How to identify and avoid crypto scams

Posted on June 10th, 2025

Romance scams, where scammers build trust through online relation­ships and then persuade victims to send crypto, are common. Two other popular examples include Hawk Tuah Girl’s pump-and-dump scheme and the Squid Coin rug pull, both resulting in significant financial losses for investors. Once someone logs in or pays 2021 cryptocurrency mining money to these websites, they might find it impossible to recover their lost funds.

Fraudulent wallets and exchanges steal funds by impersonating legitimate services or creating entirely new platforms that disappear after accumulating sufficient user deposits. These schemes involve artificially inflating a cryptocurrency’s price through coordinated buying and misleading promotions, followed by a massive sell-off by the organizers. Social media influencers often promote these schemes, receiving payment to hype tokens before the dump. Common tactics include slightly misspelled domain names, urgent security alerts, or promises of rewards requiring immediate action. Always verify website URLs carefully and use bookmarks for accessing cryptocurrency platforms.

The most successful ICOs and cryptocurrencies were fueled by early speculative investing. The lure of getting rich quickly is probably older than recorded history, and the outcomes were likely the same. A few early birds get rich, and many of the rest that try lose it all in the attempt. This scam token was kicked off on a DeFi craze, where it was promising automatic yield aggregation. Under its contract, it had unlimited token minting, causing hyperinflation, and falling within days.

• Cryptocurrency scams are financial frauds that steal from victims using digital currency.
• You should also verify if an exchange uses blockchain technology, which helps secure your transactions.
• These scams take advantage of the anonymity and decentralized nature of cryptocurrencies.
• If a token allows you to buy but prevents you from selling, otherwise known as a honeypot, this is a hard pass to a scam.

In addition, you can also check the activities of the community to spot any suspicious activities around the project. Also, you can find the crypto mining protection token’s contract address, website, whitepaper, audit report, and more. Acquired by Binance in 2020, CoinMarketCap is one of the trusted names in the crypto space.

What are the most common types of cryptocurrency scams?

To verify the legitimacy of crypto sites, especially less popular projects, scrutinize everything from the website’s spelling to the relevance and functionality of the product. If you find fraudulent patterns similar to known scams, it’s a red flag. Within the cryptocurrency community, the word ‘scam’ is often applied to dubious startups and initial coin offerings (ICOs). When the project seems to lack any practical usefulness and the business idea behind it is suspicious, such ICOs are often referred to as scams. If you purchased the cryptocurrency through a legitimate exchange, contact their support team immediately.

Contact your local cybercrime unit or use a national fraud reporting site if one exists in your country. Some scams are simply Ponzi schemes, where early investors are paid with the money of new victims, rather than actual mining profits. Scammers send threats via email or social media, claiming they will expose embarrassing information or fake crimes unless paid in cryptocurrency.

Investment scam

RBC Wealth Management employees are prohibited from providing advice or direction to clients interested in digital currency transactions. If you choose to invest in cryptocurrency, it’s how to buy pussy crucial to take steps to protect yourself and your money. While Ponzi schemes have been around for decades, they’ve found new life in the crypto era. In a Ponzi scheme, scammers attempt to recruit you as an investor in what appears to be a legitimate cryptocurrency portfolio. The scammers will continue to recruit new investors, securing more money and—thanks to their accrual of funds—the appearance of legitimacy.

How to Spot Cryptocurrency Scams

This guide will arm you with the critical knowledge to protect your digital assets and invest with confidence in an ecosystem where a moment of carelessness can cost you everything. It doesn’t affect the integrity of our unbiased, independent editorial staff. Transparency is a core value for us, read our advertiser disclosure and how we make money. The information provided on this website is for informational and educational purposes only and does not constitute financial, investment, or legal advice.

Pushy Sales and Social Media DMs

For example, this could occur if a fake celebrity social media account posts that if followers send them a certain amount of cryptocurrency, they will send back twice the amount. In fact, followers will send money directly to scammers, never to see their investment again. This becomes a cryptocurrency scam when the scammer requests the payment in crypto, oftentimes because the victim can’t reverse the transactions and because of the anonymity cryptocurrency offers.

Navigate Crypto Scams with Ease: Learn How to Identify Fake Cryptocurrency

You’re copying someone else’s trades, such as a professional investor who publishes their picks. These trades could be a signal you weigh in deciding whether to buy or sell, or a blueprint you follow precisely. A signal automation platform can auto-execute trades in your account based on copy trades or other signals. For example, fundamental analysis signals might be based on news stories, such as if regulatory changes will likely clear the way for expanded crypto usage, which could drive prices higher.

Common Signs of Fake Cryptocurrencies

If you’re still unsure how to identify fake cryptocurrency apps or wallets, always stick to verified sources and avoid downloading anything through unofficial links or sketchy ads. It’s built by the same team behind NordVPN; it’s focused on stopping scams before they get anywhere near your assets. A fake crypto scam doesn’t always start with a bad token or a shady Telegram group. Sometimes, it starts with malware silently watching your screen, logging your keystrokes, or hijacking your clipboard when you copy a wallet address.

• Romance cryptocurrency scams, like the Pig Butchering scam, follow the same approach, but the funds are requested in cryptocurrency and are much more difficult to reverse.
• Instead, they post documentation that outlines the cryptocurrency’s purpose.
• These messages are usually from cybercriminals posing as trusted sources, meaning phishing scams are similar to impersonation scams.
• When you deposit money at a bank that is a member of the Canada Deposit Insurance Corporation (CDIC), your eligible deposits are insured — up to certain limits — if the bank fails.
• If a project’s liquidity isn’t locked on platforms like Unicrypt or Team.finance, the developers can pull the funds at any moment—commonly referred to as a rugpull.

Moreover, check their active profiles on LinkedIn, X, or Discord platforms. Your digital wallet is the doorway to your crypto­currency account, so its security is paramount for your crypto account. Legitimate projects focus on solving real problems rather than relying on celebrity endorsements. Be wary of hype-driven approaches and celebrity endorsements without substance. White papers are crucial for assessing a crypto­currency project’s legitimacy.

Unlike custodial wallets, where a third party holds your private keys, non-custodial wallets put full control in your hands. There’s no centralized entity that can be hacked, mismanaged, or compromised, and no customer support agent who can be tricked into resetting your access. Scams, on the other hand, rely on speed to steal your money and vanish. Astonishingly, OneCoin managed to amass over $4 billion from global investors before its eventual demise in 2017.