It is estimated that cryptocurrency scammers stole $4.6 billion from crypto users and investors in 2023 alone. This corresponds to approximately 0.013% of the total transaction volume of cryptocurrencies in 2023.

Even though cryptocurrency is a relatively new trend, scammers are employing traditional methods to steal. Here are some common cryptocurrency scams to be aware of.

1. Bitcoin investment schemes

In bitcoin investment schemes, scammers contact investors claiming to be seasoned "investment managers". They promise their victims that they will make money with investments, using fake celebrity endorsements to make it appear as though the celebrity is promoting a large financial gain from the investment.

The scammers may also request an upfront fee and personal identification information, claiming it's to transfer or deposit funds, but then simply steal the upfront fees or gain access to a person's cryptocurrency.

The sources for these claims appear to be legitimate, using reputable company names such as ABC or CBS, with a professional-looking website and logos, but the endorsement is fake.

2. Rug pull scams

Rug pull scams involve scammers adding money into a new cryptocurrency, non-fungible token (NFT), or crypto presale. After investors deposit their money, the scammers withdraw all the funds and disappear, leaving behind a cryptocurrency or a token with no value.

3. Romance scams

Dating apps have become a common platform for crypto scams. These scams usually involve long-distance, online relationships where one party gains the trust of the other over time. Eventually, one party convinces the other to buy or give money in the form of cryptocurrency. Once the money is obtained, the scammer disappears. These scams are also known as "pig butchering scams."

4. Phishing scams

Phishing scams have been around for some time but are still popular. Scammers send emails with malicious links to a fake website to gather personal details, such as cryptocurrency wallet key information.

Unlike passwords, users only get one unique private key to digital wallets. If a private key is stolen, it is troublesome to change this key because each key is unique to a wallet. To update this key, the person needs to create a new wallet.

To avoid phishing scams, never enter private security information from an email link. Always go directly to the site, no matter how legitimate the website or link appears.

5. Man-in-the-middle attacks

When users log in to a cryptocurrency account in a public location, scammers can steal their private, sensitive information. A scammer can intercept any information sent over a public network, including passwords, cryptocurrency wallet keys, and account information.

Anytime a user is logged in, a thief can gather this sensitive information by using the man-in-the-middle attack approach. This is done by intercepting Wi-Fi signals on trusted networks if they are in proximity.

The best way to avoid these attacks is to block the man-in-the-middle by using a virtual private network (VPN) to encrypt the data being sent. Otherwise, avoid associating with public networks when you open a digital wallet using your private key. Fortunately, this key only needs to be used when creating the digital wallet or reopening it on a new device.

6. Cryptocurrency distribution

Many fraudulent posts on social media promise bitcoin giveaways, often using fake celebrity accounts to lure people in. When someone clicks on the giveaway, they are taken to a fraudulent site that asks for verification to receive the Bitcoin. This verification process often involves making a payment to prove the account is legitimate.

The victim can lose this payment or, worse yet, click on a malicious link and have their personal information and cryptocurrency stolen.

7. Ponzi schemes

Ponzi schemes involve paying older investors with the money from new investors. Cryptocurrencies are often used to attract new investors, but there are no legitimate investments; the scheme relies on targeting new investors to pay those who invested earlier. The main appeal of a Ponzi scheme is the promise of high profits with little risk. However, in reality, these investments are high-risk and there are no guaranteed returns. When the flow of new investments slows, the scammer won't have enough money to pay the promised profits, leading to the collapse of the entire Ponzi scheme.

8. Fake cryptocurrency exchanges

This topic is very important: it is necessary to choose cryptocurrency exchanges carefully. During this period, it has been observed that many crypto analysts and influencers support certain exchanges. Before investing, it's essential to do thorough research on these exchanges, as some influencers aim to earn commissions from them. We're not against this practice, but not all exchanges are safe. There are many fake crypto exchanges, some have been hacked, some have closed down, and others may make it easy to deposit funds but difficult to withdraw them, or even prevent withdrawals altogether.

Therefore, we highly recommend conducting sufficient research into an exchange’s reputation and legitimacy before entering any personal information.

9. Fake Crypto Wallets

A fake crypto wallet is a type of malware scam that scammers use to infect a computer and steal the user’s private key or password. To avoid falling victim to such scams, it's important to use reputable wallets with a long user history. If a wallet's website appears to resemble a well-known brand, it's likely a scam, and you should avoid it. App Authenticity: Always verify an app's legitimacy by examining developer information and reading user reviews before downloading. Look for inconsistencies or red flags that may suggest deceit.

Avoid Non-Official Stores: Stick to official app stores for downloads. These platforms offer better security measures and vetting processes compared to third-party stores, which may host malicious apps rejected by legitimate channels.

10. Upgrade your crypto wallet or platform

The crypto wallet or platform is essentially a software that needs to be updated periodically. The software is updated automatically through the Google Play Store or Apple Store. If any website asks you to click on a link to upgrade, please avoid doing so.

11. Token pre-sale scam

Cryptocurrency ICOs create more opportunities for scammers to access your funds. While cryptocurrency ICOs may seem profitable, they don't always reflect reality.

The concept of token pre-sale is based on the team's insufficient financial capacity to create the token and add enough capital to the liquidity pool for later token purchases. Creating a currency without adequate capital to support it raises concerns. The process of creating token ICOs is considered easy and low-cost, making it a preferred method for fraudsters.

Blockchain security firm Blockaid reported that 50% of recent pre-sale token launches on Solana have been malicious.

12. Cloud Mining

Platforms will market to retail buyers and investors to get them to contribute upfront capital to secure an ongoing stream of mining power and rewards. These platforms don't own the hash rate they claim to, and don't deliver the rewards after receiving your down payment.

While cloud mining isn't necessarily a scam, you must conduct thorough due diligence on the platform before investing to ensure that your money stays safe.

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