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How to spot and prevent cryptocurrency scams

Crypto scams come in all shapes and sizes. Find out what are the most popular scams out there, how to spot them and what to do if you have fallen victim to one.

25 Apr 2021by Corey Barchat

Crypto has revolutionized the way that items of value can be exchanged from one party to another. The rapid growth and widespread adoption of cryptocurrencies has also led to new opportunities for criminals to try and take advantage of unsuspecting or trusting victims. It’s important to know who you are sending your crypto to and where you are sharing your personal information, in order to always stay alert for potential scammers or fraudsters.

Crypto scams come in all shapes and sizes. This article highlights the most popular scams out there, how to spot them and what to do if you have fallen victim to one.

Here are some of the most popular examples:

Investment scams

This type of attack usually involves one party promising great returns via the simple act of sending them cryptocurrency. Scammers will tell their victims that if they invest a relatively small sum, they will see instant--and quite unrealistic--gains. While investing in crypto can yield significant profits for investors, it’s vital to know which investment opportunities are legitimate, and which are fraudulent.

News headline on crypto regulation and a major investment scam.
Crypto Investment scam article as covered by here 

Phishing attacks

Phishing attacks occur when criminals fish for confidential information. Usually seen as a pop-up or malicious email, these attacks are becoming more sophisticated and are intended to swipe key financial information from unsuspecting victims. Criminals may be searching for your credit card or bank information, and for crypto purposes they may be targeting to gain access to your wallet or obtain your keys. They may target you with an email from a realistic-looking crypto wallet or provider, with an offer that contains a potentially harmful link when you click on it. The link could ask you to provide your login credentials to a wallet you own, or goad you into providing your personal information that can be used to defraud you.

Dating scams

Not all scams appeal to financial motivations. There exists a type that appeals to the emotional and romantic needs of victims. Promising to fill the gap of loneliness in the lives of their victims, these scams are particularly insidious because the unwitting target is not wary that their information is being taken, due to the alluring and blinding promise of romantic interest gain.

Social media support scams

There are many false twitter and social media accounts out there posing as the support channels of cryptocurrency providers. They solicit sensitive information from users, asking for credit card, bank and wallet information, including keys.

Puppy scams

Puppy scams are yet another act of emotional manipulation by scammers, who’ll promise to send you an adorable or rare animal in exchange for sending them crypto. Without ever seeing the puppy in person, you may be deceived into thinking you’ll get a brand new adorable addition to the family, and sadly it will never arrive.

A puppy dog, which can be used as bait to scam people out of their crypto.
( Image source)

Goods and services scams

Promising to sell or loan items may not always include puppies, however the intent is the same. The scammer will promise to ship goods or promise a service in exchange for an amount of crypto, without any intention of ever delivering. As with puppy scams, these are known to take place in popular forums and advertising websites.

6 red flags to look out for

To be vigilant and protect yourself from scams, you should ask yourself the following questions:

1. Am I being asked to share financial information or my keys? Even if you are absolutely certain that the party you are talking to is your wallet provider or a legitimate cryptocurrency provider, you should take caution and never share sensitive information. If it is necessary in order to complete a transaction or gain access to an account or wallet, never share this information publicly. Ensure that you are communicating privately, whether through chat, DMs or email support.

2. Does this seem like a legitimate business? Research the company or person you are sending money to. If they claim to be a business, make sure they are a legitimate company by performing a quick Google search. You can view how long they have existed, if they have good reviews and if they have a good reputation.

3. Is the email domain or social media handle correct? Check the email domain name or social media handle to ensure that you are not sending money to someone posing as a legitimate company. Be sure to verify that the company name is spelled correctly, and if applicable that they are a verified account. You can also send a message to the official channel to ask if the account in question is legitimate, and also let them know that there are suspicious copycats out there.

4. Is the offer too good to be true? If you are promised an investment that guarantees 50% or more returns instantly and it seems too good to be true, then it likely is. Crypto can represent a gainful investment opportunity, but no one can guarantee astronomical returns quickly. If they do, then they are probably a scammer.

5. Were you contacted out of the blue? Not every unsolicited opportunity may be a scam, but we should always be wary of offers made to us with no prior warning or foresight. It is a safe practice to perform exchanges through official channels that include customer support or an option to report fraudulent activity.

6. Are you receiving threatening messages? If the person you are in contact with is messaging you with threats or warnings to pay them “or else”, this is likely an attempt to get you to send the money quickly without fully thinking through the proposition. When acting out of fear, we are less likely to consider all facets of the situation and are prone to making rash--and potentially detrimental-- decisions.

What to do if you’ve been scammed

If you believe you’ve been scammed through a cryptocurrency exchange or transaction, you should report the incident to the following authorities:

  • The police: Share all information you have about the scam and the scammer, including the site or forum where you were contacted, and any contact info or personal descriptions about the person to whom you sent the crypto.
  • Your bank: Tell your bank if you believe your card information or bank account is compromised. If you shared any financial information with the scammer in your crypto transaction, you should act quickly to block your accounts in order to prevent them from taking further funds.
  • The crypto exchange where the scam occurred: You can report the scam to the crypto exchange that was used for the transaction. It’s important to provide the wallet information of the scammer in order to report fraudulent wallets and users, to prevent future attacks.

Unfortunately, scams that involve a cryptocurrency exchange are irreversible by nature, and it may be difficult to get your money back. But in reporting common scams, you can help to protect others in the future and catch scammer criminals.

If you stay alert and follow the guidelines highlighted in this article, you’ll be able to stay one step ahead of fraudsters and keep your cryptocurrency safe. Remember, you should never give your keys or personal information to anyone if you want to protect your crypto. If you still have unanswered questions, check out our FAQ.

A protected cell phone with a lock guarding it.
Keep your crypto safe and avoid being scammed ( Image source)