Common Crypto Scams in 2023: Tips to Avoid Crypto Scammers – Part 1
Main Takeaways
Knowing how scams work is a great start for anyone wishing to stay safe in the world of crypto. Knowing how to keep your money safe is just as crucial.
This article is the first part of a miniseries exploring best practices of standing up to crypto scammers.
Be wary of “investment experts,” self-proclaimed “Binance staff,” online dates who seem too good to be true, and tiered investing schemes that promise income for inviting new people.
Keep your funds SAFU! Here’s a summary of some of the best tips to help you avoid and identify pesky scammers trying to steal your crypto.
Recently, we compiled and summarized crypto’s most prevalent scams — including the common tactics used — into an in-depth blog series titled Know Your Scam. Inside you’ll find detailed breakdowns of common scams like Ponzi schemes, fake job offers, and Binance imposters, to name a few.
While it helps to know how different scams work, we wanted to shed more light on how you can better avoid common fraud schemes.
Crypto scammers primarily target new users who are both unfamiliar with the industry and view the crypto market as an easy money-making opportunity. If you’re new to the crypto space or any form of investment, be wary of the following scenarios.
The Investment Specialist or “Binance Employee”
Strangers on the internet or self-proclaimed “Binance employees” messaging you with unsolicited investment advice or offers to “double your money” are most likely scammers. Moreover, Binance employees will never proactively message you on social media to talk about investment, give you money, or offer you some exclusive service.
Three tips to avoid imposter scams
1. Understand realistic returns
If you want to evaluate the authenticity of an "investment expert," the easiest way to do it is to calculate the returns they offer. Annual returns of 20%, which translates to a 0.0548% daily return, is already considered very high among the investing community. Be cautious of any “investment expert” touting returns greater than 20%.
Note that you should still exercise caution with anyone offering investment advice or promising to multiply your money. Even someone advertising a reasonable annual return, like 10%, could be a scammer trying to deceive you into giving money away.
2. Use Binance Verify
Our official database, Binance Verify, allows anyone to cross-check Binance domains, email addresses, phone numbers, WeChat IDs, Telegram IDs, and Twitter handles. Don’t instantly trust anyone who says they work for or represent Binance. Always verify the source on Binance Verify first.
Continue to exercise caution even if your query shows the source is verified. Scammers often use real names of Binance employees to deceive their victims.
3. Perform a background check
Search for key information behind the “investment program.” Use tools like who.is to find when the website was founded and how long it’s been active. Check URLs against Scamadviser, a database that compiles and scores websites based on how trustworthy they are.
Always do research before entrusting your money to a platform, person, or entity. At the very least, you should do a quick Google search on the website or the project’s name. If you notice any red flags, block the contact and cease all communications. Scammers often have scripts prepared to try and convince you of their legitimacy.
Website review on Scamadviser
Love Comes Quickly
If an online relationship rapidly escalates from first contact to being madly in love, be on your guard. This is a telltale sign of an online dating scam.
Three tips to spot a romance scam
1. Reverse search their images
Use image search applications such as TinEye, Google (Search by image), or Baidu (Search by image) to check if the person is who they say they are. Scammers often steal pictures from social media profiles of real people.
TinEye homepage
2. Search their name for more information
Try searching the full name of the person you’re chatting with on Google using keywords like “scammer,” “romance scam,” or “dating fraud.” Ask them for their social media profiles. If you can’t find any information about them on the Internet, tread carefully — especially if money becomes a recurring talking point.
3. Request to see their face over video
Your potential partner might be impersonating someone. Ask for a video call to check if they are who they claim to be. If they continually avoid the subject, it’s best you exercise caution. Scammers will spin a variety of lies to convince you they can’t get on a video call.
High-Returns With a Tiered Invitation System
Schemes that offer you high returns and upgraded VIP tiers based on how many people you invite are considered high-risk and are often signs of a scam. There is typically no stable business model behind such arrangements. Your income is contingent on the number of new users you invite to deposit money.
Red flags to identify a fake crypto investment scheme
1. Understand realistic returns
By traditional metrics, a 10-20% annual return is already considered a very high return on investment. Fake “investment schemes” may try to entice you with offers like 1% daily profit. This equates to 1230% annual return, a highly unlikely number.
As we mentioned previously, you should still be careful even if a project or scheme is advertising a more reasonable return.
2. Search the wallet addresses
Use a block explorer, such as Bitquery, to query the information of withdrawal addresses. Observe the balance of the addresses at different times, when the addresses were created, how often withdrawals are made, and where the money is going.
These tools, albeit more advanced, are essential to understand for any crypto user. Try to use them the next time you encounter an unknown wallet address.
For a full tutorial, check out our Binance Academy guide: How to Use a Bitcoin Blockchain Explorer.
Bitquery
For more details about a specific address, you’ll need to use a network-specific block explorer, such as:
TRONSCAN for TRON Protocol (TRX)
Etherscan for Ethereum network (ETH)
BscScan for BNB Chain (BSC)
btc.com for Bitcoin network (BTC)
Analysis feature on TRONSCAN
Final Thoughts
To stay safe in the world of digital currencies, it is important to be cautious with unsolicited investment advice, online relationships that progress rapidly, and tiered investment schemes with seemingly high returns.
By understanding realistic returns on investment, verifying sources, conducting necessary background checks, and utilizing available tools for research and due diligence, users can protect themselves against the prevalent scams and safeguard their crypto assets.
Further Reading
Disclaimer and Risk Warning: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial advice, nor is it intended to recommend the purchase of any specific product or service. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance is not liable for any losses you may incur. Not financial advice. For more information, see our Terms of Use and Risk Warning.