Cryptocurrencies Scams and How to Avoid Them

Bitcoins, altcoins, and tokens are all types of Internet currency known as cryptocurrency (crypto). It is real money but only exists in a digital format, with no central authority to manage or govern it. 

Statistics show that there were 50 million crypto users as of October 2020, with seven million using Bitcoin. In early 2021, there were an estimated 4,000 to 10,000 different kinds of digital coins and tokens, though not all were active. Among the most famous digital currencies is Bitcoin, which has been around since 2009. 

That said, due to its popularity, cryptocurrency is the latest tool for scammers to hunt for new ways to steal your money. Crypto gives scammers a new platform for their old tricks. Fall for their fraud, and there will be little chance of recovering your Bitcoin or getting your money back. 

Avoid These Cryptocurrency Scams

Staying informed about common cryptocurrency scams can help you avoid them.

Hacked Social Media Accounts

You think you’re following an expert or well-known person on their social media account, but the scammer hacked or faked the account. Twitter and Youtube are popular targets for bots created with the sole intention of copying accounts for fraudulent activities. 

When this trusted person claims that they have an exclusive investment opportunity and asks for Bitcoin, you send it to them. However, your money goes right into the scammer’s pocket. 

Instead of the above scenario playing out, try to contact the person on another platform to confirm the request before sending money. They’ll be thankful that you informed them about the hack or duplicated account if it was a scam.

Fake Exchanges and Cryptocurrencies

You receive an email pressuring you to immediately buy crypto or send money to a specific exchange with a high, guaranteed rate of return. Unfortunately, the exchange and crypto are either failed versions or never existed in the first place!

Crypto Ponzi Scheme 

Another version of the fake exchange scheme is the crypto ponzi scheme. The scammers aggressively recruit new investors and manipulate their funds to pay the original investors. After new investments dry up, the scheme crumbles as investors cannot recoup their money.

Chain Letter or Pyramid Scheme 

In this case, a letter or email invites you to join a guaranteed money-making scheme. It is a pyramid scheme in which recipients funnel money in Bitcoin to the sender and then distribute the email to multiple new recipients. With this scam, you lose money and friends who don’t appreciate the invite.

The Pump and Dump  

A final version of this type of scam is the pump and dump. The scammer uses high-pressure tactics to get as many people as possible to invest in a particular cryptocurrency. Artificially inflated, the value skyrockets and the scammers sell their investment when the price is the highest. Since the demand wasn’t legitimate, the price then tanks, leaving everyone else short. 

The common thread among these scams is that the scammers make big claims without details or explanation. Don’t trust investments that promise high returns with low riskā€”that’s a classic too-good-to-be-true scenario.

The best way to avoid these and other online scams are by deleting the scam emails as soon as you receive them. Unsolicited offers are almost always an attempt by the sender to profit from the eventual loss of your money.

You Owe Taxes or a Debt

In a new twist on this old scam, the scammer scares you by saying you owe taxes or debt. They claim they are an authority, such as the IRS, and use threats to convince you to pay immediately. But then they want you to pay with Bitcoin via an online wallet address.

If contacted in this manner, ask them to mail you the information about the tax or debt. Immediately contact the agency or company directly and ask about any outstanding debt. Most likely, there is none. Never give identifying or financial information to someone who calls you asking for it. 

Blackmail Scams

You receive an email from a blackmailer stating that he has embarrassing or personal information about you. Failure to deposit funds into their Bitcoin account within a specific timeframe will result in an incriminating video released to your family or friends. They may know your email address and password. 

In this scam, hackers breached a company’s data and stole information. You may notice that the scammer gives you an outdated email address or password. So, don’t send money but do make sure you change your passwords regularly.

Still uncertain if it’s a scam, a good deal, or a real problem to resolve? Make sure to do your research and don’t feel pressured into making a quick decision.

How to Spot a Bitcoin, Altcoins, or Tokens Scammer

Here are some warning signs that indicate a scam.

  • A stranger sends you an email telling you about a no-risk investment opportunity in virtual currency. 
  • Scammers tend to inflate the sense of urgency surrounding a red-hot cryptocurrency opportunity.
  • Somebody wants you to buy cryptocurrency or deposit to a digital wallet to pay taxes, debt, or blackmail.

If you do spot a cryptocurrency scam, report it immediately to the Federal Trade Commission (FTC). You can also use the Bitcoin Abuse database to determine if someone’s crypto payment wallet address is attached to a scam.


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