With the rising popularity of cryptocurrencies like Bitcoin and Ethereum, there has also been an increase in crypto-related scams. Scammers know that crypto is the latest, brightest, and most interesting investment out there, and many people who aren’t that clued up are hoping to cash in.
Since there are many ways to fall victim to scams, here are seven common crypto scams that you should watch out for.
Fake Cryptocurrency Exchanges
Some scam websites impersonate legitimate cryptocurrency exchanges to steal users’ login credentials or cryptocurrency. They may even allow users to deposit funds but make withdrawals impossible. Always verify that you are on the official website of the exchange before depositing any funds.
Pump and Dump Schemes
A group of scammers will buy a low-value cryptocurrency, hype it up on social media to increase demand and price, then sell it for a profit before the price crashes. The promoters make money while unsuspecting investors lose theirs when the hype dies down. Avoid investing just based on sudden price spikes or social media hype.
Ponzi/High-yield Investment Programs
Scammers promise high, unrealistic returns on cryptocurrency investments. They usually rely on money from new investors to pay earlier investors, collapsing when new money stops flowing in. Reject investment opportunities that promise unusually high profits with little to no risk.
Fake Celebrity Endorsements
Scammers hack social media accounts or create fake profiles for celebrities and influencers to promote scam cryptocurrency projects. Ignore investment “opportunities” promoted by celebrities, as they rarely endorse such projects.
Scammers mimic legitimate cryptocurrency organizations or influencers and promote “giveaways”, asking you to send some crypto to participate. But you won’t get anything back. Real crypto giveaways don’t ask for upfront payments.
Scammers send emails or links pretending to be from crypto exchanges, wallets or other services, asking you to log in and provide credentials or keys to steal funds. Always double check the sender’s address and visit sites directly rather than through links.
Crypto malware can hijack computers to mine cryptocurrency or steal wallet keys and seed phrases. Use anti-virus software, don’t download suspicious files, and use a hardware wallet to prevent theft from online computer infections.
If you fall victim to a crypto scam, act quickly to minimize losses.
- Report the scam to relevant authorities like the Federal Trade Commission (FTC) or Securities and Exchange Commission (SEC) to potentially warn others.
- File a complaint about a broker if this is how you lost money. The best crypto recovery services will get all your money back.
- File a report with the FBI’s Internet Crime Complaint Center (IC3).
- Contact the exchange or wallet provider involved to freeze accounts.
- Notify your bank if bank accounts were compromised.
Retain communication records, transaction IDs and screenshots as evidence for investigations and potential lawsuits. Legal action against scammers is difficult but tracing transactions on public blockchains can sometimes facilitate recovery. Don’t pay ransoms to scammers as this rarely works.
Stay skeptical of investment opportunities involving crypto, especially those promising high guaranteed returns or asking for upfront payments. Verify sender identities, company backgrounds and exchange listings before investing or sharing personal information. Keep cryptocurrencies in your own personal wallet rather than on exchanges long-term. Being cautious and doing research can help avoid losing your hard-earned money in crypto scams.
Please note that the information provided on this page is not intended to be and should not be interpreted as legal, tax, investment, financial, or any other form of advice. It is important to only invest what you can afford to lose and to seek independent financial advice if you have any doubts. For further information, we suggest referring to the terms and conditions as well as the help and support pages provided by the issuer or advertiser. CryptoMode is committed to accurate, unbiased reporting, but market conditions are subject to change without notice.