How to know if it is a cryptocurrency scam or not?

The number of financial frauds for consumers to avoid was already nearly endless, but the number exploded when digital currencies, also known as cryptocurrencies, went mainstream. According to the U.S. Federal Trade Commission (FTC), between January 2021 and June 2022, more than 46,000 people reported losing $1 billion worth of cryptocurrency to various scams, adding to the figure. includes only those who voluntarily provided information passed on to authorities. 

Cryptocurrencies such as Bitcoin, Ethereum, and Cardano are popular commodities for online trading, and lucky investors can reap large returns. But for some, the prospect of getting rich quickly blinds them to risk, allowing scammers to trick and deceive.

This cryptocurrency is not backed by any government or central bank. Nevertheless, you can also use cryptocurrencies to buy goods and services, exchange them for US dollars or other traditional currencies on digital markets, or obtain them at dedicated ATMs. 


  • How do people commonly get scammed in the cryptocurrency industry?
  • What are the most common cryptocurrency warning signs?
  • What should you do if you’ve been crypto scammed?
  • How to avoid crypto scams?

How do people commonly get scammed in the cryptocurrency industry?

The most common cryptocurrency scams fall into two categories. The first category involves access to victims’ digital wallets and private security passwords/authentication credentials. If successful, the scammer gains access to the victim’s cryptocurrency holdings. A good example of this is a phishing scam. The fraudulent email contains a link to her website and requires the victim to enter a private key.

In the second category, victims send cryptocurrencies directly to scammers. 

6 common cryptocurrency scams in 2023


What are the most common cryptocurrency warning signs?

With this in mind, there are general red flags to look out for in the cryptocurrency industry (and indeed any investment) to mitigate the risk of fraud.

These warning signs include:

  1. Any opportunity with little or no risk and a high return on investment.
  2. An opportunity that promises very stable profits.
  3. There are no minimum qualifications or experience required as an investor.
  4. Investments that are difficult to withdraw, pay or receive income from.
  5. excessive marketing. and
  6. Poorly written “white papers” (i.e. information published by developers to explain the technology and purpose of the project). 


Be careful about the Ponzi scheme!


What should you do if you’ve been crypto scammed?

If you discover fraudulent activity after making a recent payment through your bank, you should notify your bank (the sending bank) and the other party’s bank (the receiving bank) immediately. The sending bank may be able to recover the funds and must use reasonable efforts to recover the funds. In some cases, the receiving bank can freeze the funds.

If you paid with a credit card (such as VISA or Mastercard), you should check to see if there are any chargeback claims. You can also consider whether your bank (remittance bank) offers other possible relief options, such as CRM codes (conditional redemption model codes).

Further claims can be filed if the identity of the fraudster is known. But usually, the victim has very little information.

Another important consideration to start with is the potential financial cost to victims who wish to take legal action against scammers. Seeking relief through the courts can be costly (especially if tracking is required, the exchange or fraudster involved is based in a foreign jurisdiction, and/or an emergency court order to freeze funds). required). If the anticipated costs make remediation uneconomical, victims may consider whether others have been similarly duped before filing a class action lawsuit.

From here, there are a few things you can do before taking legal action. Hire tracking experts to track the movement of funds and crypto assets. Review all relevant communications and create a chronology with available supporting evidence.


How to avoid crypto scams?

  • Ignore cold calls: You have to ignore people who suddenly scream to sell you a cryptocurrency investment opportunity. In addition, we may not disclose personal information or transfer funds to such individuals.
  • Download the application from the official platform: To minimize the chances of downloading fake apps, individuals should download all cryptocurrency-related mobile applications from Apple App Store or Google Play Store.

what are gift card scams and how to avoid them?

  • Secure your cryptocurrency wallet: Individuals investing in digital assets should store their holdings in a crypto wallet containing private keys. If someone asks you to share a key to participate in an investment opportunity in the cryptocurrency space, it is most likely a scam.
  • Check your wallet app: For the first transfer, a small transfer is made to verify that the wallet app is legitimate. If you notice anything suspicious while updating the app, you should cancel the update and uninstall the app. 


The bottom line

With the current downturn in the crypto market, many investors are now looking to “cash out” their cryptocurrency investments and convert their holdings into more traditional currencies. However, in some cases, investors may fall victim to fraud without recovering their funds.

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