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What Are the Best Ways to Avoid Crypto Scams?

By Jinia03/09/2023


Cryptocurrency scams are, unfortunately, all too common in the crypto space. The pseudo-anonymous nature of most cryptocurrencies, coupled with the overall lack of regulation, creates an environment where scammers can operate relatively freely. 

Unlike traditional financial markets, the crypto space is largely unregulated, which can make it easier for bad actors to deceive unsuspecting investors. In addition, the decentralized nature of many cryptocurrencies means that there is often no central authority to hold accountable for fraudulent activity, making it challenging to recover lost funds. 

As a result, it’s crucial for investors to take precautions and be aware of the risks associated with investing in the crypto space. By educating oneself and exercising caution, it is possible to avoid falling victim to these scams and protect one’s investments.

What Are Crypto Scams?

Cryptocurrency scams come in various forms. These deceitful practices falsely guarantee effortless high returns, tricking people into investing their money.

Unfortunately, many individuals fall victim to these scams due to a lack of understanding or knowledge about cryptocurrencies. It’s essential to research and verify the legitimacy of any investment opportunity before committing to any funds. 

Since the start of the crypto space, various crypto scams have robbed crypto-natives of billions of dollars worth of crypto. For example, in 2014, Mt. Gox (a Japanese-based crypto exchange) suffered a hack that resulted in the loss of over 850,000 bitcoins, which at the time was valued at around $450 million. 

The Mt. Gox hack was a major wake-up call. However, despite efforts to improve security and regulations, the crypto space has since seen a proliferation of other types of scams, such as Ponzi schemes and fake pump-and-dump schemes. 

In fact, scammers have become even more sophisticated in their methods, making it harder to detect their fraudulent activities. 

The meltdown of the FTX exchange is a notable example of how even seemingly reputable crypto platforms can turn into major scams in an instant. FTX appeared to be a reputable project, even gaining the recognition of top government officials in the U.S. Unfortunately, the entire exchange came crashing down in November last year, wiping out over $30 billion from the crypto market. 

These incidents highlight the need for continued vigilance and caution in the crypto space and for investors to always conduct thorough research before investing in any project or platform.

How to Spot a Crypto Scam

Crypto scams are any type of fraudulent schemes that involves cryptocurrency. They can take various forms, including phishing scams, Ponzi schemes, fake ICOs (Initial Coin Offerings) or IEO (Initial Exchange Offerings), pump-and-dump schemes, and malware. 

In most cases, these scams promise high returns with little to no effort. 

Here are some common signs of a crypto scam:

Unrealistic Promises

Scammers often promise high returns with little to no risk. Be wary of any investment opportunity that promises guaranteed returns or quick profits.

Pressure to Act Quickly

Scammers often use unrealistic promises to lure crypto natives into scam projects. Some common promises include guaranteed high returns with little to no risk, insider information on upcoming crypto projects, and access to exclusive investment opportunities.

They may also offer referral bonuses or promise quick profits through trading signals or automated trading bots. However, these promises are often too good to be true.

Unsolicited Offers

Another cunning method that crypto scam artists use to lure their victims is unsolicited offers. Scammers often use various channels, such as email, social media, or messaging apps.

These offers may include invitations to invest in a new or upcoming cryptocurrency, promises of exclusive access to a lucrative investment opportunity, or offers to participate in an airdrop.

They may also impersonate reputable companies or individuals.

Suspicious Websites

Scammers also use fake websites that are designed to look exactly like legitimate crypto exchanges or ICOs to trick people into investing. The link might be slightly different but the design and general outlook of the site will be similar to the authentic site. Always double-check the URL and look for security indicators like HTTPS before entering any personal information on any site.

Types of Crypto Scams

There are several types of crypto scams, including:

Phishing Scams

Phishing scams are a common tactic used by crypto scammers to obtain victims’ login credentials or private keys. They do this by creating fake websites or emails that appear to be from legitimate exchanges or wallets. These fake websites or emails often have similar logos and designs as the real ones, making it difficult for victims to detect the scam. 

Examples of phishing scams include fake emails claiming that there’s an issue with the victim’s account and requesting them to log in to resolve the problem. Once the victim enters their login credentials, the scammers gain access to their account and steal their funds. 

Ponzi Schemes

Ponzi schemes are fraudulent investment schemes that involve using new investors’ funds to pay returns to earlier investors. The scheme’s operator convinces people to invest by promising high returns with little to no risk. They often use impressive marketing tactics and false testimonials to gain trust and credibility. However, the promised returns are usually unsustainable and rely on the continuous recruitment of new investors to pay earlier investors’ returns.

One example of a Ponzi scheme in the crypto space is Bitconnect. The scheme eventually collapsed, and investors lost millions of dollars.

Pump and Dump Schemes

Pump and dump schemes involve artificially inflating the price of a cryptocurrency and then selling it at a profit. Scammers often use social media to promote such types of schemes.


Malware is software that can infect a victim’s computer or mobile device and steal their crypto assets from their wallets either through recording their keyboard patterns as they type or hacking the encryption of their wallet.

Conclusion: Secure Your Crypto

The crypto space is built on the belief of self custody. That means that the security of your coins is in your hands.

The first step towards securing your portfolio from scammers is to get the best cold storage for your coins. Also, be sure to double-check the platforms you are using to trade crypto. Keep in mind that there is regulatory uncertainty in the crypto space. Therefore, you should take responsibility for your investments and conduct your due diligence with every investment.

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Jinia is a fintech writer focused on the cryptocurrency market and passionate about blockchain technology. With years of experience, she contributes to some of the most renowned crypto publications such as Cointelegraph, Coinmarketcap and others. She also has experience writing about the iGaming industry.

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