How to Avoid Cryptocurrency Scams?

Jan 27, 2022 12:56:08 PM | cryptocurrency How to Avoid Cryptocurrency Scams?

What types of cryptocurrency scams are there and how to avoid them? Find out in this article.

Cryptocurrency is gaining more and more popularity these days, and so are cryptocurrency scams. Although investing in crypto has been successful only recently, fraudsters seem to be sticking to tried and tested methods of defrauding consumers.

BitConnect seems to be the most striking example of an Initial Coin Offering (ICO) fraud. At a time when people were talking a lot about cryptocurrencies but weren't really informed about how it functions, BitConnect marketed itself as an easy way for individuals to invest in cryptocurrency and make a lot of money in a short period. However, it turned out to be a Ponzi scam that lost its investors $3.45 billion.

Pincoin, a Vietnamese cryptocurrency that garnered $660 million from approximately 32,000 people, was another massive crypto scam promising constant returns. At first, Pincoin investors began receiving cash as a return for their investment, but then the team started paying them with iFan, their new cryptocurrency, before completely vanishing with all the money invested.

According to the American Federal Trade Commission, about 7,000 individuals lost well over $80 million in crypto frauds between October 2020 and March 2021. That's a significant increase from the 570 cryptocurrency scams and $7.5 million in losses seen in the same months a year prior.

According to recent research from Crypto Head, most cryptocurrency scams are related to Bitcoin, which is expected given that it is the most widely used cryptocurrency.

Crypto investors, whether they like it or not, are exposing themselves to a new and increasing danger of cryptocurrency scams. If you've created a crypto portfolio or are considering doing so, here are some frequent frauds and potential problems to be aware of.

Impersonation scams 

There's a large number of phone lines set up by criminals impersonating a range of firms in the banking, technology, and other industries. Fake phone numbers are widely disseminated on the internet, tempting naive victims looking for help. These scam artists are experts at psychological manipulation, deceiving and misleading their victims into supplying personal information that would be utilized for malicious reasons by making false promises.

For example, Telegram is widely used by crypto services for support and thought exchange. Many scammers will copy the display name of the "actual" admins and the profile picture and will deceive you by providing fake support. The only way is to check the actual Telegram handle and compare it to the official list that can usually be found in the Telegram feed.

To avoid these kinds of scams, don’t give access to your accounts to anyone asking (which applies to all other areas of the internet), even if they say they are a customer support representative from an app that you use. Trustworthy agents will never ask for your password. Moreover, contact companies only through their official numbers and email addresses listed on their websites. And never, ever, send crypto or money to external addresses that claim to be mediating agents of financial companies. 

Giveaway scams

These kinds of cryptocurrency scams happen through social media, where scammers upload screenshots of fake messages from companies that “organize” giveaways with links to fraud websites. To increase the perception of legitimacy for these posts, they create fake accounts that reply to them. When you click on their link, you’ll get a request to transfer cryptocurrency in order to authenticate your address. 

Never do this! In general, you should take all social media giveaways with a grain of salt. Never trust screenshots in reply messages should not be trusted since they might be falsified and manipulated. Always check URLs and make sure you report fake profiles to the original organization. 

Investment scams

These con artists encourage you to invest money in order to make bigger returns with little risk and then want you to recruit others to do the same. In order to earn profits, they frequently require a steady stream of new investors. Investment schemes such as Ponzi and pyramid schemes are the most typical cases. To avoid these scams, always check who’s behind the platform you’re investing in. Look for some public articles that feature the platform to make sure it’s a trusted site. 

Extortion scams

Some fraudsters may call you and claim to have humiliating or harmful information about you, threatening to disclose it unless you transfer them cryptocurrency.

They may show you anything they received from a data breach, such as an old password, to make the hoax more plausible. In most cases, they don't have more information than this, and the scammer is only fooling you into complying with their requests.

Always report these emails as spam. If you are using the password they threaten you with, immediately change it. Use a trusted application to run a preventive malware scan on your computer.

Loader scams

These are blatant frauds in which someone asks for your crypto wallet or credit card data in order to increase your account limit. In exchange, the fraudster promises a share of the profits they claim to generate from their assets.

Instead, the victim's crypto asset is stolen, and they are frequently forced to foot the bill for bogus credit card transactions. They "fill up" the victim's account with cryptocurrency and then steal it all, leaving the victim liable for any transactions performed using their wallet information.

Never give out your credentials to a third party. If you notice this type of conduct on a legal trading platform, disclose it so that it may be addressed.


Representatives from fake companies—or claiming to be from legitimate ones—will contact you and offer to help manage your crypto if you’ll give them your login credentials. They might also say they need remote access to your computer or other device or want you to send crypto to a suspicious wallet address.  

Never give important information to persons who contact you without your permission, no matter how compelling or urgent they appear to be. Double-check their details if they indicate they work for a genuine firm.

Wrapping up

Always report frauds to the sites where they're being perpetrated. If you notice a fraudster posing as a representative of a cryptocurrency exchange, such as Binance, report it to the exchange. If you see someone on Instagram distributing fraudulent freebies, alert them.

Avoiding cryptocurrency scams, like other frauds, boils down to keeping your data safe and always being alert. Remember that no reputable business will contact you and ask for money, and you should never transfer funds to random people.

If an offer for investment appears to offer easy money for an unrealistically short period of time, it most likely is a scam. Cryptocurrency scams should be reported, and any further messages should be ignored.

Sara Miteva

Written By: Sara Miteva