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What are Crypto Scams and How to Spot them?

2023-11-27 02:06:49

Cryptocurrency scams take many forms. Just as financial criminals will try to steal money from your bank account or put fraudulent charges on your credit card, crypto scammers will do anything to take your crypto. To protect your crypto assets, it helps to know when and how you’re being targeted and what you can do if you suspect that a cryptocurrency or any communications related to it are a scam.

Types of Cryptocurrency Scams

Cryptocurrency scams typically fall into one of two broad categories:

  1. Attempts to gain control over your digital wallet or authentication details. Scammers strive to obtain sensitive information that could grant them access to your digital wallet or other confidential data, such as security codes. This may sometimes involve gaining control of physical devices like your computer or smartphone.
  2. Tactics that trick you into sending cryptocurrency directly to a scammer. These can take the form of impersonation, bogus investment or business opportunities, or other deceitful methods designed to part you from your crypto assets.

Social Engineering Fraud

Social engineering scams involve tricksters who manipulate and deceive to obtain crucial details about user accounts. These scammers are skilled in making individuals believe they are in contact with a trustworthy entity—be it a governmental organization, a reputable company, tech support, a fellow community member, a work associate, or even a friend.

Such fraudsters will invest considerable time to build a rapport with their potential target. Eventually, they may request sensitive information like private keys or prompt the person to transfer funds to a specified digital wallet. A request for cryptocurrency from someone perceived to be a trusted source should raise immediate suspicions and is often indicative of fraudulent activity.

Frauds Promising Romance

Dating platforms have become a common hunting ground for scammers looking to forge romantic connections. Once trust is established, they typically steer the conversation towards lucrative cryptocurrency ventures, ultimately aiming to extract digital currency or wallet credentials from their targets. The Federal Trade Commission reports that a significant portion of money lost in romance scams involves cryptocurrency, with losses reaching substantial amounts.

Imposter and Giveaway Scams

Scammers often impersonate public figures or crypto influencers to lure victims with the promise of doubling or multiplying their cryptocurrency in so-called "giveaway scams." They leverage the semblance of legitimacy provided by social media profiles to create a false sense of authenticity and urgency. Such scams may lead victims to act hastily in the hope of a quick profit. Additionally, fraudsters may pose as customer support or security personnel from crypto exchanges to deceive individuals into transferring funds or revealing sensitive information.


Phishing in the crypto realm is aimed at stealing online wallet details, especially the private keys that are essential for accessing one's digital assets. Following traditional scam tactics, fraudsters send emails that direct victims to counterfeit websites, prompting them to enter their private keys. Once obtained, these keys give scammers unfettered access to the victim's cryptocurrency holdings.

Blackmail and Extortion Schemes

Scammers resort to blackmail as a tactic, alleging possession of incriminating evidence about a victim's online activities, often related to adult content or other illegal websites. They threaten to publicize this information unless they receive cryptocurrency or the private keys to the victim's wallet. This type of coercion is a serious criminal offense and victims are urged to report such incidents to law enforcement agencies, including the FBI.

Fraud Involving Investment or Business Opportunities

The timeless warning, "if it seems too good to be true, it probably is," is particularly pertinent in the realm of cryptocurrency investments. Many deceptive sites promise "guaranteed returns" or large profits in exchange for significant investments. These empty promises can lead to substantial losses when individuals are unable to reclaim their funds.

New Crypto-Based Opportunities: ICOs and NFTs

Emerging crypto-based ventures, such as initial coin offerings (ICOs) and non-fungible tokens (NFTs), have opened new channels for fraudulent schemes. While they may be presented as attractive investment opportunities, they may not always be reliable. Scammers may set up fictitious ICO websites and persuade individuals to deposit cryptocurrencies into a fraudulent wallet. Alternatively, ICO creators themselves might issue unregulated tokens or engage in false advertising to mislead investors about the potential of their products.

Rug Pulls

A 'rug pull' is a scam where developers collect funds or cryptocurrency for a purportedly legitimate project, only to abruptly drain the liquidity pool and vanish, leaving investors with worthless assets. This results in investors losing their entire contribution as the project gets abandoned without warning.

Cloud Mining

Some platforms entice individual investors with the promise of steady mining rewards in exchange for initial capital. However, these services may falsely claim to have mining power and fail to provide the promised rewards after payment. While not all cloud mining services are fraudulent, it's crucial to thoroughly vet any platform before investing to avoid scams.

Fake Jobs on Job Sites

Fraudulent job offers in the crypto space can surface on job boards, promising roles in investor recruitment, crypto sales, or currency exchange. These positions typically request payment in cryptocurrency for a supposed fee, which is a definitive sign of a scam. Scammers may also send counterfeit checks, instructing victims to deposit them, withdraw funds, purchase cryptocurrency, and transfer it to a specified account, leading to financial loss and liability for the victim.

Impersonate Well-Known Companies

Scammers may impersonate reputable companies like Amazon, Microsoft, or banks, reaching out through various communication channels, including phone calls, emails, social media messages, or computer pop-ups. They often create a false sense of urgency, claiming there's fraudulent activity or a risk to your funds, and instruct you to purchase cryptocurrency and send it to them as a solution. Engaging with these communications can connect you with a scammer, and following through on their instructions is invariably a scam.

How To Avoid Scams

To effectively evade cryptocurrency scams, vigilance is key. Here are some preventative measures:

  • Never disclose your private cryptocurrency keys, as they are the gateway to your crypto and wallet. Legitimate transactions do not require them.
  • Avoid promises of high returns with little to no risk. Such offers are common tactics used by scammers.
  • Disregard unsolicited investment offers, especially those that claim they can significantly increase your funds in a short period.
  • Be skeptical of outreach from "celebrities" promoting cryptocurrency investments. Genuine celebrities do not typically engage in such personal solicitations.
  • If you meet someone on a dating platform, arrange to meet them in person before considering any financial involvement.
  • Dismiss unexpected communication from well-known companies or startups about account issues and refuse to follow any instructions that involve purchasing or transferring cryptocurrency.
  • Should you receive messages purporting to be from government or law enforcement agencies claiming frozen assets, verify through official channels and not through the contact information provided in the message
  • Steer clear of job advertisements that involve converting cash to cryptocurrency or cryptocurrency mining, as these are often fronts for fraudulent schemes.
  • If someone threatens to release sensitive material unless you pay them in cryptocurrency, recognize it as blackmail. Report this to the appropriate authorities.
  • Lastly, be cautious of offers that seem too good to be true, like "free" money or crypto, as these are likely scams.
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