Crypto Scams — What They Are and How to Spot Them

As you delve into the world of cryptocurrency, it doesn’t take long to realize that there’s substantial risk associated with these transactions. We don’t mean the volatile nature of the currencies but the vast array of scams surrounding this market. 

If you’re thinking about investing in different cryptocurrencies, it’s worth being aware of the scams and risks. In this article, we’ll take you through some of the biggest crypto scams you need to be aware of and how to avoid them. 

Some General Tips

Before we look at the various cryptocurrency scams, note these tips for making a safe investment: 

  • Check the company’s website for their ICO rules and digital currency liquidity.
  • Ensure that they are blockchain-powered—it means detailed tracking for all transaction data.
  • Research the people behind the company—find out who you’re investing in and the company history.

If you can’t find the information above, you may need to think again. Most legitimate cryptocurrency companies will provide everything you need to know to make an informed decision about investing with them.

Below, our crypto scams list covers some of the biggest crypto scams so that you can make sure you don’t fall victim to one of them.

Imposter Websites

You may be trying to invest in a legitimate coin but fall victim to a scam by visiting an imposter website. These sites are set up to look exactly like the original (and valid) company pages but are copies created to scam people out of their money. 

For example, a site called turned out to be a scam phishing site of the legitimate platform CEX.IO. That’s why you must take note of the original URL.

One thing to look out for is the lock icon in your browser bar (it should be right next to the URL), which confirms that the website is secure. If there’s no ‘HTTPS’ in the website URL, this is also a red flag, and you should double-check that you’re not on an imposter site. 

Some cryptocurrency scams change just one URL letter to try and stop people from realizing that they’re on the wrong site. For example, they might change an ‘o’ to a 0, which may go unnoticed. The safest way to ensure you’re on the right website is to type in the URL and check it over carefully. 

Fake Mobile Apps

Similar to websites, fake apps exist as well. These apps are available through the App Store and Google Play Store and resemble the original and legitimate apps. While many get removed from the marketplace swiftly, there are still lots out there and have cost people thousands of dollars. Just last year, three crypto apps were found to be draining crypto wallets: 

  • Jamm 
  • DaoPoker
  • eTrade/Kintum

These apps appeared to be legitimate but installed secret malware on devices and stole wallet keys. 

To spot a fake app, note anything that looks unusual and double-check the brand name and details. Key giveaways are misspellings in the app name or copy and branding that look slightly off in terms of the logo or coloring. 

Social Media Scams

Social media crypto scams use marketing and links for fake cryptocurrencies circulated either through bots or account hacks. 

In 2020, a Twitter account hijacking saw celebrity accounts hacked and tweeting out fake crypto links. The accounts, ranging from celebrities like Kim Kardashian to former president Barack Obama, asked Twitter users to donate via Bitcoin. Many people fell for this and lost money as they mistakenly trusted the source. 

These Bitcoin scams are avoidable if you treat all social media crypto content with skepticism and research before engaging with it. 

Bad Tweets and Fake Accounts

There are millions of fake accounts and bots on Twitter and other social media platforms, so take care to check that you’re following legitimate people with real information rather than fake accounts. Bots tweet out malicious links and information on crypto that’s rarely legitimate. 

When it comes to crypto on social media, if it looks too good to be true, it usually is. Crypto scams on social media are very sophisticated, with an extensive network of bots and scam accounts. Even if it seems like other people are replying to or endorsing tweets, they may also be coming from fake accounts.

Instagram Crypto Scam

Instagram crypto scams are pretty rife. One Instagram bitcoin scam conned followers out of hundreds of thousands of dollars.

Fraudulent accounts with lots of followers post malicious links, pyramid schemes, or Bitcoin flipping schemes. Instagram influencers have also sometimes run these schemes, 

Scamming Emails

Email scams are common in just about every online industry, including cryptocurrencies. As with websites and apps, it’s always worth checking an email’s source. Email replication is highly advanced, so it may look like an email you’ve previously received from a legitimate crypto company.

To avoid email cryptocurrency scams, check the email address and verify whether it’s associated with a valid company. You should also look for any branding that looks off or typos within the text. 

If you’re in any doubt about an email including crypto offers, never click on any links in the email to get to web pages.

Fake Bitcoin Exchanges

Fake Bitcoin exchanges lure their potential victims by pretending to be legitimate exchanges. They employ tactics such as pushing users to invest more funds, charging hidden fees to access your account or release your funds, or simply stealing your money altogether.

For example, BITKRX was a well-known fake exchange that was exposed by Korean authorities in 2017. It was made to seem like a real subdivision of the Korea Exchange – the largest trading platform in the country.

To ensure you don’t become a victim of these crypto scams, only use exchanges that are well-known and popular within the existing crypto community.

Ponzi Schemes

Ponzi schemes are a simple investment scam. In Ponzi crypto schemes, scammers create business plans that attract lots of currency buyers to generate income. The scammers use a new investor’s money to pay existing investors, meaning that investors believe their crypto is making money. 

In reality, the crypto itself isn’t profitable. Instead, scammers are making money from recruiting new people, but when the newcomers dry up, so too does the cash. 

This kind of scheme has flooded the cryptocurrency market, affecting up to millions of people. 

Fake Cryptocurrencies

Bitcoin is the most well-known digital currency, but there are plenty of other legitimate coins out there. The problem is that there are lots of fake coins out there too. One of the biggest crypto scams is to offer a new cryptocurrency as an alternative to some more major currencies, under the impression that they’re the next big thing.

Often, fake cryptocurrencies will offer promises that are too good to be true. They will present as low-risk but not offer details on their ICO or team members. 

Look out for these red flags if you’re unsure whether it’s a fake. Sometimes it can be challenging to know if a new coin or cryptocurrency is fake, so the best thing to do is monitor it over time.

Malware and Cryptojacking

Installing malware on your computer is an age-old technique used by scammers to access personal information, such as passwords and banking details on your PC or your cryptocurrency funds stored digitally.

Malware can infiltrate your hardware through downloaded links in emails, websites, and social media. It’s why you should always avoid clicking on any links that aren’t from a trustworthy source. If in doubt, contact the company for verification using the contact information found online.

Cryptojacking is a specific type of cybercrime whereby hackers use people’s computing devices (without authorization) to mine for cryptocurrency. It works in the same way as malware, with the victim accidentally downloading the malware needed to mine from a fraudulent email. 

Pump-and-Dump Scams

Pump-and-dump scams are as old as the stock market. It occurs when a group of people buys lots of one low-value share to drive up its overall value. They encourage others to invest in this stock, promising easy money, and then sell their original stock. 

With pump-and-dump cryptocurrency scams, investors can lose a lot of money. These schemes usually promote fake endorsements from celebrities and fake news. 

To protect yourself from these kinds of scams, don’t opt for single tip purchases and realize when something seems too good to be true.

Exchange and Wallet Hacks

Crypto exchanges sometimes get hacked, and investors using that platform can lose their money. Further, digital crypto wallets are a desirable target for hackers, who have stolen millions of dollars worth and leaked personal details.

To mitigate the risk of exchange and wallet hackers, always use popular and trustworthy platforms. To be extra safe, you might consider using a hardware wallet rather than a digital wallet for your digital currency. 

Social Engineering Scams & Phishing

Social engineering scams steal vital information, in this case relating to cryptocurrency wallets. Hackers usually use deceit and psychological manipulation to gain this information.

One example of phishing is when scammers send emails with fraudulent links. They will encourage recipients to update their information by clicking a link. When the person clicks, scammers gain personal information, such as private keys or keys needed to access funds.  

Social engineering scams also include blackmail, where scammers threaten to expose details about the individual if they do not send them cryptocurrency. Recent scams like this include threatening to reveal website history that shows you’ve visited adult sites. This tactic is extortion, and you should report it to your email provider as junk/phishing immediately. 

Sometimes, extortion emails will use data like old passwords to trick you into thinking it’s real. If a current password appears in this kind of email, change it right away across all platforms. 

ICO Scams

ICO scams often use fake or fraudulent sites that appear legitimate, but the user ends up depositing their funds into a compromised wallet. 

To avoid these kinds of crypto scams, research the team and individuals behind the ICO before you invest. 

DeFi Rug Pulls

Decentralized finance (DeFi) platforms aim to decentralize finance and enable users to stake their coins to networks and earn profits as interest accrues. The digital currencies remain locked into the network, and the owner receives repayments at regular intervals. 

Some DeFi platforms are cryptocurrency scams, and it becomes challenging to recover funds once staked. Always beware of DeFi platforms that promise returns that seem too good to be true, and if you’re thinking about using one, research it first.

Technical Support and Impersonation Scams

Scammers sometimes use the guise of customer support to impersonate investment platforms that help with Bitcoin investment. These Bitcoin scams spread fraudulent phone numbers far and wide on the internet, pulling in unsuspecting victims looking for advice or assistance. Other times, scammers conduct outbound calls pretending to be from a support team. 

Always check company details against a trustworthy source (such as the company’s website), and never give out your security codes or passwords if contacted by someone who purports to be from technical or customer support. 

Telegram Scams 

Telegram is a crypto messaging platform that can be useful but is also a target for scammers. Telegram crypto scams cover a range of the scams and frauds listed here, from bots to employment scams and giveaways. 

Recently, a new token named WSB Finance was promoted on Telegram, and resulted in losses estimated around $2 million. The Telegram account encouraged users to send different coins to a particular wallet in order to receive WSB Finance tokens, but these were never delivered.

Therefore, it’s worth being aware of the potential of scammers on this website, and always take caution if you choose to use it. 

Employment Scams

Fraudsters sometimes pretend to work in recruitment and offer fake jobs in a bid to steal crypto. Most often, the scammers will contact people who have posted their CV online and ask for payment to commence training. 

NFT Scams

NFT’s (non fungible tokens) are an exciting investment opportunity because they exist on the blockchain and are transferable between different marketplaces and users. 

An NFT is valuable because of its specific hashtag code, which is not easy to duplicate. When hackers target your account, they can quickly transfer the NFT, and it won’t be easy to get it back or do anything about it.

Some NFT crypto scams also involve selling copies and fakes. You should only ever purchase them through well-known and legitimate channels.

Crypto Scams — Summary

Cryptocurrency is a highly lucrative and exciting investment opportunity, but it’s not without its risks. As digital currencies gain more traction and popularity, the industry becomes the target of scammers and hackers looking to profit illegally from your legitimate investments. 

To remain safe and protected from cryptocurrency scams, use the tips in this guide. Most often, doing your due diligence and researching companies and opportunities before you invest will go a long way to avoiding scams. Also, never click on links or reveal sensitive information to unknown parties before verifying them.

Found this guide helpful? Find more information on safe and lucrative crypto trading today on Cryptoholics!

Crypto Scams FAQs

How to know if a cryptocurrency is legit?

Legitimate cryptocurrencies will use blockchain, offer information on their ICO, and be reasonably transparent. You can find out lots of information about them online from reputable sources.

How do I know if I have been exposed to a crypto scam?

Often, people don’t realize they’ve been the victim of a scam until their funds are missing, and they’re unable to recover them. That’s why it’s always worth researching before investing or paying in crypto, as it’s much easier and safer to discover a scam before you become part of one.

Can you get scammed with Bitcoin?

While Bitcoin is entirely legitimate, there are Bitcoin scams pretending to be Bitcoin or outright hacking and stealing your Bitcoin funds. Use the tips in this list to avoid falling victim to these cryptocurrency scams.

How to avoid crypto scams on Instagram?

To avoid cryptocurrency scams on Instagram, check the credentials of anyone offering crypto-related deals. Find out whether accounts are associated with legitimate crypto businesses before engaging with them. 

How do I report a crypto scam?

It would be best if you always aimed to report crypto scams where possible. You can report social media crypto scams to the platform to have those accounts swiftly blocked. With email, you can mark a message or sender as junk/phishing.

How can I protect myself from crypto scams?

Our crypto scams list covers the biggest crypto scams out there, but it’s always best to be cautious when investing. Being thorough in your research and investing in a secure hardware wallet can help protect your funds. 

Similarly, installing good anti-malware software on your computer can also prevent cyberattacks and crypto-jacking. 

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