Common Cryptocurrency Scams: What to Know and How to Avoid Them

Common Cryptocurrency Scams: What to Know and How to Avoid Them

Currently, the cryptocurrency market is valued at more than a trillion dollars. Aside from the most popular such as Bitcoin, Etherum, and Dogecoin, there are more than 8,000 other cryptos and altcoins available. And where there’s money to be made, there’s money to be stolen.

Unfortunately, every year, thousands of people fall victim to various online cryptocurrency scams and end up losing a chunk of their crypto portfolios. It’s easy to think that scams are so obvious that you would never fall for such a ruse.

However, as people become more aware, scammers become more sneaky. Just ask anyone who has been scammed. Never would that have believed they would have fallen for such a trick previously.

Therefore, despite you being sure you will never have an issue, being fully aware of how scammers operate and what types of techniques they use will ensure that you can always stay one step ahead.

After all, since cryptos are regulated by any government, if you are scammed, there will be no one who can help you get your money or assets back.

Check out our list of common cryptocurrency scams below as well as tips on how you can avoid them further down the page.

The scams we will look at in this article are

  • Investment Opportunities
  • Extortion and Blackmail
  • Giveaways
  • Employment Offers
  • Fake Apps
  • Loader Requests
  • Imposters and Impersonators
  • Social Media Bots
  • Phishing Messages
  • Romantic Interests

1. Investment Opportunities

An investment opportunity scam involves someone contacting you, usually via email or through your social media, telling you they have a great investment that you can’t miss. They’ll usually include a link to a web page.

This web page may look genuine, they may even include stolen photos or fake celebrity endorsements to seem legitimate. You’ll be told that if you invest money with their crypto scheme, you’ll get rich quick. The fraudster may also put pressure on you so you follow through with the scam without thinking it through clearly.

However, once you send your money, you’ll never hear from this person again.

What to Lookout For

  • Unsolicited messages from people you don’t know
  • Guarantees you’ll get rich quick
  • An investment that is way too good to be true

2. Extortion and Blackmail

One of the most common and oldest scams going is extortion or blackmail. This scam works so well because it’s guaranteed to make most people panic and do whatever the other person is asking.

For this scam, someone will contact you via email or message and say they have explicit or compromising photos, videos, or information about you. The kind of thing that could ruin your life.

Now, for most people, when they read this, all logic goes out the window. Instead of realizing that this couldn’t possibly be true, they start to think that maybe their phone has been hacked or someone has been spying on them.

This latter option is extremely rare, and the reality is that the person contacting you has nothing. There are no photos, no videos, no compromising information. It’s all just one big scare tactic that unfortunately, people fall for because they start to worry so much.

If you ever receive messages like this, stay calm, don’t react, and just delete the messages. Block the number, the account, or even the sender’s IP if you can. Even if you don’t block them, you may receive a couple more attempts from them, but they will eventually get bored and move on to someone else.

These scammers know that most people won’t reply, but if they can blackmail just one person after they send a thousand emails to a thousand different people then they consider this a win.

What to Lookout For

  • Threats to expose sensitive or explicit photos or other media or you
  • Payment requests are in Bitcoin or altcoins
  • Vague information about what they have on you

3. Giveaways

Who doesn’t love a giveaway, right? However, this is another situation of if it sounds too good to be true then it probably is. Scammers will create profiles on social media imitating well-known people. Especially people associated with cryptocurrencies such as Elon Musk.

The scammer will post to say that if you send them x amount of Bitcoin, you will be entered into a draw to win ten times as much. Or if you send them Bitcoin, they will send you double your amount back. Of course, there is no draw and you definitely won’t get twice as much back.

While you may find it incredulous that this type of trick could ever fool someone, it has already happened. One well-known case happened in 2021 when someone did pretend to be Elon Musk and managed to convince a lot of people to send them Bitcoin!

What to Lookout For

  • An investment that is way too good to be true
  • Promises of payment or prize only after you have sent money or Bitcoin

4. Employment Offers

Have you ever been so desperate for a job that you’d be willing to pay for it? Probably not. But then again, if you truly were desperate, perhaps you would consider paying.

Scam employment offers are similar to unsolicited investment opportunities. You’ll be sent an email with a job offer but you’ll be told that you’ll need to send a certain amount of crypto upfront before you can start the job.

This amount will be justified as equipment cost, resources, or admin fees to process your application. You might even be told that if you pay, your application will get to the front of the queue. Then, you send the amount and never hear from them again.

Ordinarily, you may ignore the email, move it to trash or spam and never give it another thought.

However, if you’re struggling to find a job, are getting desperate to work, and have nearly run out of savings, then you might just take the risk. All that’ll happiness you’ll still have no job and now you’ll have handed over part of your crypto for nothing.

What to Lookout For

  • Unsolicited offers for a job
  • Payment required to start the job/join the company

5. Fake Apps

Different cryptocurrencies have different apps that they have created in order for investors to check their accounts, send money, make payments, store their assets, etc.

However, apps can easily be replicated which leads to people downloading malicious apps instead. If you end up installing a bogus app rather than the real thing, your wallet could be compromised and you could send your crypto to the wrong places.

What to Lookout For

  • Poor reviews
  • A surprisingly low number of downloads
  • Incorrect spelling or grammar in the title or description
  • Low quality or rip off branding

6. Loader Requests

Is it possible to be scammed by someone outright asking for your login details? Yes, it is. Are there people who don’t think it through and hand over their login details? Yes, believe it or not, there are.

A loader request is when someone asks to use your account to receive BTC as their account has limits. For example, some platforms will only allow investors to have up to 2 BTC for free before they charge a fee. The scammer will promise you a cut of the Bitcoin if they can “borrow” your account.

However, if you hand over your login details, guess what will happen? Any Bitcoin you already have will be transferred out and this mysterious crypto will never appear.

What to Lookout For

  • Anyone offering you payment for using your account
  • Someone asking for your login details
  • Someone asking for your private key (never give up your private key)

7. Imposters and Impersonators

Depending on your country’s rules or processes, you may receive a letter from time to time telling you that you owe tax money. Or a fine. A medical bill. Or some other amount that is due to an organization or authority.

For the most part, these letters are real. People are frequently notified that they haven’t paid enough tax or have some other type of bill outstanding.

However, what is never going to happen is that the authority in question asks for payment via Bitcoin. If you receive a letter, email, or text saying you owe money and must make a payment in Bitcoin to prevent fines, ignore it. You will never be asked to use this as a payment method and it is 100% a scam.

Even if the fact that you owe money to someone is true, this particular message is still from a scammer.

Additionally, don’t be tempted to phone the number on the letter to get more information. You’ll only get through to the scammer’s office and will be told false and worrying information to get you to cave.

If you are concerned about owing taxes, medical bills, fines, etc, then independently get the phone number you need from the internet or local town hall. Speak directly to the department you need and ask any questions you have.

What to Lookout For

  • Government departments or other authorities asking for payments in Bitcoin
  • Being told you owe money when you are not expecting it
  • Poor grammar or spelling in the letter or email you receive

8. Social Media Bots

Bots are everywhere on social media and one of their main purposes is to try and scam other users. Go on any post on any platform about any topic and the comment section will be full of bots trying to get curious users to click their profile.

The ways bots lure people is by posting comments saying things such as, “I’m paying the student loans of the next ten people who message me”, “click the link in my bio if you want to know how you can make $10,000 a day”, “Thanks to (insert profile here), I’ve been able to quit my job and travel the world”. You get the picture.

However, the website they direct you to, or any messages they send you if you contact them first, will only be some form of exploiting your Bitcoin or altcoins from you.

Whatever they promise is not true. The testimonials are fake. And the realistic-looking profiles spamming comments are all just bots.

What to Lookout For

  • Unrealistic promises
  • Repetitive comments on people’s posts
  • Profiles that have very few followers or “friends”

9. Phishing Messages

Phishing is similar to impersonation in which the scammer will claim to be from someone or a company you know such as your bank, Amazon, your internet service provider, etc.

The message will usually contain an urgent warning saying your account has been compromised or your bank card has been used and you must input your information to confirm your ID and stop the transaction or account issue.

In the panic of thinking a card is being used or an account is being hacked, many people follow the instructions without caution. They fill out forms giving their personal information such as name, address, passwords, even PINs without even thinking. 

The form and all the information are sent to the fraudster and your account is hacked. This time for real. If you receive one of these messages, call the company directly on a number that is different from the one in the message to confirm

What to Lookout For

  • Emails or messages that say your information is needed urgently/any type of urgent message or “act now” 
  • Link to a form that asks for personal information especially sensitive data like bank details, passwords, secret question answers, etc
  • Messages from a company that you have never heard of or don’t have an account with

10. Romantic Interests

According to the FTC, 20% of all romantic interest scam victims lose money via cryptocurrency, in particular, Bitcoin. This scam involves someone reaching out to you, usually on social media, expressing an interest in getting to know you or dating you.

This is often a long-term plan and the scammer will happily spend months talking to you, exchanging pictures, even calling you or meeting to keep up the ruse. Once they feel like you trust them, then they’ll ask for money or assets such as crypto.

Normally, they’ll say they’re in some kind of trouble such as they have an urgent bill to pay or have fallen behind on their rent and are going to be evicted. None of this is true. Once you hand over your money or transfer the crypto, you’ll never hear from them again.

Rarely, they may continue the relationship a little longer to ask for more money or more crypto then block you once you start questioning their motives. This type of scam costs victims hundreds of millions of dollars each year in the US alone with the figure reaching billions around the world.

What to Lookout For

  • A total stranger contacting you wanting to get to know you
  • An online romantic interest asking for money or asking for access to your crypto wallet
  • Sob stories about hardship or bills

Serious Red Flags to Remember

Scams usually have the same, or similar, characteristics as each other. If you can keep a lookout for these characteristics, then you’ll know they’re red flags before the scam can go any further.

  • You’re approached with an opportunity for crypto investment even though you never asked to be contacted by anyone
  • An authority figure such as a government worker contacts you via email asking you to pay your taxes, a fine, or other bills using your Bitcoin or other crypto types
  • An online seller wants payment for their goods or service in crypto rather than using Paypal, credit card, or other protected method
  • Romantic interests asking for money early on in the relationship

Tips for How to Avoid Being Scammed with Crypto

Online scams cost people billions each year. Tens of thousands of people lose money, crypto, and assets through all kinds of scams. Not to mention the mental toll it takes on the victim afterward.

So, are there ways you can help protect yourself and stay one step ahead of the scammers? Absolutely. Check out our top five tips below.

1. Never Pay In Crypto

Bitcoin and other crypto are not regulated by the government. Bitcoin is only legal tender in one country in the world. And anyone pushing for you to pay for anything in crypto is a huge warning.

2. Don’t Trust Promises

Often, people trust others too quickly because they wouldn’t scam. So, because they wouldn’t scam, they assume other people won’t either. Don’t trust promises from strangers or people you don’t know well. And remember, don’t be naive. Just because you wouldn’t steal from someone doesn’t mean they wouldn’t steal from you.

3. Don’t Give Into Emotion

Receiving urgent requests or “act now” warnings bring out a lot of emotion. From panic and worry to stress and sadness. All these emotions cloud your judgment and cause many people to make silly decisions they wouldn’t ordinarily make.

4. Be Patient

Investing in Bitcoin or altcoins isn’t a bad thing, not every opportunity online is a scam. However, the key is to be patient and thoroughly research the investment before going ahead. If it seems too good to be true then it probably is.

5. Report Suspicious Activity

If everyone who notices scam activity or is suspicious of scam activity reports it to the correct authorities then these fraudsters will have far fewer chances at taking advantage of innocent people.

You can report it to your crypto exchange, Securities and Exchange Commission, or the Federal Trade Commission - or your country’s equivalent.

Are Cryptocurrency Scams Successful?

Unfortunately, yes! According to the FTC, these are some top statistics highlighting just how successful crypto scams are.

  • In 2020, the number of cryptocurrency scams increased 12% from the previous year
  • Those aged between 20-30 are the most susceptible to scams especially if they are already investing in other stocks or cryptos
  • The average amount a victim lost in 2020 was $1,900 per scam. An increase of 1000% from 2019

Bitcoin is real, altcoins are real, and success stories are real, just be sure to not jump ahead of yourself when starting your own investment. Choose wisely, don’t let your emotions get in the way, and once you do start, protect your Bitcoin!

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