crypto currency scams and how to avoid them

Crypto might look very inviting right now. With interest rates still low and the value of cash being eroded by inflation, Crypto investment can seem to be a good idea.

But there are pitfalls. As the investments grow, more scammers and tech savvy co artists start to pick off the unwary.

Many who fall for such scams are likely to never report them. In Canada, for example, the Anti Fraud Centre estimate as few a 5% of victims will actually come forward.


Scammers often don’t start with Investment offers. Trading Platforms report that Instagram scams account for 32% of social media fraud cases. Facebook and Whatsapp are the next most popular are 26% and 9% respectively. They often start as Romantic enticements as opposed to Investment opportunities, but they are second in importance.



A classic bubble: Cryptocurrency is hyped and promoted, demand is ramped up, the value rises and promoters sell at great profit. More investors sell due to nerves, and whilst the few promoters get very rich quickly, many small investors are left “holding the bag” with no value left in their investments.

Squid Game is allegedly a notorious example of pump-and-dump. Launched October 2021, it rode the fame of the Netflix series of that name – and its value rose to $2,800 in just two weeks. The developers suddenly sold, making them 3.3M USD better off and leaving the value of 1 Squid Coin at around 1 cent.

Giveaway scam, or 2-for-1 scam

A giveaway scam where the victim is asked to send cryptocurrency to a wallet address, with the scammer promising to send double the amount back. The reciprocation never happens.

During bull markets FOMO drives the desire to take up these types of offer – free crypto becomes too tempting to pass up.

Airdrop scam

Crypto Currency and NFTs are given away to promote a project. Users obtain them by completing tasks – often resharing posts or creating accounts. Assets then need to be “claimed” to be realised – owned and traded.

Airdrops may be used to direct victims to fraudulent websites, which can be used to collect private information, like bank and card information, or the keys to a crypto wallet.

Service provider support scams

Posing a representatives of crypto providers, people are tricked into giving their private information information like passwords and virtual keys. Theft then becomes possible.

 Community platforms and messaging apps such as Discord or Telegram are a favourite haunt of these fraudsters, using seemingly authentic accounts to gain trust, in order to obtain the information they need to transfer their victims’ assets to their own accounts.

Genuine providers do not use unofficial channels like unverified social media accounts or personal email addresses, nor ask for passwords or private keys.

Crypto Ponzi schemes: Mining or staking pool scams

In the crypto world, Ponzi scams are applied to mining and staking pools. With the growing popularity of crypto, many investors want to participate in blockchain technology and the decentralized economy. One way is to mine or stake coins such as bitcoin (BTC), ethereum (ETH), polkadot (DOT) and cardano (ADA) through a mining pool or stake pool.

How does staking work? Investors contribute to the operation of a blockchain – the technology that securely and permanently records crypto transactions – by pledging, or locking up, their coins for a period of time. In return, they may receive crypto rewards. 

Scammers try to trick people into joining fake pools. Unlike other scams where the goal is to make a quick buck, mining and stake pool scams are a variation of a classic Ponzi scheme. They typically begin with an unsolicited invitation to join a pool, with the promise of lucrative rewards. You may initially receive returns, as the scammers attempt to gain your trust. However, as in all Ponzi schemes, these rewards are paid using the money received from new investors, rather than from legitimate returns on investment. 

The scammers hope that receiving returns will prompt you to invest more of your crypto in the pool. If you stake a larger amount, your crypto could be transferred to an unknown address – and you will likely never see it again.

Celebrity impersonation

Was that really Jeremy Clarkson touting NFTs? Can you really buy virtual property near Snoop’s? Trend-jacking off these real endorsements is a slew of faux celebrity crypto endorsements. A common concern around crypto investing is whether a coin or a project is genuine and trustworthy—but if your favorite actor or influencer is on board, it’s probably fine, right? 

Scammers create fake social media content or manipulate to make it appear as though celebrities endorse a particular cryptocurrency. They tend to use faces already prominent in the crypto space—such as Tesla CEO Elon Musk or Ethereum founder Vitalik Buterin—to draw investors in. 

Also beware of unknown and fake influencers: people who create social media accounts, buy followers and pretend to be influencers in order to peddle specific coins, crypto products or services. Scammers also use fake comments to make it appear that social media users recommend their services.

Blackmail scams

Blackmail scams are among the most disturbing crypto schemes. Scammers will send threats, often claiming they have access to a victim’s internet browsing history, passwords or an embarrassing webcam recording, often connected with watching porn online. They demand that the victim transfer crypto to their wallet address to make the problem go away. Or, the demand may be for the victim to promote a particular crypto to their contacts. 

While these experiences can be harrowing for victims, it is important not to respond to blackmailers. 

How to protect yourself from crypto scams

With all the ways that can be used to entrap you, it may be a bit daunting. However, there are things you do and behaviours to follow that can help protect you

Be sceptical: When it sounds too good to be true, it usually is. A healthy dose of scepticism will usually be of great benefit when an offer comes your way.

Verify all links: Don’t click through a link without examining it. A link expansion service can be used to inspect a shortened URL which will verify an email ID with the institution it’s supposedly sent from, or using a URL decoding tool to find a links true destination.

Don’t send crypto to unknown wallets: Before sending crypto to a wallet of a third party, ensure you know and trust that person or company. Don’t get caught up in the hype or succumb to Fear of Missing Out (FOMO).

Use official support channels: Don’t trust anyone who reaches out to you in the guise of a support representative on social media platforms or community messaging platforms.

Do your research: When choosing a crypto trading platform or a mining or staking service provider, stick with trusted names and companies with a clearly visible public footprint.

Never disclose confidential information: Don’t share your passwords, private keys or seed phrases with anybody under any circumstances.

Don’t respond to blackmail: If someone attempts to blackmail you, the best way to protect yourself is not to respond at all. You should, however, report it to your country’s Online security organisation.

All Crypto, even well organised, genuine currencies, can be highly volatile. Always ensure that it fits your investment plans, your risk tolerance levels, and your goals. Please spend time researching the opportunities and always review service agreements before hitting that BUY button.

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