Last Updated on Dec 17, 2021 by James W

The market of cryptocurrencies is highly volatile, and this trend seems to be there for some time now. Hence there are many investors ready to take advantage of the emerging asset. The system and asset-based cryptocurrencies such as decentralized finance and the non-exchangeable token attract many people, as there are several innovative ways to earn money.

As Cryptocurrency is earning the mainstream tag, the FTC (Federal Trade Commission) is witnessing losses on account of investment in cryptocurrency scams gaining new highs. FTC received close to 6,800 scam reports from cryptocurrency investment from 01 October 2020 till 31 March 2021. The loss has amounted to more than eight million USD.

Fraud recovery companies prove to be a great help to recover the funds from a scam. They carry relevant experience to deal with the scammer, and in most cases, the recovery chances increase. You can recover money lost in Bitcoin scams, accounting scams, banking frauds, and many more by taking guidance from such companies.

It is necessary to stay cautious about investment in cryptocurrency and portfolio management of crypto as there are high chances of fraud. Below are a few scams in connection to cryptocurrency that you must know.

1. Phishing Scams

Phishing is one of the oldest forms of scam. Here a scammer will try to obtain your details like social security number, address, name, and passwords. If you invest in cryptocurrency, scammers strive to get the private key or seed words from any cryptocurrency wallet that belongs to you.

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Multiple forms give rise to phishing ranging from an innocuous email, text, or phone. The phishing scam in cryptocurrency is usual on social media websites, messaging apps, and forums.

The scammer will present himself falsely as a company representative or an individual from an authority. Once you believe them, they will extract all the information to make you a scam victim.

2. Giveaway Scams

You must have seen business people and eminent personalities discussing cryptocurrency online in a legitimate way. The birth of a giveaway scam starts from here to extort victims. They will imitate famous personalities, even create a profile on social media using their bios and pictures.

The scammer usually announces the token distribution of cryptocurrency. To get the giveaway, they will ask you to transfer funds. Then they will remit you more than what you have invested. The harsh reality remains, they will make you initiate a transfer and then disappear.

3. Fake Websites and Apps

Cyber offenders make fake apps and websites with names identical to trusted and reliable cryptocurrency services.

Unfortunately, if you happen to visit these fake sites and end up entering your account and personal information, it becomes easy for the scammer to steal your cryptocurrency or personal information. In a few situations, you might unintentionally opt for the services to transfer your cryptocurrencies to the wallet of a scammer.

4. Blackmail Scams

Blackmail is yet another common way used by a criminal to scam you. Usually, they have embarrassing or incriminating details about you that may be true or made up. For example, they can scare you by informing you that they will share a compromising picture or video to your contact lists in emails and phone.

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They can also terrorize you by keeping the threat unclear, informing you about sharing your top-secret without actually taking a specific name. The scammer usually expects payment through some cryptocurrency or Bitcoin. You must file a complaint of blackmail or extortion to the FBI without wasting any time.

5. Established Scams

Sometimes the main target of the scam may not be specifically cryptocurrency assets. But the scammers use cryptocurrencies only to make their victims transfer the money. Such scams are not distinctive for investors of cryptocurrency. Some of the common scams are:

  • Employment Scams – When someone offers you a job opportunity but demands advance for software, initial training before coming on board.
  • Romance Scam – When a person associates with you in a platonic or romantic relationship, then demands money.
  • Marketplace Scams – When you shop online, someone requests you to transfer cryptocurrency.

No matter the terms and conditions initially, once you are about to close the deal, they demand payment in cryptocurrency.

6. Investment Scams

Beware of pitches that scammers make on the phone for investments. They will guide you to a website to know the details of the promising opportunity. Else, they can request a direct transfer of money also.

Usually, a scammer pretends to be someone else. It is a common practice amongst scammers to create new scams. Rug pulls, exit scams are the investment scam types in the crypto world.

Some Primary Rules Need Attention

The identification of a cryptocurrency scam is not easy. The reason people are not aware of multiple terminologies and technologies in crypto. The scammer usually leverages the lack of knowledge and awareness of the investor related to cryptocurrencies. They create a sense of fear of missing out (FOMO) about an opportunity that pushes the investor to take a hasty decision.

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Stick to the following guidelines that may assist you to avoid crypto scams:

  • Avoid sharing your seed phrases and private keys with any individual.
  • Never think of cryptocurrency transfer to individuals claiming that they are part of a large corporation or government agency.
  • Always opt for multi-level authentication.
  • Never trust a person who says I will give you money for no work or assures you a way higher return on your investment.
  • If you are not confident, check the details of cryptocurrency, app, and website in queries and scams. Also, the reviews of other investors can be of great help.

Wise Investment Decision

The world is becoming dynamic every day and is creating opportunities to mint money. Making money is never considered evil. But at the same time, it is necessary to move away from the trap of a scam. Never put in your hard-earned money instantly after knowing about a particular investment, especially in cryptocurrency. Always take detailed information and the risk associated with getting a return on your investment.

Knowledge is power, so collect all details from every source to become confident in investing in a complicated asset like cryptocurrency. Once you are sure about it, go ahead with the investment.


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