Home » What are the 8 Cryptocurrency Scams to Avoid?

What are the 8 Cryptocurrency Scams to Avoid?

by kevinhall
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cryptocurrency trading

The discussion around trading cryptocurrency is now quite popular, and there is a lot of excitement surrounding this topic. The value of virtual currencies such as Bitcoin, Ethereum, XRP, and Tether, amongst others, has been steadily increasing for some time now, and there is a valid explanation for this. There are a lot of cons associated with them, particularly when it comes to dealing with monetary transactions, as is the case with everything else that is popular.

In this guest post, we will go through eight different cryptocurrency-related scams that companies need to steer clear of. In addition to this, we will discuss what they are, how to identify them, and what steps to take if you find yourself the target of one.

What is a Cryptocurrency Scam?

As a result of Elon Musk’s tweets promoting Dogecoin, the cryptocurrency’s price saw a significant increase. These tweets became headline news. And who among us could forget his making a joke on “Saturday Night Live” about cryptocurrencies being a “hustle” during one of the sketches! Dogecoin’s price fell significantly now the joke was told, which led to a lot of laughter. In the meantime, bitcoin scams are not something to be taken lightly.


For those who are unfamiliar, a cryptocurrency scam occurs when a person takes advantage of the growing popularity of cryptocurrencies to deceive others into providing them with bitcoin transactions, which often take the form of money or personal information.

They could accomplish this by stating that they would double the amount of money you contribute, providing free coins to new users in exchange for joining up, or even just requesting contributions. Scammers may even create phony websites or social media pages that give the impression that they are affiliated with a real trading cryptocurrency.

8 Cryptocurrency Scams to Watch Out For

Scams using cryptocurrencies result daily in the loss of many millions of dollars. Around thirty percent of all of them may be attributed to fraudulent activity. You are fortunate if you can recognize them since this will protect you from having your money stolen from you. To assist you in avoiding falling prey to the shadier side of the crypto market, here’s a list of the eight most prevalent scams that you should be on the lookout for!

Downloaded Scam Applications Relating to Cryptocurrency

The fraudulent use of cryptocurrencies may also take the form of phony mobile applications that falsely claim to have connection to a certain coin. They are con artists attempting to defraud you of your money or your personal information. They could accomplish this by providing free coins in exchange for signing up for their service, or they can make a promise to double the amount of money you invest.

How to Keep Away?

You may prevent falling victim to these scams by ensuring that any cryptocurrency applications you download come from reliable sources. If this is not possible, you should investigate the app before downloading it to ensure that it is genuine.

Scams Based on Phishing

Scams using phishing are yet another prevalent kind of bitcoin swindle. Someone is trying to fool you into giving them your personal information, such as your login credentials or your credit card number. This one is a sort of social engineering. Scammers often accomplish this goal by sending emails that seem to have originated from a reputable website or by establishing a fake website that imitates the appearance of a genuine article.

How to Stay Clear of It?

You may evade falling victim to these by exercising extreme caution concerning the websites that you visit and the emails that you read. You may perform a fast search on Google to discover if other people have reported a website as a scam if you are unsure as to whether a certain website is genuine. In addition, you should never click on links that are sent to you by email or text message from somebody you do not know.

Digital Games & Collectibles

Convincing you to pay money to con artists via the use of a giveaway scam is a sort of social engineering known as “social engineering.” A specialized subset of giveaway scams involves the offering of digital goods such as games and collectibles. These scams often take place on well-known social media platforms such as YouTube and Instagram.

Someone may try to deceive you into giving them your money or private information by telling you that they will offer you a digital game or collectible for free. For example, they may promise to provide you with skin for your favourite game or a rare Pokémon card in exchange for your information.

One such incident in which this took place was the con involving the squid game. It is also known as a rug pull case, which refers to a deceptive strategy in which crypto engineers quit projects and abscond with the monies invested by investors. In the world of new crypto schemes, rug pulls are observed rather often.

During this time, a crypto exchange business began an investigation into the Squid token and froze the wallet addresses of all the token developers. This investigation is still ongoing. Before all was said and done, it is believed that the masterminds behind the plan got off with $3.3 million in illicit profits.

Does it imply that everything about such a thing has been finished? Not even close.  Unfortunately, competent programmers now can construct fictitious worlds and games on the blockchain, and they can begin the next social engineering assault as soon as the next popular Netflix show is released.

How to Keep Clear?

Again, doing in-depth research is the most effective method forwarding against the deception of this kind. Be aware of the people you are interacting with as well as the situation you are putting yourself in. Be very sceptical of anybody who assures you that they will give you a valuable or rare item for free. It is quite likely to be a hoax.

Idealistic Con Artists

Scams using trading cryptocurrency are rampant on dating apps, and according to the Federal Trade Commission, between October 2020 and March 2021, almost 20% of the money stolen by con artists via romantic scams was transferred through cryptocurrencies to phony accounts (FTC). If you are in a digital connection with someone and they ask for cash or presents early in the relationship, this is a red flag that you may be participating in a scam of this kind.

How to Stay Well Away?

Being wary of everyone you encounter on the internet is the most effective way to prevent falling victim to this con. You shouldn’t give cryptocurrencies to that individual unless you’ve had a face-to-face conversation with them and gotten to know them very well. You should also do a reverse image search on their profile images to see whether they have stolen from another individual. You should also listen to your intuition, which is that nagging sense that tells you, someone, is attempting to steal the contents of your cryptocurrency wallet.

Ponzi Schemes

Thanks to Bernie Madoff, a former chairman of the NASDAQ who stole billions of dollars’ worth of funds from his investors before he was sentenced to jail, the fifth fraud on our list is one of the most well-known business opportunity scams. Bernie Madoff is responsible for this hoax.

Ponzi schemes, which are illegitimate investment operations in which the operator creates returns for older investors using income supplied by new investors, is what Madoff engaged in. It is sometimes referred to as a pyramid scheme; the little point at the very top of the pyramid indicates the promoters who earn money off the enormous base of investors at the very bottom of the pyramid.

What are some warning signs that they could have?

These kinds of currency scams often offer substantial or even absolute returns for crypto investors.

How can One Avoid It?

Doing your homework and maintaining a healthy scepticism in the face of marketers who make exaggerated claims about the money you may make is the most effective method to avoid falling victim to this con. You should also look for other warning signs, such as the company’s having a history of fraud or the promoters’ emphasizing recruiting new distributors for your sales network as the sole way for you to make money in the business.

Schemes for multilevel marketing (MLM)

Some forms of multilevel marketing, sometimes known as MLM, are perfectly legal, while others are nothing more than elaborate pyramid scams. A pyramid scheme is a business model that involves recruiting individuals to join to earn money via recruitment fees and commissions. A genuine multi-level marketing company, on the other hand, generates revenue from the sale of goods or services. Many trading cryptocurrency multi-level marketing (MLM) scams make lofty profit projections but don’t really provide any goods or services for sale.

How to take proper care?

Researching the firm in which you are considering investing is the most effective strategy to protect yourself from being taken advantage of in this manner. Be careful of anybody who tries to get you to invest in anything without first providing a comprehensive explanation of what it is and how it operates. Check to see whether they provide a product or service, and make sure it’s something that interests you if they do.

Pump and Dump

The phrase “pump and dump” refers to yet another kind of prevalent trading cryptocurrency fraud. When someone purchases a large quantity of a certain cryptocurrency with the intention of driving up its price, this is known as a “pump and dump.” After that, after the price has increased to a certain point, they sell everything. This is something that often occurs on lower-volume coins, which are coins that are smaller in size and less well-known. Scammers often promote a currency on social media to drive up its price, at which point they sell the coin for a profit.

How to Stay Well Away?

First and foremost, you should educate yourself on the inner workings of Bitcoin by doing some research in this area. In addition, you may steer clear of cryptocurrency pump and dump scams if you do not give in to the buzz around a coin that does not have a significant amount of trading activity. You should also be aware of postings on social media regarding certain cryptocurrencies since they can be part of a strategy to pump and dump the coin’s price.

Cons that Target Cryptocurrency Investors

Scams involving investments in cryptocurrencies con many individuals into falling for them. This is a kind of financial fraud in which the perpetrator makes false assurances that they would invest the victim’s money in cryptocurrency but then vanishes with the money.

This scam is commonplace in the world of initial coin offerings (ICOs). Initiated Coin Offerings (ICOs) are events that take place when a corporation gives investors tokens in return for money. The issue is that a significant number of these businesses are not real and will just take your money without providing you with anything in return.

How can One Escape This?

Be cautious of websites and other businesses that offer unattainable levels of return on investment or other types of opportunities. When it comes to everything else on this list, if anything about an initial coin offering (ICO) seems too good to be true, you can bet that it probably is. Never transmit bitcoin to anybody who isn’t a known and trustworthy third party.

The Bottom Line

Be mindful of falling for any of the many coin scams that are now circulating. However, the most critical step you can take toward protecting yourself from falling victim to these scams is to educate yourself on how they operate. If you can stay ahead of the most common coin scams, you will be able to protect the value of your cryptocurrency investments.

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