What Are Some Common Cryptocurrency Scams to Watch Out For?

Illustrations by A. Gnetova and G. Phan

In This Article

Bitcoin (BTC)

It’s no secret that the realm of Bitcoin and cryptocurrency are still in a bit of a “Wild West” phase. While this is starting to change, there’s currently no shortage of scams and fraud going around, preying on the new and unfortunate alike. That’s why BeInCrypto has created a list of some of the most common and notorious scams currently plaguing the cryptocurrency space. With any luck, you won’t be the next person to fall for one of these traps!

Fake Exchanges, Wallets and Projects

One of the most direct types of scams out there is simply criminals putting forward a product or service that is meant to trick people into trusting it with their money. There has been no shortage of fraudulent exchanges, fake wallets and new coins that amount to nothing across the cryptocurrency space in recent years. Sometimes these cons try to look like a known, legitimate company. Other times they simply try to look professional enough to gain new user’s trust. In any event, once they secure your money, you won’t be getting it back. The best way to stay safe from these scams is to go slow and do your homework. Only follow known, trusted links, listen to what the community is saying about these services, and if something just doesn’t feel right, don’t trust it.

iran fake news

One other common fraud along these lines is the “Free Giveaways” you tend to see on Twitter. Often emulating the account of a known entity, like a major developer or exchange, they promise to give out massive payouts to those who “register.” Usually this means either sending some coin to an address, or providing personal information. In either event, this is always a scam. Nobody ever gives away free money, and no matter what they say, this will be no different.

Pyramid Schemes

A pyramid scheme is any type of scam which requires a constant stream of new “investors” in order to continue. Generally these will ask for an initial investment from the user and promise remarkable returns, probably very quickly. The reality is that early investors get their returns by bringing in newer investors, but sooner or later new investors will run out. Since the money is getting channeled upward, the original creator of the scam will end up with most of the money and usually disappear when it becomes clear the momentum is running out, leaving most of the people on the bottom with notable losses.

pyramid scheme

One of the most famous examples of this is Bitconnect, which was revealed as a ponzi scheme years ago after taking billions from investors in exchange for useless coins. Though now defunct, to this day projects exist in the cryptocurrency space that amount to the same model. The best defense here again comes in the form of taking the time to understand an offer before investing in it, as well as being very suspicious of anything boasting unusually high returns.

Traditional Scams

Often the scams being used today don’t differ much from the ones harming consumers for years. These come in the form of phone calls, emails or texts that either offer some promised reward for taking part in a contest, or alternatively threaten legal action against the consumer, possibly even blackmail. In any event the claims are falsehoods trying to entice or scare unprepared citizens into handing over some of their cryptocurrency.

As already covered, anything that seems too good to be true almost certainly is, however fear tactics can be even more effective. They may emulate the IRS or other regulatory body. They may threaten the user claiming possession of recorded private footage from the individual’s webcam, and demand some Bitcoin lest they release the footage on social media. While obviously each scenario could be different, it is almost always based on lies. Official agencies will not contact you in this way, and it is much easier to lie about having sensitive information than it is to actually get it.

An offshoot of this kind of scam happens mostly through text and email, and is called phishing. Again, the message will try to look like something official and important, and prompt the user to follow a link to get more information. Usually just clicking on that link is enough to initiate the installation of nefarious software onto your device. This brings us to our next major category, malware.


Malware is generally any type of software designed to steal money or information from your device. This can be accomplished in many ways. One is simply installing a keylogger, or software that records everything you type and transmits it back to the attacker, inevitably revealing usernames and passwords. Another type scans the system clipboard for cryptocurrency addresses and, if one is found, replaces it with an attacker-controlled address. This makes it a good idea to double and triple check addresses before sending transactions, even if you used copy and paste.

monero xmr malware

One other infamous version of malware is known as “ransomware,” because it will encrypt a user’s entire device and refuse to unlock it unless the user sends a certain amount of cryptocurrency to a specific address, usually under a time limit. This type of malware has been used repeatedly to target businesses and governments, who often do end up paying the ransom as it is generally less expensive than losing their entire computer network.

The main way to avoid these types of attacks is to never click on anything you don’t 100% trust. It also certainly doesn’t hurt to separate sensitive systems, like where you store your cryptocurrency, from general use systems, like where you surf the web and social media.

Pump and Dump

One more common form of scam comes from small, organized groups that will seek to generate inordinate hype around some specific, usually small-cap coin. They will buy some for themselves initially, then have a coordinated campaign on social media to generate some buzz for the project and get new money to start coming in. This will cause a bump in price, which will then start a FOMO feedback loop as more people will now believe they have to jump on this opportunity.

Bitcoin BTC Option Price Pump

As the buying reaches a fever pitch, the initial group who plotted this will sell, usually causing the pump to cease, followed by a collapse as later investors freak out and realize they’re losing money. In the end, few come out ahead except for the scammers. The obvious way to avoid this is to never panic buy into any position, and again, always do your homework.


This guide covers the most common forms of scams currently going around in cryptocurrency. That being said, criminals are very clever and are always looking to find new ways to dupe unsuspecting investors. The best advice is always to go slow and do research, listen to the community and don’t invest with emotion. Following those rules should keep most users out of any serious trouble.

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