How to Avoid Crypto Scams

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Last updated May 18, 2023 | 05:49 PM UTC

Internet-based scams are nothing new. We’ve all received emails from people we’ve never met, asking us to open an attachment. Or perhaps you’ve received a message from your ‘bank’ urging you to send your account number and PIN to avoid added charges of some kind. Fortunately, nowadays, most of us are well-versed in how to avoid the majority of these types of cyber attacks.

When we think of scams, we usually assume that fraudsters are after our bank or card details, where they can access quick cash that is difficult to trace. So we wouldn’t associate the word ‘crypto' with these types of criminal schemes, as cryptocurrencies are thought of as a far more secure entity than fiat currencies like USD or EUR. However, crypto scams are on the rise. And the more mainstream decentralized coins become, the more criminal schemes and cons we expect to see.

So what are the most common tactics that criminals use to target users of digital currencies? And how can you avoid crypto scams and protect yourself from these hackers? Let's take a look.

Crypto Scams Hit the Mainstream

Over the last few years, there has been a rise in the number of scams that target crypto users. The level of sophistication is also on the up as fraudsters learn more about how decentralized currencies and their exchanges work. This leads to more complex and refined scams that are becoming harder to spot and avoid.

One example that springs to mind is the unfortunate case of Wormhole, the 'bridge' company that lost over $320 million in February 2022. As reported by news network CNBC, Wormhole was the subject of an 'apparent hack' that saw the company hemorrhage funds overnight, in what is considered one of the biggest losses by a crypto firm in history.

Types of Crypto Scams

However, the average person is not going to be targeted by hackers any time soon. But that's not to say these same groups that go after the fat cats aren't also snooping around looking for smaller fish to catch. That's why it's so important to remain diligent when it comes to protecting yourself against these schemes.

With that in mind, take a look at some of the most commonly used types of crypto scams and how to avoid cryptocurrency scams in general.

Crypto Investment Scams

One of the most common scams gaining traction is the crypto investment con, whereby people are duped into investing in a fake or non-existent product. This scam is particularly prevalent in the NFT market, where potential clients are sold the promise of huge returns when they invest in a hot new non-fungible token.

Scammers assume the role of 'investment managers,' contacting their targets and bragging about how much their other clients have made in a short space of time. Then they will ask for an upfront fee to get the ball rolling on your end. And before you know it, your new investment manager has disappeared with your fee in his back pocket, never to be seen again.

How to Avoid Crypto Scams Like Fake Investment Schemes

One of the simplest ways to avoid all types of crypto scams, not just investment schemes, is to be highly suspicious of anyone you do not know. If you're contacted by anyone not in your particular circle, we first suggest doing some research. Often, the product's name and the person recommending it plus the word 'scam' in a Google search will be enough to bring up some results. If anyone else has been targeted by the individual selling this product, it won't take long for it to flag up.

Secondly, never give out any personal or financial information. That includes giving out your seed phrase or any other information that could be used to access your crypto balance. Also, don't be drawn in by sales-forward phrases like 'act now' or 'don't let this opportunity pass you by.' These are designed to make you act swiftly without having the time to question things properly. Therefore, they should be viewed with caution.

Lastly, check with your friends and associates to see if anyone has been contacted about a similar investment. Again, a little bit of research and some skepticism is probably the best way to avoid crypto scams like these.

'Pull the Rug' Scams

A classic scam, given a crypto face-lift, 'Pig Butchering' scams are probably the oldest in the book. This is where a love interest will ask for financial aid, usually in the form of your sending them cryptocurrency.

These types of cons were prevalent in the early days of Facebook, where people would form long-distance romantic relationships over social media platforms, not knowing that the person at the other end was not a loving partner, but a cold-
hearted con artist.

This type of scam has not gone anywhere. And now, crypto criminals have large networks of people spending their days trying to hook people into these seemingly innocuous relationships, hoping that their victims will eventually succumb and send funds to their online 'girlfriend' or 'boyfriend.'

How to Avoid Crypto Scams Like 'Pig Butchering'

As much as we all like to believe that love conquers all, to avoid being scammed out of your money, a little logic must prevail. If you get contacted by someone who seems to be interested in forming a relationship, ask yourself why. Is this person a friend of a friend? Do they live in a country that has a history of online scams? What reason could they have for wanting to form a connection with a complete stranger?

How to Avoid Pig Butchering Scams

Even if you do enter into a friendship with a new acquaintance online, remember never to give out any personal or sensitive information that could be used to access your funds. There is absolutely no reason why a new friend, or even a romantic partner, would need to know your financial information, such as where you store your cryptocurrency or any other details.

Phishing Scams

This is another famous type of crypto scam. Phishing scams have been around since the inception of emails, and their primary goal is getting you to act on something that usually entails giving away your financial details.

A common example is receiving an email from your 'bank.' To instill a sense of urgency, the email will say something like 'the security of your account has been compromised and will follow with instructions on what to do to restore your account's safety. This will inevitably involve giving away information like your account number or PIN. Et voila! You have now voluntarily given your bank details to a scammer.

And these scams are not limited to emails and fake banks. Phishing scams can come in the form of mobile phone providers, utility companies, and firms telling you that your cryptocurrency is at risk. And as mentioned, these con artists are constantly improving at these types of scams.

In crypto-specific scams, you might get an email or text saying a withdrawal has been initiated with a link to cancel the transaction. Of course, you authorized no such withdrawal, so you'll most likely click the link. This link could take you to a fraudster's own website, with software designed to harvest your crypto details the moment you land on the site. And thus, phishing scams are also one of the most dangerous types of con around.

How to Avoid Phishing Scams

It's very difficult to dish out advice on scams that are ever-changing. But if there's one thing we recommend, it's that you always remain calm, regardless of what type of communication you receive, and do not act rashly. This is exactly what those messages are intended to do; make you start clicking on links and sending information without thinking, which leads to a greater risk that you will give out details that can then be used to access your funds. So no matter what an email or text says, stop for a moment and take stock.

You can also do some small things if you suspect you have received a phishing email. They are often disguised as coming from reputable companies, so check for spelling and grammatical mistakes, which would be unusual behavior from a trusted brand.

How to Protect Yourself from Phishing

Furthermore, check the imagery used, as it may appear grainy if it has been cut and pasted from the real website.

Finally, a good Google search with the word 'scam' and the type of communication you received can bring up fast and useful results. And if in any doubt about a text or email, you can ring the company yourself and inquire about its authenticity.

How to Report Crypto Scams

Before falling into trap of cryptocurrency scams, you should familiarize yourself with the most common frauds and learn to recognize them. It’d also be useful to check statistics about the most common scams in the market. Below you can see a report published by US Federal Trade Commission on the most common crypto frauds.

Since the beginning of 2021, over 46,000 people have reported losing more than $1 billion in crypto due to scams. This is about one out of four dollars reported lost and significantly more than any alternative payment method. The median reported loss per individual is $2,600 while the most used cryptocurrencies for paying scammers were Bitcoin (70%), Tether (10%), and Ether (9%).

The FTC’s Consumer Sentinel Network disclosed the figures of the most common frauds with crypto as a payment method between January 2021 to March 2022. The most usual were investment scams that include art, gems, investment seminars, stocks, advice, miscellaneous investments, and commodity future trading.


You can report crypto scams to the following places:

Final Thoughts on How to Avoid Cryptocurrency Scams

As we've seen, crypto scams are on the rise as more of us use decentralized currencies across the world. And for every new coin, NFT, or other currency product that comes to market, there seems to be a scammer waiting in the wings, ready to pounce on our investment. However, it's not all doom and gloom.

Cryptocurrencies, as a whole, are still far safer than fiat currencies to store, save and spend. And with a little common sense and some diligence, there's no reason why you should fall victim to one of the many crypto scams that, unfortunately, look like they are here to stay for the foreseeable future. 

Written by

As a maths whizz with a love of sports, Andrea had no hesitation in entering the crazy world of sports betting. Andrea currently lives in the UK and specializes in soccer (those guys call it football), but is quite adept at finding value bets in other sports. While her time zone makes it easy to follow European leagues, she occasionally sets her alarm for when action in the Americas begins!