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Crypto Scams: How to Identify and Avoid Them
The interest in the crypto market has been increasing in recent years, and with a whole package of attractive features, crypto continues being the main thing for scammers. The FTC (Federal Trade Commission) reports around $1 billion loss in crypto between Jan 1, 2021 and March 31, 2022, and this number may only be the tip of the iceberg.
Cryptocurrencies are mostly not authorized by any centralized authority and hence they become more vulnerable to fraud and attacks of crypto scams. Most people in crypto don’t even know how the system works and that the crypto transfers can not be reversed as they run on blockchain. This article is to help people understand tips on what crypto scams are and how to identify them to avoid possible attacks.

What is a crypto scammer
To be able to spot crypto scammers, you must learn who they are.
Just like everywhere else, scam artists know no boundaries and this also applies to cryptocurrencies, where chances to track your money once it's sent go down to almost zero. The most important thing to know is that scammers can go to any lengths to get your money, and to avoid becoming a victim of their manipulation, it’s better to get the hang of how you can suspect the scammer or any crypto-related operation.
How do crypto scams work
The main reasons scammers or thieves get attracted to cryptocurrency can vary from the chance of being pseudonymous to the lack of authorized power or legal protection and transactions that can almost never be reversed. These scam artists can come for your money in ways no one can be suspicious about, like tricking a naive person into sharing private information or sending cryptocurrency to a suspicious unknown wallet.
Crypto scams often aim to win trust and fidelity through many giveaways, initial coin offerings (ICO), NFT (non-fungible token) drops and even attempts to build fake romantic relationships to develop further scenarios for their scam.
Common trends of crypto scams
Cryptocurrency scam scenarios are mostly traditional theft ways that sometimes just come with new tools. Compared to 2021, we have seen an increase in crypto scams that make around 10% higher in 2022. Every year most of the crypto scams or attacks are reported from exchange platforms, blockchain bridges, as well as from DeFi protocols that are simply aimed to govern how crypto assets are used in blockchain.
Most people lose to rugpulls, meaning that the project owners stole liquidity from the investors by closing the project without a trace. Here are some obvious examples of what can alarm you to suspect cone artists or projects.
Promises of high returns
Success stories of crypto millionaires about their high investments in crypto and other crypto-related industries can in fact attract many investors who want to try their luck in crypto and enjoy the fruits of their invested money. It is said that everyone who bets big, can eventually lose big and this kind of stories have already started to pop out and they will continue this year too.
One of the most obvious alarms of crypto scam scenarios are the promises to earn high returns with the risks going down to zero. You must always take into account that no one can promise you an investment free of risks, so do your homework and educate yourself in crypto before falling for it. Remember that information and attention can become the best defense against crypto scams/ frauds.
Requiring you to send money
Here is another possible scenario of a crypto scam. Lots of cone artists will cheat you into sending them some money or cryptocurrency in order to “help” you invest. You should be really cautious of these kinds of offers, as most of the advice or helping attempts are possible scams.
Anything that captivates or inspires a person falls into the strategy of scammers. In this case, they can use the trick of emotional persuasion. Scammers mostly guarantee you big payouts and loads of money, thus awakening the emotional decision-making side of you as a buyer to reach their goal. Stay alert to recognize emotional abusers that come after your money because once you send them crypto or any kind of money, it will be gone forever.
Impersonating a legitimate company of individual
Scammers pretend to be someone trustworthy to persuade you into buying and sending them cryptocurrencies. They can impersonate well-known companies or trusted individuals, government agencies or pretend to be a celebrity able to multiply your income with a certain cryptocurrency.
In the name of well-known companies, they can send you ads, emails or text messages, encourage you to give them your account details or send them crypto, as the account happens to be at risk or has already been attacked. They come in waves, so as soon as you answer their calls, click the links or open the photos, you get in touch with a scammer.
Offering side income without any risks
Crypto scammers attract people with “get rich real quick” or “no risks in investing crypto” type of messages, promising lucrative and guaranteed returns with no risks at all. This can actually be very tricky, and unfortunately, many people fall for the idea of enriching their finances in days, instead of working for it for months and even years. And this perfect strategy works best for fraud scenarios.
When considering making any kind of investment, especially in cryptocurrencies, always find out the risks, interrogate as much as you can about where the money will be directed to, or what are the odds of losing your money. Honest advisors or legitimate companies share all the ups and downs of your deal and provide every detail that matters.
Not having legitimate KYC processes
When registering on a cryptocurrency exchange platform, ID verification and KYC checks are mandatory and serve as a legal requirement. KYC (know your customer) is simply an identity verification process that each financial institution or organization carries out to provide maximum protection both for their product and for their customers as this sphere tends to attract frauds, cone artists and scammers.
As secure as it is, many exchange platforms still do not require proper KYC checks, and this leaves us to doubt their authenticity and question the legal integrity. Accepting the risk of trading crypto on no KYC exchanges, can cost you your whole money or business, becoming a victim of fraud. Try to avoid them and secure yourself for the future.
What are the common crypto scam types

Cryptocurrency scams come in many waves and take multiple forms. And here are several common types to watch out for in 2023.
- Ponzi schemes
- Phishing scams
- Pump and dump schemes
- ICO scams
- Pyramid schemes
- Fake exchanges
Ponzi schemes
As probably one of the most wide-spread crypto scam types, Ponzi schemes come as investment scams involving the payment of purported returns of existing investors from funds contributed by new investors.
Ponzi scheme organizers usually use the latest industries, technologies or innovative projects to lure fresh investors into cryptocurrencies. New projects attract investors with the unexpected opportunities they can bring with them and this is where they start underestimating the risks. Cryptocurrencies are the latest “fresh meat” for scam artists, with their greater privacy benefits in terms of transactions, allowing them to offer investors high returns and little risks as the growing Internet phenomenon.
Most of the Ponzi scheme cases share similar characteristics such as overly consistent returns, sellers without licenses, unregistered investments and last but not least unlimited returns that take little or no risk at all.
Every “fresh” investor must be highly skeptical of each paperwork about the prospects of their investment. Risks are always out there, especially with cryptocurrencies, so you better watch out before giving your money away with no guarantees of return.
Phishing schemes
Phishing scams have been around for a while, but scammers still won’t give it up as they have now adopted it to crypto. In case of phishing schemes, attackers target consumers with emails containing malicious links to “great” websites with booming investment offers that you cannot miss.
Via these websites, scammers can get your personal details, such as private information about your cryptocurrency wallet address. Once this key information is stolen, your wallet is gone as the key is unique for each wallet, meaning that the person needs to create a completely new wallet.
To avoid phishing schemes, it is best to check the websites directly, however secure or familiar it may look or seem.
Pump and dump schemes
Present in the economic contexts from around the 1700s, pump and dump schemes have evolved to become more prevalent now. Manipulation is the main asset here, that’s why these schemes target mainly micro- and small-cap stocks.
Pump and dump schemes are practically the amassment of a certain commodity (in this case cryptocurrencies) over time by fraudsters who artificially increase its price with misinformation, known as “pumping”, later selling their assets to rather unaware investors/buyers with a higher price, also known as “dumping”.
Before getting into a pump-and-dump deal, you better find out its legal grounds. However crypto and exchange platforms are still considered a “safer” place for scammers that lack lots of regulations unlike the stock market.
After spreading the word that a certain cryptocurrency is rising, scammers aim to attract people with the FOMO (Fear of Missing Out) of one-of-a-kind chance to use multiple social media platforms for it.
As uncertain as the signs of pump-and-dump frauds can be, you can however consider every hype around a new-rising currency a red flag. Dive deep into each motivation people can have to involve in its promotion and discuss every detail before you go for an unknown project.