What is a crypto scammer? 

Many scammers are professionals who work in organized crime groups or are victims themselves who are compelled to scam by people with leverage on them. Scammers often use specialized software, paired with stolen personal identification information (PII), purchased in illicit online marketplaces, to identify potential targets. Using bits of personal information – like your social media contact list, your social security number, or your credit card transaction history – scammers can impersonate you or someone in your network.

Many of the attributes that make cryptocurrency empowering and transformative to privacy advocates and people who can’t access traditional finance also make it attractive to scammers. The pseudonymous nature of cryptocurrency allows scammers to disguise their identities more easily than other forms of payment, and because there is no central authority, nobody can stop scammers from moving money and transacting on the blockchain.

Watch out for these crypto scams  

These are some of the most common crypto scams that investors should be aware of: 

1. Romance scams 

The Internet connects people across the globe, and websites and apps dedicated to matchmaking have been successful for decades. When people use these apps to form emotional bonds and show vulnerability, that gives scammers a way to get around our natural distrust of strangers.

One of the most common types of romance scams involves a process known as Pig Butchering. This is a long-term scam where the victim is “fattened up” with charm and a semblance of a personal connection, then the “slaughter” comes when the scammer uses their bond to drain the victim’s wealth. This can start by asking for money to buy a plane ticket to see each other. Then the scammer might claim they’re being held for passport issues and need money to get free. Then something else happens… At a certain point the victim has sunk so much capital into the relationship that they become irrationally committed, hoping that if they just keep sending money eventually it will work out. The scam will continue until the victim is out of money. Then the scammer will disappear, leaving the victim financially and emotionally drained.

2. Investment scams

Have you received an unsolicited message from someone claiming to have financial advice that is “very lucrative” or an investment strategy that will “change your life forever?” These scams are as old as email, and in their original iteration were sent out to hundreds or thousands of emails in the hope that one or two people would fall for it. With modern fraud tools and stolen contact lists, scammers can claim that they know a mutual contact, or even impersonate somebody you’ve worked with in the past to gain your trust. Their pitch might involve private details, or even imply some kind of leverage on you like, “Hey I know you’re behind on your truck payments,” then they’ll tell you about some great investment they can help you out with. Photoshop and AI image-doctoring programs can make convincing financial statements to back up their claims. But the only way to access the opportunity is to sign up for an account with them or give them funds for an initial investment. These scams often convey a sense of urgency but once the crypto has been transferred, the so-called good buddy and the crypto you sent to them are gone.

What makes investment scams especially persuasive in the crypto community is that many successful projects started off as a few people convincing others to buy in through word-of-mouth methods. Dogecoin, for example, was created as a joke, but is now one of the top coins by market capitalization, and the people who bought in early reaped huge gains. Scammers use stories like this to play on people’s fear of missing out. To muddy the waters further, scammers employ dozens, or even hundreds of fake profiles to upvote and evangelize a fraudulent project in online forums to make it appear legitimate and exciting to an outsider.

When evaluating whether you should give a crypto-based project money, keep this in mind:

1.      For every Dogecoin there are a thousand failures.

2.      Never invest anything you can’t afford to lose.

3.      If its so easy to get rich on this, why isn’t everybody in the world doing it?

4.      What’s in it for the person pitching you?

And most importantly, a core element of cryptocurrency is the idea of self-custody. If somebody wants you to give them access to your private wallet or the assets within, that’s a bright red flag.

3. Phishing scams

Phishing is one of the oldest and most common forms of online fraud. It involves a scammer posing as a trusted source to lure you into revealing sensitive information. For example, you may get an email claiming to be from a cryptocurrency exchange you use that says there is a problem with your account, and you must log in to fix it. You click the email link and it sends you to a site that looks exactly like the exchange’s, so you enter your login and password – and now the scammers have a way into your account.

To avoid phishing scams, get in the habit of checking email addresses and URLs. If a message from your bank comes from an “@gmail.com” address, that’s a phishing scam. And if a link tells you to visit www.coinflip.tick, again, not real.

4. Official Impersonation Scam

A scammer may also pose as a government official to separate people from their crypto. An impersonation scam may involve someone pretending to be an IRS official or a representative from another government agency. Scammers can also impersonate someone working for a utility company and ask for crypto to pay outstanding fees for something like a late electricity bill or water bill. The tactic involves intimidation and urgency, usually embellished with threats of jail time or stiff penalties.

Keep in mind that no U.S. government agency accepts cryptocurrency payments – any request to pay an outstanding bill or fee in cryptocurrency is a scam.  

5. Social media giveaway scams

The social media giveaway scam has risen in popularity with the mass adoption of social platforms like X (Twitter), Instagram, TikTok, and Facebook. The scam takes the form of a post that promises free crypto or a similar prize with monetary value behind it. The scammers frequently pose as celebrities like Elon Musk and claim they have lots of cash to give to their first crop of new followers, but then vanish without a trace. 

Even if a social media giveaway looks legitimate, remember one of the top methods to avoid crypto scams: never send crypto to somebody you don’t personally know, and never share crypto wallet details with another person — even if it’s a well-known celebrity.

Also, real social media sweepstakes always have a little fine print at the bottom to lay out the terms of the giveaway. If a post is missing that, it might be a scam.

6. The crypto job scammer

The crypto industry has gone on a hiring spree in recent years. Many blue-chip firms in finance, consulting, and technology have built entire crypto divisions seemingly overnight. A scammer might pose as a recruiter in this rapidly growing industry. If the recruiter requires upfront payment for you to get the job, that’s a problem. No legitimate job offering will ask for payment to be considered for the role! They’re supposed to pay you!

Common warning signs of crypto scams 

A general rule to keep in mind is to ask yourself, “Does this seem too good to be true?” If the answer is “yes,” then it’s likely a scam. It might be useful to set strict boundaries for yourself if you’re new to crypto. This could be a social rule like never sending crypto to anybody that you haven’t met in real life, or a monetary rule like never putting more than $X into any new venture.

Any crypto investment expert or potential romantic partner asking for personal information should also ring alarm bells.  

And, in general, anyone claiming to be giving away free crypto or free money is probably hiding other motives. There are some examples of legitimate crypto giveaways, but any individuals or companies that are honestly trying to give away crypto must prominently outline clear rules and guidelines.  

Things seen on a screen can seem real, but it’s best practice to heavily scrutinize any claims that sound like the examples above. Setting things in a real-life context can be helpful. If a person stopped you on the street and claimed that you could get 10x your money by simply giving them $10, do you hand them $10 from your wallet? The answer is probably no. Take this same amount of healthy skepticism to the online realm. It could make the difference between falling for a crypto scam and keeping your crypto safe.  

If you have any questions or feel you may have been targeted in a scamming or phishing attempt, please contact us immediately at our 24/7 support number: 773-800-0106.