Cryptocurrencies are a new rage, but they have been around for a long time. The most well-known cryptocurrency, Bitcoin, was launched in 2009. There are more than 2,000 active cryptocurrencies on the international market. 

Cryptocurrency is a peer-to-peer trading system with no mediator. All the transactions are recorded in a ‘blockchain.’ People who own cryptocurrency keep track of payments and transfers of money. Every bitcoin owner is notified when a person sends a bitcoin to another person. The blockchain interacts with the participants’ computers, and when they all agree on where the money is, a new ‘block’ is added to the chain with updated balances and the location of the capital. 

Cryptocurrency scams follow the cryptocurrency market’s state. Cryptocurrency scams like the pump and dump schemes generally correlate with the overall cryptocurrency price levels. When markets are booming, so do scams and when markets fall, so do scams. Scams mostly rely on the influx of new users that appear when cryptocurrency markets are booming and particularly investors who are after a quick buck. 

Cryptocurrency Investment Scams 

These include Initial Coin Offerings (ICOs). ICOs are how new cryptocurrencies fund their startup by offering new investors coin tokens for money. While there are legitimate ICOs present that are genuinely made for cryptocurrencies, there are some black sheeps as well. ICOs are scammers’ favorite mechanism.

Most ICOs are marketed by individuals or small groups with little industry or IT experience and without accurate technology or legitimate business plans to back them. Regulatory bodies have prosecuted many ICO scammers in recent years.

Cryptocurrency Trading Scams

Malicious individuals and scam groups have designed multiple ways to defraud innocent investors out of their hard-earned funds. The presence of unregulated brokers with dodgy tactics under their belt going after investments or fleecing investors out of cash is commonplace in the cryptocurrency trading market.

These operatives usually work from call centers and are typically based overseas; they make cold calls to people with enticing offers and make unreal promises of hot tips that will return high dividends.

Facebook Scams, Fake News, and Fake Bitcoins

The advertisements you see on social media are a popular way to lure users toward a crypto fraud. These ads show up on Facebook and claim to be endorsed by celebrities such as Mel Gibson, to attract people to the investment. These scams are played out by organized criminal gangs across the world, who prey on people’s innocence.

Beginners are vulnerable to scams

The shady nature of cryptocurrency transactions allows scammers to play investors who are after profit, especially the ones who are new to the market. 

Decentralized exchange effectively enables scammers to run off with investor money and makes tracking them down tricky. 

Have you been attacked by a cryptocurrency scam

Cryptocurrency scams are not different from other investment fraud; they are often carried out internationally and, at times, across several jurisdictions. This limits law enforcement in tracking scammers, and investors are unable to reclaim their money. 

Crypto scams are recognized by their exaggerated promises of huge returns on investment through some hot cryptocurrency trading system endorsed by a fake celebrity or government agency endorsements. 

Scammers often reach out to you through social media or text messages. They have also penetrated dating apps to build fake romantic connections and groom victims for a crypto scam. In the beginning, cryptocurrency investors receive small returns, and when you start trusting the service, they take the actual dollars and run. 

Then there are ‘pump and dump’ scams where scammers hype a non-existent cryptocurrency investment to drive its value up and then sell it themselves, leaving other investors stranded. 

Red flags you need to watch out for: 

  • Know who you are trusting. Research about cryptocurrency project founders. If they choose to remain anonymous or have no track record of legitimate projects, be wary. 
  • If you have been approached directly with an investment opportunity offer, do not trust them. 
  • Read the ‘white papers’ or plans that lack detail or are poorly written. If they do not have it, it’s a problem. 
  • Watch out for blockchain data indicating that the token creator holds tokens in large amounts; it is an indicator of a pump and dump scheme. 
  • If you can, look for malicious code in the smart contract of the token that would let the scammer steal investors’ money. 
  • Look for grammatical errors, spelling mistakes, and conflicting information about the investment. Be vigilant about any sign that indicates the investment is illegitimate. 
  • Look for cryptocurrencies with names that appear similar to other well-known cryptocurrencies of decentralized finance projects. Many scams attempt to mimic other legitimate projects.
  • Do not share your private key or wallet seed phrase with anyone. 


Cryptocurrencies are off-limits for many people. Their unstable value depends on what people are willing to pay for them. Recently, people have been paying substantial sums for established cryptocurrencies like bitcoin. Many bought low, sold high, and made considerable amounts of money, while the volatile digital tokens battered others. 

Regardless of the uncertainties, people are increasingly jumping on the cryptocurrency bandwagon, hoping for a windfall. But recently, many people have been scammed with cryptocurrency fraud.