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Crypto scams are fraudulent schemes that aim to steal cryptocurrency or personal information. These scams are on the rise, as digital currencies gain popularity. Crypto scams often involve fraudulent schemes that trick investors into sending cryptocurrency to fake platforms or impersonators.
Cryptocurrency scams come in many forms, each designed to trick you to part with your crypto assets. By recognizing common crypto scams, you can avoid significant financial and emotional distress. Below are some of the most common crypto scam types.
Phishing scams
Phishing scams are a classic trick that can target your crypto wallet and email accounts to make you give sensitive information, like private keys, to scammers. Imagine receiving an email that looks exactly like it’s from your cryptocurrency exchange, telling you to click a link and enter your cryptocurrency account credentials. Once you do, the scammers have the keys to your wallet. They can then empty the wallet of cryptocurrency.
Rule of thumb: never enter secure information through email links. If something seems off, always go directly to the website by typing the URL into your browser. Better safe than sorry.
Rug pull scams
Rug pull scams work by hyping up a new crypto project, attracting investors, and then vanishing — leaving everyone with worthless tokens. These scams often involve fake initial coin offerings (ICOs) and flashy promises that seem too good to pass up. But if something sounds too good to be true, it probably is. Always do your research before investing, and be wary of projects that rely more on hype than substance.
Impersonation scams
Impersonation scams trick people with scammers pretending to be legitimate organizations or famous figures, creating a false sense of urgency. They might pose as job recruiters or well-known personalities on social media, asking for cryptocurrency to “verify your account” or settle a fake debt.
One of the most common tactics is the fake celebrity giveaway — claiming that if you send them some crypto, they’ll send back even more. Spoiler: they won’t. These scams can be surprisingly convincing and often lead to major financial losses, so always double-check before sending crypto to anyone.
“As cryptocurrencies gain popularity, they often attract endorsements from influencers. Unfortunately, some of these promotions are linked to deceptive schemes, where trusting followers end up bearing significant losses,” says Sarogini Muniyandi, Senior Manager of Scam Protection Engineering at F‑Secure.
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Emerging trends in crypto scams
With AI making scams more sophisticated and realistic, even cautious investors can get caught off guard. Some scams now involve money laundering, tricking victims into unknowingly facilitating illegal transactions. Emerging threats like romance baiting — long-term scams that build trust before draining victims’ funds — and fake initial coin offerings (ICOs) are designed to outsmart even the most skeptical investors. Staying informed is your best defense.
Romance baiting scams
Romance baiting scams are long-term cons where scammers build trust with victims, showing fake investment gains to lure them into bigger and bigger investments — only to disappear with everything. These scams rely on psychological manipulation and can be devastatingly effective. “Romance baiting“ scam is the new term of the perhaps more familiar, widely used but stigmatizing term “pig butchering”. The original term comes from the way scammers “fatten up” their victims with false profits before the final “slaughter,” taking their investments completely.
Fake initial coin offerings (ICOs)
Fake ICOs are an emerging scam trend where scammers create convincing websites and marketing materials to attract investments in fake tokens and non-existent cryptocurrency projects. Promising high returns, they vanish once they’ve collected enough funds, often leaving investors with worthless tokens.
Always do thorough research before investing in an ICO, and be extra cautious with new projects that don’t provide detailed, transparent information.
How to spot crypto scams
Spotting a crypto scam can save you from big losses. Always watch out for red flags like:
Low quality white papers
Lack of transparency about team members
Overhyped marketing
Trust your gut: if something appears too good to be true, it usually is. Engaging with the crypto community can also help you stay informed about potential scams and protect your investments.
Evaluate white papers
White papers are crucial for assessing a cryptocurrency project’s legitimacy. A good white paper explains the project’s protocols and functionality in detail. Fraudulent ICOs often have poorly written white papers with fabricated details to mislead investors.
Research team members
Researching the team behind a cryptocurrency project also gives you valuable information. Credible projects provide verifiable information about team members. Transparency is key; lack of information is a red flag and should alert you.
Analyze marketing strategies
Legitimate projects focus on solving real problems rather than relying on celebrity endorsements. Be wary of hype-driven approaches and celebrity endorsements without substance.
How to prevent crypto scams
Preventive measures can protect you from cryptocurrency scams:
Secure your digital wallet
Avoid unsolicited offers and
Research thoroughly to protect your investments
Securing your accounts is crucial as cyber criminals use various methods to steal cryptocurrency.
Secure your digital assets wallet
Your digital wallet is the doorway to your cryptocurrency account, so its security is paramount for your crypto account.
Consider biometric authentication
Avoid public Wi-Fi and ensure you have a secure connection
Add 2-step verification if possible
Always verify URL & email sources
There are different types of wallets, including digital and hardware wallets which offer different levels of security. Do your research and choose the type that suits you best and keep your crypto assets safe.
Avoid unsolicited offers
Unsolicited investment offers — those you didn’t ask for — are often red flags that something is too good to be true. Legitimate investments don’t typically come through random emails, messages, or phone calls. Scammers use these offers to lure in unsuspecting victims, promising high returns with little risk. Engaging with such offers can quickly lead to significant financial losses.
Research thoroughly
Always do your own research — it's your best defence against fraudulent crypto investments. Identify credible sources and evaluate risks before making any investment decisions. A little diligence goes a long way in protecting your money from scams.
“For people considering crypto investments: research them thoroughly,” says Munyiandi. “Be cautious of newly created coins that rely on hype and lack substantial backing. Avoid rushing into decisions; take time to evaluate the risks of any investment opportunity.”
Reporting cryptocurrency scams
Reporting cryptocurrency scams helps authorities track down scammers and fight fraud and protect other investors from further fraud.
Contact relevant authorities
If you suspect a cryptocurrency scam, contact relevant authorities immediately. Also we advise to report to organizations like the Internet Crime Complaint Center and the Commodity Futures Trading Commission to support their investigations and prevent further fraud.
Inform your crypto exchange
Inform your crypto exchange about suspected scams. It helps to prevent further fraud and creates an alert system for other users. Act fast to minimize the impact on your investments and increase your change to recover lost funds.
Learn from the past — case studies of crypto scams
Learning from past scams can provide valuable lessons. Romance scams, where scammers build trust through online relationships and then persuade victims to send crypto, are common. Two other popular examples include Hawk Tuah Girl’s pump-and-dump scheme and the Squid Coin rug pull, both resulting in significant financial losses for investors.
Hawk Tuah Girl's pump-and-dump scheme
Haliey Welch’s cryptocurrency, HAWK, skyrocketed to a market cap of $490 million before plummeting by 95% within hours. Insiders controlled 80–90% of the token supply, leading to accusations of a pump-and-dump strategy. Investors are suing the creators for unlawful promotion and sales of the cryptocurrency.
The Hawk Tuah Girl scheme highlights the dangers of investing in hyped projects without substance. Research thoroughly and be wary of projects relying heavily on celebrity endorsements.
Squid Coin rug pull
The Squid Coin rug pull is another example where a trending topic, the Netflix series Squid Game is used to scam investors. After the squid coin was hyped up, the price soared. However, trading of the coin was rapidly halted, leaving investors with worthless assets. This case underscores the importance of due diligence and scepticism when investing in new projects.
Frequently asked questions
How can you tell if someone is a crypto scammer?
If someone is asking for money through unexpected messages or promising unrealistic returns, there’s a high chance they are a crypto scammer. Always do your research and be sceptical of messages that seem off or too good to be true.
What are the most common types of cryptocurrency scams?
Watch out for phishing scams, rug pulls, and impersonation scams — they're the most common but new scams are arising with the support of AI. Stay alert to keep your assets safe!
How can I avoid falling victim to a phishing scam?
To avoid phishing scams, don’t click on links in emails, text messages or QR codes; always visit websites directly. Staying cautious can save you a lot of trouble!
What should I look for in a white paper to spot a potential scam?
Check if the white paper explains the project’s technology clearly and has verifiable information; vague details or promises of guaranteed returns can be red flags.
How can I secure my digital wallet?
To secure your digital wallet, always use strong, unique passwords and consider activating biometric authentication. Plus, steer clear of public Wi-Fi when accessing it to keep your funds safe.
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