How to Spot Crypto Scams

Crypto Scams

Cybercriminals are targeting cryptocurrency investors with scams that appear legitimate, including fake investment platforms, social media accounts and celebrity endorsements that appear authentic.

Keep your crypto brokerage and traditional bank accounts separate, and if a wallet app asks for your password or username, be wary! These could all be warning signs.

Initial coin offerings (ICOs)

ICOs have become an increasingly popular means of raising funds for projects using cryptocurrency. Investors receive virtual tokens in exchange for their money that they can later redeem to access products and services provided by the project. This new type of financing enables companies to avoid traditional stock market requirements while instead focusing on innovative technology solutions. However, as with any investment, ICOs do carry risks; indeed, several ICOs that were found fraudulent have been brought under enforcement action by the Securities and Exchange Commission (SEC).

Contrary to traditional stock markets, which are heavily regulated globally, initial coin offerings (ICOs) remain unregulated in many countries – creating an opportunity for fraudsters to exploit unsuspecting investors with deceptive schemes. Private investors, however, do have recourse through civil RICO claims; such cases demonstrate the need for greater regulation within this space in order to safeguard investors.

The SEC has successfully prosecuted numerous high-profile initial coin offerings (ICOs), such as messaging app Kik and Ukirn Esports, who agreed to pay millions in penalties. Furthermore, some ICOs were found fraudulent and will require their investors to return their investment proceeds – this may represent significant financial losses for investors since compensation from the SEC will likely not be forthcoming for such losses.

Our investigation of ICO fraud revealed that, with increasing funds raised, fraudulent ICOs increase in number proportionately – this trend being caused mainly by external events like phishing and hacker attacks. Furthermore, fraud was more likely if companies had large social media followings, and an increase of one standard deviation increased funds raised significantly increased fraud probabilities by approximately 38%.

Additionally, our study indicates that ICOs ultimately discovered as fraudulent tend to provide less information than nonfraudulent offerings – although this difference is not statistically significant; it could represent attempts by fraudsters to keep negative news at bay or provide incomplete details. Finally, the likelihood of fraud decreases with time between launch of an ICO and first listing on virtual currency exchanges.


Modern investment scams utilize cutting-edge technology to defraud people. While they may be difficult to detect, there are certain warning signs which should help identify fraudsters promoting investment schemes through social media or even impersonating legitimate news sites. They pay advertising fees to appear higher on search results pages and make their websites more visible so as to target more people with fake investment opportunities that appear real.

One of the more prevalent investments scams involves precious metals, where fraudsters tempt victims into investing in fake gold or silver coins without backing from actual gold, with unrealistic promises and unrealistic returns. They may use high-pressure sales tactics such as suggesting that value will rise rapidly before demanding higher deposits before withdrawing funds.

Another type of investment scams includes Ponzi schemes, where fraudsters collect money from new investors to pay out returns to older ones – eventually leading to its collapse as soon as there are no longer new investors stepping forward to invest. This form of scheme tends to gain prominence during times of economic instability.

Scam artists can be particularly successful at targeting vulnerable populations such as seniors and the sick, including social media users and those suffering illness. Scam artists may use social media, emails, and websites with false financial data and performance figures that claim endorsement by an authority like ASIC (Australian Securities and Investments Commission).

When investing, take your time and consult the Australian Securities and Investments Commission before making your decision. Be particularly wary of companies not subject to regulation as these may lack safeguards provided by an authorised company. Don’t be misled by testimonials or celebrity endorsements – do a quick Google search if you have doubts; check whether there have been reports of fraudulent activity by the company, officials, or promoters involved; mobile phone numbers only contact details could indicate an investment scam is at work here!


Giveaway bots are one of the most prevalent forms of crypto scams, taking advantage of people’s FOMO (fear of missing out) to convince them into sending their cryptocurrency to an address associated with an offer or contest. Once that crypto has been sent over, it is nearly impossible to retrieve.

Scammers use fake names and email addresses to impersonate lottery, sweepstakes, or prize programs and request that winners pay fees such as “taxes” or “shipping and handling charges.” They may pressure recipients into acting quickly by telling them the giveaway will soon end; such practices constitute timeshare fraud which can lead to money being stolen or personal information exposed.

Some individuals may also be targeted by malicious giveaway bots that aim to gather social proof for giveaways they support – posting comments, tweets, and YouTube videos as evidence that it’s legit on social media – also known as like-farming which can be used to promote malware or scams.

One popular scam of this nature is the Discord Nitro giveaway bot, which promises free subscription services such as Nitro. Nitro includes features such as custom emojis and tags, larger file uploads, and high-resolution screen sharing – features found in many Discord servers as well as hosted by some online influencers themselves.

However, these giveaways can sometimes be run by fraudulent individuals and companies looking for social ‘proof’ of their scams. Discord has taken steps to combat this by including anti-scam measures in its terms and conditions document and some influencers have begun moving giveaways off social media in order to avoid being copied by bots.


Crypto scams come in all shapes and sizes, but their goal remains the same: money loss for victims. Scammers use high-pressure sales tactics to pressure individuals into handing over personal information or sending digital assets like non-fungible tokens (NFTs) or cryptocurrency directly to their account – transactions which cannot be reversed and thus make these scams highly profitable for criminals operating them.

There are various kinds of crypto scams, such as giveaways, phishing attacks, fake company alerts, extortion emails, rug pulls and initial coin offerings. Scammers may create websites that appear as legitimate trading platforms or applications and use complex investing language to dupe people into thinking their investments are safe. They might even block access to victims’ accounts or demand exorbitant fees in order to recover their money back from victims.

Criminals will typically promote and sell one particular cryptocurrency or token via social media and email campaigns to induce investors into purchasing it at increased prices; then use this cash to fund fraudulent business ventures promising high returns – known as Ponzi schemes.

Impersonation scams are another popular type of crypto scam, in which cybercriminals pose as trustworthy sources to convince victims to make cryptocurrency transactions. They might pose as government agencies, credit card companies, banks, service providers or celebrities, family or friends–sometimes even pretending they’re from within their own household–before persuading them through phone calls, texts messages and emails to make this transaction.

As cryptocurrency transactions are private and untraceable, its blockchain technology makes tracking or reversing suspicious transactions very challenging. Therefore, individuals need to educate themselves about crypto scams and learn ways they can protect themselves against them; learning the signs of scams as well as keeping private cryptocurrency keys safe in cold storage is very important.

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