The Most Common Crypto Scams & How to Avoid Them

The US Department of Justice confiscated $3.3 billion from an American who robbed a trading platform for 50 thousand Bitcoins; two scammers of the Estonian crypto mafia who stole $575 million were arrested; a gang of fake brokers deceived 17 thousand Spaniards out of 2.4 billion euros in crypto; in China, 63 people were arrested for laundering 12 billion yuan using cryptocurrencies. And all these events took place in 2022, and they’re not even the biggest cases.  

Between January 2021 and March 2022, 46,000 people reported cryptocurrency scams, as the Federal Trade Commission states. According to a report by Chainalysis, a company working with blockchain technology, cryptocurrencies worth the equivalent of $14 billion were stolen in 2021. Another $329 million was lost in Q1 2022. From January to November 2022, investors lost more than $4.3 billion worth of cryptocurrency, as was reported by Privacy Affairs researchers.

Cryptocurrencies and their users face a huge number of fraudulent activities, which leads to massive distrust of cryptocurrencies. Fraud can be divided into several categories, from scams on users for tiny amounts for deanonymization to hacking corporate servers and stealing billions. Let’s figure out what the most common cryptocurrency scams are and how you can protect yourself and your money with Exolix.            

The Most Common Crypto Scams 

A cryptocurrency scam is the work of fraudsters who deceive users with the help of cryptocurrencies, digital assets that can be used as a means of payment. Here is a list of the most common crypto scams:

• Rug Pull scams

• Phishing scams

• Cryptocurrency giveaway scams

• Ponzi schemes

• Fake crypto exchange websites 

Let’s talk about each of them in more detail.

Rug Pull Scams 

A Rug Pull in crypto is a fraudulent scheme where the creators pump up a new project and then withdraw liquidity, which was received from ordinary depositors. Eventually, trading stops, and scammers disappear with the stolen funds. Thus, depositors are left with useless tokens with no value. A popular case was the Squid coin scam — the scammers gained almost $3 million from the investors.

Phishing Scams

Phishing scams are a long-standing favorite among fraudsters. They seek to gain access to your account data and crypto keys. Phishing scammers often use links to fake websites where they can then steal account details. They can impersonate well-known companies like retail stores or banks, post links to social media or even contact victims directly. For example, they can send an email or message that a withdrawal has been initiated and provide a link to cancel the transaction. Do not click on links that you are not sure about, and do not enter your data on unknown websites.

Giveaway Scams

Social media cryptocurrency giveaway scams include fake communities and celebrity accounts promoting a giveaway. There can be fraudulent sites asking for verification to receive Bitcoin or other tokens. The verification includes making a payment to prove that your account is legitimate. The scammers promise to send back double what you send them. 

These scams often cause FOMO, which is about making victims think they’re missing out. They offer a limited amount of crypto, such as “1,000 ETH,” and use bots and fake accounts to imitate that people are actually receiving money. The hurry makes users conduct irrational transactions. 

Ponzi Schemes 

A Ponzi scheme lures in new investors with the promise of high returns. It is similar to financial pyramids. At its core, scammers using Ponzi schemes pay older investors with the money they get from new ones. This scheme runs in circles, as there are few or no legitimate investments. Sooner or later, schemes collapse if users try to withdraw money, especially during bearish market cycles. 

Fake Exchange Websites & Wallets

As it is clear from the name of this fraudulent scheme, the websites and cryptocurrency wallets that the user gets to are not real and verified. You can get there by clicking on the links in social media, ads, or search results. Also, there are a lot of fake products on the net, such as cheap Bitcoin or cryptocurrencies with discounts. Don’t get fooled by this; it’s 100% fraud. Always double-check the URL and use trusted websites. 

The Most Common Bitcoin Scams 

Apart from some popular crypto scams, which are universal and can apply to Bitcoin as well, there are several specific cases. Let’s consider the most common Bitcoin scams.

• Bitcoin investment schemes

• Romance scams 

• Old-school Bitcoin scams

Bitcoin Investment Schemes 

Investment scams involve luring people to send their cryptocurrency to a scammer with promises of huge profits. If you follow their request, say goodbye to your crypto. Investment scams include pumping and dumping schemes. A fraudster tempts you to buy cryptocurrency at a low price, promising that the value of the asset will soon skyrocket. This can refer to BTC as the main currency on the market and obscure little-known crypto.

Romance Scams 

Scammers may use dating sites and applications to make naive victims believe that they want a real long-term relationship, usually strictly online. When trust is gained, conversations often turn to cryptocurrency opportunities and the possible transfer of crypto coins. 

The scammer asks to buy or give money in cryptocurrency. After receiving them, the fraudster disappears. The Federal Trade Commission found that about 20% of the money lost in love scams was in crypto.

Old-School Scams

An example is an unwanted phone call or email from someone claiming to be a tax inspector. Scammers will try to convince you that you owe money, and you will face a lawsuit if you do not transfer a certain amount of Bitcoins to them. There are also Bitcoin blackmail scams:

fraudsters pretend to be hackers with some compromising evidence. One of the common variants of this fraud is an unsolicited email, the sender of which claims that he is a hacker who has gained access to your computer.

How to Avoid Crypto Scams     

• Remember that there are always risks and no guaranteed returns in crypto investments.    

• Never trust schemes that promise returns that sound too good and promising to be true.    

• Thoroughly research any product, coin or token history, community website, and reviews before buying it. 

• Never make purchases when you are in a hurry, overexcited, or too nervous. Try to reason about your choice. 

• Do not trust any unsolicited emails and phone calls from strangers.

• Choose only well-known and popular crypto exchanges, such as Binance, Huobi, and Exolix. 

• Install and regularly update antivirus software to protect yourself against malware and unauthorized access.