Cryptocurrency scams: the 10 most common crypto scams
On this page, you can read more about cryptocurrency scams. You can read what a crypto scam entails, but also how to recognize these scams and what to do if you have become a victim of a scam.
What is a cryptocurrency scam?
A cryptocurrency scam is simply fraud with a cryptocurrency, such as Bitcoin or Ethereum. For example, you receive an email that child pornography has been found on your computer. Only if you transfer a certain number of Bitcoins, Ethereum, or Litecoins, this will not be disclosed, and the scammer will not go to the police.
You can divide crypto scams into two types:
- Private data: In some scams, hackers try to gain access to your wallet by stealing certain private data.
- Transfer: In other scams, the scammer tries to convince you to transfer crypto due to a ‘false’ reason.
Crypto scams often use social engineering. The scammer wants to make you believe, that it is the government or a trustworthy crypto exchange asking you to share your information.
What crypto scams exist?
Scam 1: Investment scam
If you are active on social media, you have probably already come across this type of scam. A profile contacts you and promises high returns if you invest in an (unknown) crypto fund.
These types of funds are often set up as a Ponzi scheme: the returns are paid out with investments from new members. Typically, the scam is made more realistic by using celebrities or well-known sources for promotion.
Always be vigilant with crypto investments and check the source carefully. When high guaranteed returns are promised, you can assume that it is a scam.
Scam 2: Rug pull scam
In this type of crypto scam, a new project is strongly hyped. This can be a cryptocurrency or an NFT. The value of the underlying token then rises sharply. The developers then withdraw their investment and disappear. As an investor, you lose your entire deposit.
Scam 3: Phishing scam
A phishing email is an email that appears to be from a reliable source. Criminals try to copy the style of, for example, a crypto exchange and then ask you to confirm your password or private key. The hacker then uses this information to steal your crypto assets.
Never hand over your private data without caution: trustworthy exchanges will never approach you by email.
Scam 4: Man-in-the-middle attack
Clever hackers can intercept the data you send over a public network. This allows them to gain access to your account with your crypto exchange.
You can protect yourself against this type of hack by using a VPN. A VPN encrypts all the data you send, so hackers cannot easily steal your personal information.
Scam 5: Fake crypto exchanges
There are also parties that set up fake crypto exchanges. When you transfer money to buy crypto, the exchange simply steals your money. Therefore, it is important to only buy crypto from a reliable crypto exchange.
Furthermore, it is essential to be careful, as FTX proved that even exchanges with a good reputation can be a total scam. The users’ assets were illegally transferred, causing them to lose their money.
Scam 6: Love Scam
Crypto scammers are also active on dating apps. They first flatter you with compliments and eventually ask for money. This scam is also known as the pig butchering scam.
Scam 7: Giveaway Scam
Free crypto giveaways are regularly promoted on social media. You only need to sign up to receive free crypto. After registering, you are often asked to verify your account by making a small payment. Unfortunately, you don’t receive any crypto, but you do lose your investment.
Scam 8: Employer Scam
Scammers also try to scam users in their career by offering an “interesting” job that requires payment in crypto in exchange for training. You will eventually receive neither training nor a job.
Scam 9: Blackmail/Extortion
Another well-known crypto scam is extortion. For example, you receive an email stating that you have visited certain adult websites and that webcam footage has been taken. If you don’t want this to be released, you have to pay in Bitcoins. In most cases, these images do not exist, so you can ignore these extortion emails.
Scam 10: Mining Scams
Other scams revolve around investments for mining pools. Cloud mining is not always a scam, but there are examples of non-existent mining clouds. It is therefore important to investigate whether the offer is genuine.
Watch out for ICO scams too
You should also be careful with ICOs, known as an Initial Coin Offering. Due to the popularity of cryptocurrencies, more and more parties have decided to launch their own digital currency. Investments in new coins can generate a lot of money, but if you are not careful, you can quickly become the victim of a large-scale scam.
It is common for new coins to be advertised as an “interesting investment” with guaranteed returns. The owners often use a “pump & dump” scheme.
In a pump & dump scheme, an institution spreads very positive news about a coin. They can then easily drive up the price. When the price has doubled, the founders sell the coin and leave the project behind.
You can avoid falling into a similar scam by always doing thorough research on ICOs. Research whether the coin actually introduces unique features. It is also important to investigate whether the founders remain active.
How to recognize cryptocurrency scams?
Recognize lies
When dealing with a cryptocurrency scammer, something is usually being lied about. For example, the scammer might say that you have child pornography on your computer or that you suddenly have to pay for a computer program that you have been using for years.
When what is stated is not true, you can already assume that it must be a crypto scam.
Recognize unrealistic promises
You can also be scammed by supposedly making a good investment. The scammer promises, for example, that if you invest a certain amount of bitcoins in their product, service or company, you will get double, triple, or quadruple in return. In the end, you don’t earn anything. In fact, your money is gone.
You can also easily recognize this type of fraud. Does a certain promise sound too good to be true? Then it probably is. It is not realistic to earn two, three, or even four times as many bitcoins in the short term by investing somewhere. If you receive an investment proposal with a very high profit, it is better not to go for it.
Do sufficient research
When you want to invest in an unknown crypto, it is extra important to do sufficient research. Study whether the team behind the crypto has enough experience and read the whitepaper. You can save yourself a lot of trouble by always critically examining new crypto projects.
What should you do if you become a victim of a crypto scam?
If you have become a victim of a cryptocurrency scam, it is important to report this first. Unfortunately, the police cannot do much with a single report. However, if you are not the only victim of the cryptocurrency scammer, there is a good chance that a large-scale investigation will be set up. With a bit of luck, the scammer will be caught.
Unfortunately, the chance that you will get your lost money back is small. Even if the scammer is caught, you still do not have this guarantee.
Prevent crypto scams!
You can prevent fraud by being vigilant. Never give personal information to strangers, and take measures to secure your crypto accounts. By using a VPN, you also prevent the data you send to, for example, a crypto exchange from being intercepted.
