10 Most Common Cryptocurrency Scams and How to Avoid Them

Digital currency can seem like a minefield, and you’re certainly not the only one feeling this way. The crypto universe is growing fast, but so are the scams.

In this top 10 cryptocurrency scams guide, we’ll cover the exact scams shaking up the digital finance landscape.

We will define each scam for you and outline how they work.

Now, sit tight and prepare for a wild ride of crypto scam insanity!

So, buckle up and get ready for a wild ride through the crypto fraud landscape!

Most Common Cryptocurrency Scams

1. Pig Butchering: The Long Con

You’re scrolling through a dating app when you see a perfect match. The dialogue comes easy, ranging from life and love to crypto.

But beware! You could have stepped into the world of pig butchering scams.

It is one of the nastiest types of scams in the realm of cryptocurrency fraud.

Here’s how it usually goes:

The scammer spends time building rapport with the victim, a process continuing over weeks or months.

Slowly but surely, they eye cryptocurrency as an investment opportunityที่จ่าย on both sides of the equation.

They convince the victim to invest money on a platform that looks genuine.”

At first, the victim sees phony “profits” that suggest the investment is a success.

This elicits even larger investments from the scammer.

But, when the victim tries to pull out their money, they find that it can’t be done, and the scammer has all but disappeared from sight.

Why is it referred to as “pig butchering”? Because the scammer “fattens up” the victim before going in for the kill. Brutal, right?

How to avoid:

• Investment advice from people you recently met online? Proceed with extreme caution.
• Do your research on the platform before putting down any cash.
• If it sounds too good to be true, it probably is.
• Keep your love life out of your investment decisions, everybody!

2. Rug Pulls: Now You See It, Now You Don’t

Have you encountered a crypto project that seemed legit but vanished with the investments of everyone? That’s called a rug pull.

It’s one of the most nefarious schemes in all of crypto.

Rug pulls often follow this pattern:

1. A new cryptocurrency or DeFi project is released by developers.
2. They create buzz on social media and crypto forums. Eager investors plow in large amounts of money, driving up the value of the token.
3. Then, suddenly, devs “pull the rug out” and sell all of their holdings and abandon the project.
4. The value of the token plummets, leaving investors with worthless coins.

How to avoid:

• Do your homework thoroughly. Dig deep on the project team.
• See their track record; look for team members with public identities.
• You must be wary of anonymous team projects, clarity is important!
• Check the audits on their smart contracts and if the liquidity is locked.
• Never forget to only invest what you can afford to lose.

3. Phishing: Don’t Take the Bait

Phishing attacks are the chameleons of crypto scams. They imitate actual websites and emails, making them appear credible. They do this by trying to make you hand over your sensitive login or private keys.

Stay safe and keep your information secure.

In the crypto space, common phishing tactics include:

1. Beware of false emails saying your crypto account is at risk.
2. Beware of websites that mimic popular exchanges or wallet services
3. Be aware of nefarious browser extensions that might harvest your data.
4. Be skeptical of messages on social media that include “urgent” requests to verify your account.
5. Listen to your gut man and make sure to play safe with this crypto thing.

How to avoid:

• Remember to inspect the URLs you visit closely. Be wary of minor misspellings or unusual domain extensions that could signal a phishing site.
• Use two-factor authentication on your crypto accounts.
• Never click on unknown or suspicious links from emails or texts.
• Use hardware wallets for significant long term storage. Refrain from rushing to believe something you read.

4. Pump and Dump: The Hype Train to Nowhere

Remember that obscure coin your favorite influencer wouldn’t shut up about? It may related to a pump and dump scheme. Such scams inflate the prices of crypto资产 artificially.

Later, the creators dump their own shares, and you’re left holding the bag. Keep your eyes peeled and study up!

The pump and dump playbook typically goes like this:

1. Cyber crooks will typically accumulate a large amount of a low-value, low-liquidity cryptocurrency.
2. To build excitement, they initiate a hype campaign that frequently involves social media influencers or false news.
3. The more people buy in, the higher the price rises, rapidly.
4. The scammers then sell at the top, causing the price to crash.
5. The sad part — late investors are left with worthless tokens.

How to avoid:

• Be cautious about sudden buzz over new or untested coins. And always do your own research, and don’t take influencers’ words for gospel.
• Look at the coin’s market cap, trading volume, and price history.
• FOMO (Fear of Missing Out) in crypto can result in bad decisions. We encourage you to keep yourself informed and to decide what’s best for yourself.

5. Fake Celebrity Endorsements: Stars in Their Eyes

If you see something like “Hey, it’s me, Elon Musk, giving away free Bitcoin! then you’ve probably encountered a common cryptocurrency scam.

These scams often work like this:

1. Scammers frequently create fake social media profiles, posing as celebrities.
2. They lure you in with tantalising cryptocurrency giveaways, typically offering to match any investment doubled.
3. A small amount of cryptocurrency is then sent by victims to supposedly “verify” that their address is real.
4. Once they have the money, the scammers disappear into thin air.

How to avoid:

• Celebrities are not in the habit of giving crypto away for free Pexels.
• Note that all social media accounts are verified with account badges.
• Beware of tournaments that ask you to pay money to enter.

6. Ponzi Schemes: Same Scam, New Tech

Ponzi schemes are not new, but they are getting a crypto facelift. They offer large returns but just use money from new investors to meet payments to those who got on board previously.

In the crypto world, Ponzi schemes might look like:

1. Beware of high-yield investment programs (HYIPs) that claim to offer high, but mean that they rip people off.
2. Avoid cloud mining services that promise profits without a plausible business model.
3. Be wary of referral programs that focus on recruitment rather than authentic products.

How to avoid:

• Watch out for anyone promising massive returns with little, if any risk.
• Be cautious of investment opportunities that emphasize recruitment of new investors.
• Like in other types of finance, sustainable returns in crypto rarely tend to be extravagant.
• If you don’t know how a project earns revenue, it’s a good idea to avoid it.

7. Malware and Cryptojacking: The Silent Thieves

Beware of the hidden crypto scams! These scams typically get your device infected. They are trying to steal your digital currency or take over your processing power.

Scammers leveraged this power to mine cryptocurrency for themselves.

Malware and cryptojacking can infiltrate your system through:

1. Phishing emails are usually attached with malware.
2. Other websites take advantage of flaws in the browser itself to compromise security.
3. Well, these are counterfeit applications posing as genuine cryptocurrency wallets.
4. Pirated software or games are also a big risk. Be aware of such threats to avoid falling prey.

How to avoid:

• Always update your software and operating system.
• Use reputable antivirus and anti-malware programs.
• Be careful about what you download and install on your device.
• Monitor your device for unusual slowdowns, which could signal cryptojacking.
• If you are wondering about storing large amounts of cryptocurrency consider hardware wallets.

8. Fake ICOs: The Ponzi Scheme 2.0

There are still honest and useful ICOs. But there are plenty of fraudulent ones in the crypto world, too.

They are preceded by the promises of revolutionary technology but end up with nothing for the investors.

Red flags for fake ICOs include:

1. The presence of vague or copied whitepapers can also be an indication.
2. Exercise extreme caution if there are claims of guaranteed returns.
3. Refrain: Fake team members or advisors.
4. There should be a definite use case for a token.
5. Red flags are hype and marketing without strong foundational support.

How to avoid:

• Read the whitepaper thoroughly
• Make sure it is very focused on the technology.
• Check the credentials of team members.
• Is there a real person behind them with a verifiable background? Seek reputable backers and partners.
• Examining the GitHub repository of the project How about some real development? Be patient.
• Invest once projects demonstrate their value. Do give time for projects to prove their worth.

9. SIM Swapping: The Phone Snatch

They are stealing your phone number with a clever high-tech heist. They can then bypass two-factor authentication and access your crypto accounts.

One of the most important moves you can make to protect your digital property is to protect your phone number.

Here’s how SIM swapping typically works:

1. Scammers usually gather a victim’s personal details via social engineering or data breaches.
2. They then pretend to be the victim and call the victim’s mobile carrier.
3. They report claiming that a lost or damaged phone, and ask for a SIM swap.
4. After taking over a person’s phone number, they can change passwords and defeat two-factor authentication at cryptocurrency exchanges.

How to avoid:

• This two-factor authentication is better through authentication apps instead of SMS.
• You might want to have a separate phone number for your crypto activities.
• Don’t put your personal info on the web.
• Do set up a personal identification number or password with your mobile carrier, to lock people out of making changes to your account.
• So when it makes sense, rely on hardware security keys for your most important accounts.

10. Fake Recovery Services: Adding Insult to Injury

If you have been scammed in crypto, losing your funds can be frustrating, and it’s tempting to trust so-called “recovery experts” who claim they can get your money back. They are usually not free though, and could be the latest scam to cash grab you.

Be diligent, do your research, and listen to well-respected voices before proceeding.

These scams typically operate like this:

1. They primarily target those who lost out in previous crypto scams.
2. They claim to have special tools or industry contacts to recover lost money.
3. They take either an advance payment or a percentage of the “recovered” sum.
4. After you pay, they disappear or claim the recovery effort failed.

How to avoid:

• Beware of unsolicited offers to recoup lost cryptocurrency.
• Legitimate law enforcement agencies don’t request advanced payment.
• Instead of turning to unverified “experts,” report you have been the victim of a scam to law enforcement officials.
• Realize that in many circumstances, lost cryptocurrency is gone forever.
• Instead, focus on protecting what assets you still have.

How To Avoid Crypto Scams?

Your best defense against common cryptocurrency scams is knowledge, and it’s ever changing.

Here are some key takeaways to protect yourself.

1. Always do your own research before investing.
2. Watch out for promises of large returns or any push to invest quickly.
3. Use strong, unique passwords for your crypto accounts, and enable two-factor authentication.
4. Always keep your private keys to yourself — never share them.
5. Beware of unsolicited investment advice, especially from people you meet online.
6. Opt for exchanges and wallets with a robust security history.
7. Store the bulk of your crypto in cold storage (hardware wallets)
8. Learn about more scams and security tips going around the crypto space.

Wrapping Up: Stay Smart, Stay Safe

Caution and common sense go hand in hand in the crypto world.

So look for the warning signs, be smart, and follow your gut. Naturally, if something looks off, it’s always better to be safe than sorry.

Never allow FOMO to impact your decisions — what matters most is the safety of your funds over possible profits.

Best wishes for safe and happy trading, crypto lovers! May you be in the black and your keys secure!