Bitcoin Trading Scams

Our money is heading into the future, with digital money and cryptocurrency starting to rise in popularity and commonality. And just like we see with our traditional forms of currency, bad actors are looking to take advantage of the systems in place to scam you out of your hard-earned money. 

As you navigate the exciting and futuristic world of Bitcoin and cryptocurrency, keep these common trading scams in mind. 

Ponzi Schemes

It’s a tale as old as time, it seems. Ponzi Schemes won’t go away; they simply evolve and adapt to whatever type of currency we are using at the time. And we see that very thing with cryptocurrency. 

Ponzi Schemes in cryptocurrency look very much like the traditional Ponzi Scheme: new investors hand over their money, which is used to pay older investors. In fact, a 2019 Ponzi Scheme from BitClub Network led to the fraud of $722 million of cryptocurrency. 

To protect yourself, know who you are investing with and only invest through reputable sources. If the structure of their organization appears triangular in any way, you might be sniffing out a cryptocurrency Ponzi Scheme. 

Old School Scams

While cryptocurrency is the money of the future, the same old-school scams are running rampant through the community. Those same con artists from past generations have been updated for this digital age and continue to use the same means to convince their victims to transfer the money. In this case, they persuade their targets to transfer cryptocurrency. 

An example of these old-school scams would be an email or a call from someone claiming to be the IRS or another government agency. They might say you owe back taxes or have a warrant that needs to be paid immediately. That’s when you should stop. 

No government agency will contact you in this way and they will never ask for your cryptocurrency. This is a sure way to tell that you are the target of a scam. 

Pump and Dump Scams

The unique thing about pump-and-dump scams is that they require a larger group of people. When a group begins to buy up a penny stock to cause the price to rise, they might get outsiders to invest. While this seems like a good idea, it presents a ton of risk and can often lead to losing your cryptocurrency. 

To avoid this trading scam, be sure to stay away from single-tip purchasing and groups that make pump-and-dump trades. You should also be willing to acknowledge when an offer seems too good to be true. Trust your gut – it probably is. 

Social Media Scams

As a society, we love social media. But there’s a dark side with social media, especially when you bring cryptocurrency into the mix. With social media scams, a perpetrator might create a fake social media account and use that to try and collect Bitcoin or cryptocurrency from followers. Typically, they will create accounts or hack accounts for famous and well-known people. 

As recently as 2020, we’ve seen cryptocurrency social media scams. In the July 2020 Twitter hack, many accounts for famous people and brands were hacked, including Elon Musk, Bill Gates, Warren Buffet, Floyd Mayweather Jr., Apple, and Uber. The attackers then posted tweets that requested that followers send them cryptocurrency to a specific blockchain address, which they promised to return two-fold. 

Within minutes, 320 transactions happened and these fake accounts raked in the crypto-dough. This is another situation to trust your instincts and pay attention to whether something is too good to be true. 

ICO Scams

While ICO scams were most popular during the initial hysteria surrounding cryptocurrency in 2017 and 2018, they are still present and accounted for. The SEC continues to crack down on ICO scams, which has reduced their frequency, though we still see them regularly. 

With an ICO scam, you might see a fake website or website link that looks like an initial coin offering. The fake site will then tell the users to deposit their coins into a compromised wallet. At that point, the scammer has the money. 

A recent ICO scam was CentraTech. This offering was so convincing that it was even supported by several celebrities, including Floyd Mayweather and DJ Khaled. It’s best to stick with the most reputable sites to ensure that you are not losing your money the minute you deposit your coins. 

Fake Cryptocurrencies

Arguably one of the most sneaky cryptocurrency scams is a fake cryptocurrency scam. This attack plays on your fear of missing out on a new and up-and-coming cryptocurrency. The scammer might convince you that you’ve missed out already on cryptocurrencies like Bitcoin, so you should invest in what seems like a fledgling cryptocurrency. 

However, if this alternative cryptocurrency is fake, you are simply being swindled out of your hard-earned savings. An example of this in recent years was My Big Goin. Before they were shut down, the attackers took $6 million for their “new” cryptocurrency and immediately transferred it into their personal bank accounts. 

To be sure you are only investing in actual cryptocurrencies, stick with researched, established cryptocurrency and be leary of what someone calls a “new” cryptocurrency. 


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