enhanced privacy. Since no private keys are stored, you can monitor wallets safely and anonymously.

In the 1inch Wallet, you can easily add watch-only addresses. This lets you track activity across multiple wallets - your own, your organization’s or even interesting public addresses - all in one app, without compromising security.

When you understand how they work, watch-only wallets can add transparency and convenience  without risk.

Stay tuned for more guidance as we continue answering key questions about Web3!