December 18, 2023

The dark side of cryptocurrency: Steering clear of crypto scams

The dark side of cryptocurrency: Steering clear of crypto scams

Cryptocurrencies (or crypto) are digital currencies and speculative investments that can be used to pay for goods and services. They have no government backing or legal protections and use decentralized blockchain technology that relies on users to verify transactions and generate new currency. Although transactions are generally secure, the market is volatile, so cryptocurrency trading can be a high-risk but also high-reward practice.

To further complicate an already complicated subject- matter, the cryptocurrency sector has become attractive to scammers looking to swindle inexperienced traders. Fraudsters take advantage of crypto’s anonymity and lack of regulation in order to scam their targets and then vanish, sometimes  with huge sums of money. Since these transactions can’t be canceled, reversed, or easily traced to an individual, they can be ideal for scammers.

Read on and learn how to steer clear of crypto scams and protect yourself from dangerous fraud attempts.

Identifying common types of crypto scams

Crypto scammers may use a range of methods to steal your funds, commonly employing texts, emails, phone calls, social media messages, and website pop-ups. They may trick you into transferring over your money or revealing personal information like your private key, which would grant them access to your wallet. Crypto scammers often impersonate trustworthy businesses, government agencies, and other familiar, legitimate entities.

There are various types of crypto scams, and knowing how to identify them can help you protect yourself from their traps.

Phishing attempts in cryptocurrency

Many crypto scams are phishing and smishing attempts that aim to steal your private key to your crypto wallet and other confidential information like your email address, Social Security number, and bank account details. Phishing emails and smishing texts rely on malicious links to direct you to a spoofed website that solicits and steals this information or downloads malware onto your device.

Phishing attempts usually involve the scammer posing as a legitimate business, service, or government agency to establish trust and authority as well as a sense of urgency. They might claim there’s a problem with your digital wallet or other crypto-related account that must be addressed quickly, or they may offer a fake limited-time opportunity that supposedly ends soon. The goal is to get you to give away your information before you realize you’re being scammed.

Watch out for texts and emails that include suspicious links and a false sense of urgency. Never click links or respond to unexpected text messages that solicit personal or financial information.

Fake ICOs and fraudulent investments

An initial coin offering (ICO) is like an initial public offering (IPO) but for a digital currency. It’s a way for companies to bring in investors and raise money for a new coin, service, or project. The new digital token being offered may grant you perks with the company as the project is carried out, or it may serve as a speculative investment that could pay dividends (literally) in the future.

The bad news is that virtually anyone can launch an ICO. ICOs (and crypto in general) are only loosely regulated, and changes to the platform can be made after passing inspection with the Securities and Exchange Commission (SEC). Fraudsters may use fake ICOs to convince you you’re helping fund an important project and will receive high returns on investment (ROI) or company perks. They might draw you in with paid celebrity endorsements or even deepfakes. In reality, you may lose any funds and information you contribute to the campaign.

Thorough research is vital before investing in anything, especially when crypto is involved. Learn as much as you can about the project and the people behind it, and ensure the organization has a history with (or at least significant ties to) cryptocurrency and blockchain technology. Legitimate ICOs will offer potential investors full transparency, so don’t trust organizations or opportunities that seem vague or suspicious.

AI crypto scams

Although artificial intelligence (AI) has been in use for decades, it’s only recently become more visible and accessible to the public. Like cryptocurrency, AI is still a relatively new and growing element of society that many people don’t quite understand yet and scammers recognize this as an opportunity to take advantage of those who are interested but inexperienced.

An AI crypto scam may start as an email, text message, or social media message offering you the chance to invest in a vague AI algorithm that supposedly yields an incredible ROI. However, any money you “invest” (crypto or otherwise) will be swiftly stolen, and you may lose other personal or financial data along the way. This tactic is often used in conjunction with fake ICOs.

Fraudsters have also begun integrating AI into their scams to identify and lure targets, using bots to persuade potential victims to invest. Never trust promises of high returns on AI algorithm investments, and if it feels like you’re chatting with a robot, you probably are.

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Ponzi schemes in the crypto world

Similar to a pyramid scheme, a Ponzi scheme relies on new investments to pay previous investors. It promises low-risk (or no-risk), high-reward opportunities, but there are often no actual investments at all. The whole system depends on a constant influx of money from new investors, and the “investment” is really the scheme itself.

A crypto Ponzi scammer might find you on social media or catch your eye with a flashy advertisement or pop-up. The fraudster offers you an exclusive chance to “get in on the ground floor,” but any money you contribute would actually be used to pay off those who came before you. These scams can quickly collapse, so you may not be reimbursed for your “investments” at all.

Never make an investment without concrete details about the overarching plan and how your money will be used. Be suspicious of brokers who don’t ask about your salary, net worth, or portfolio, as it likely means they don’t have the minimum qualifications that legitimate investment groups have. They simply want to take any money you’re willing to give them.

Mining scams 

In addition to purchasing crypto, you can earn it through mining or generating solutions to mathematical equations. This is also the process by which blockchain transactions are validated and new coins are created. Although anyone can mine cryptocurrency, it takes an expensive and highly specialized equipment rig to be able to do it effectively.

Mining scams typically work in two ways: A fake data mining company may offer you their services, or they may try to recruit you for a fake data mining job. If they pitch you their services, they may claim to have top-quality gear that promises massive returns on a small investment. If they offer you a job, they may ask you to pay a fee to get started. In either case, the only exchange of funds is from you to them.

Although you can hire people to mine cryptocurrency for you, don’t trust unsolicited “opportunities” that come to you out of the blue. Never pay a fee to take a job, even (or perhaps especially) if they guarantee a much bigger sum or salary later on.

Romance scams

Online dating fraud or romance scams take advantage of vulnerable people looking for love. Scammers may poach targets from dating apps and social media accounts or initiate contact “by accident” with a wrong-number text scam. They may lay the groundwork for weeks or months, typically while trying to move the victim from the dating or social media app to another platform with less oversight and fewer user protections.

Romance scammers flood dating and social media apps with fake personas using images of other people, which is known as catfishing. They pull you in by mimicking your interests, showering you with affection and praise, and making you feel like you’re in a serious relationship. Once the scammer determines a strong enough connection has been made, they pitch the scam, which is often crypto-related. The scammer may even pretend to live a lavish lifestyle thanks to their own crypto success to make the scheme more believable.

Love can make you do crazy things, but don’t let losing all of your money to a Bitcoin scam be one of them. Beware if your online love interest suddenly brings up cryptocurrency and wants to get you involved. Never give away personal information — especially the private key to your digital wallet — or transfer funds to people you don’t personally know and trust.

Wallet thefts

If you’re new to cryptocurrency, it can be easy to get swept away in the excitement and as a result, mismanage your funds. Unfortunately, scammers are ready and waiting to steal your tokens before you even grasp what a crypto wallet is.

With a bit of hacking prowess and the right personal information, cybercriminals can invade your wallet and steal your cryptocurrency. One of the most direct ways they do this is by disguising themselves as a legitimate entity and soliciting your private key. Unfortunately, giving out the key to your digital wallet is like opening the door to your vault and letting the criminal walk right in.

Never give away your private key, especially in response to unsolicited contact by phone, email, or social media message. If a scammer gets hold of your private key, they will have free rein of your digital wallet and the crypto inside it. Keep your private information private, and consider using a cold wallet, which is stored offline and inaccessible to fraudsters.

The impact of crypto scams

Falling for a crypto scam can have serious and long-lasting consequences for you and your family. Users aren’t the only victims, however; the existence of crypto scams may be detrimental to the market itself.

Financial and emotional tolls of crypto scams

Digital currencies can quickly change in value, and it may take some business savvy to navigate the volatile market. But even with the perfect combination of experience, research, and timing, a scammer can step in and wipe out your portfolio. 

Since a single cryptocurrency token (or coin) may grow to be worth thousands of dollars — or, in the case of Bitcoin, tens of thousands — a successful scam can yield devastating financial and emotional consequences. Victims may lose their life savings, their financial stability, and perhaps their interest in economics and investments. To make matters worse, the scammer may get away with sensitive information that can be used to empty other accounts and commit identity theft.

Crypto has been life-changing for many, but not always in a good way. It only takes one scam to empty your wallet, so staying safe is critical.

The broader impact on the crypto market

Cryptocurrency is still a new phenomenon, and it’s generally not well understood by the public. When something you don’t fully understand often comes up in the context of scams and fraud, you’re likely to create a negative association. And if the word “cryptocurrency” also makes you think of the word “cybercrime,” you’re probably not looking for investment opportunities. Unfortunately, this has led to a famously unstable market.

In reality, cryptocurrency offers many benefits, from lower fees and faster transfer times to more secure transactions — when done correctly. Always be cautious when purchasing, storing, and exchanging cryptocurrency, and know how to tell when things aren’t quite right.

How to spot and avoid crypto scams

The sooner you spot a crypto scam, the less likely you are to fall for it. Get to know the red flags to look out for and the steps you can take to stay safe.

Red flags in crypto investments

Crypto scams come with many of the same red flags as other types of phone scams, as well as some that are unique to cryptocurrency:

  • Unexpected communications: Crypto scams often come as unsolicited texts, emails, phone calls, and social media messages. Don’t trust offers that seemingly come out of nowhere, especially if their caller ID reads “Scam Likely.”
  • Sense of urgency: Scammers want you to act now, or else you might realize you’re being scammed. Beware of those who push you to make immediate decisions and become agitated if you ask questions or delay.
  • Solicitation of personal information: Crypto scammers want your private key in order to access your digital wallet, but they’d be happy to glean some additional personal and financial information in the process. Be suspicious of anyone who asks for private information that seems unrelated to your interaction.
  • Fund recovery offers: Recovering lost crypto is an extremely difficult and specialized service. If you hire an investigator, do your research and work with a trustworthy professional, not someone who contacts you with an offer.
  • Guarantees of success: Whether you’re looking to invest your crypto or recover what you’ve lost, don’t trust services that make guarantees. Cryptocurrency is volatile, and fraud is difficult to reverse, so legitimate companies don’t guarantee results.

Best practices for secure cryptocurrency transactions

Getting involved with the wrong people can empty your cryptocurrency wallet in a hurry, so it pays to be meticulously cautious when making transactions.

  • Do your research. Never exchange cryptocurrency or private information with parties you don’t know and trust. Research companies and platforms, read customer and user reviews, and don’t be afraid to back out of a deal if it feels suspicious.
  • Don’t trust unbelievable offers. Scammers pitch “risk-free” opportunities and staggering returns on investment that no legitimate cryptocurrency entity would guarantee. Unbelievable offers should remain unbelieved.
  • Be wary of cryptocurrency in online relationships. Romance scammers lure you in, establish a relationship, and eventually pitch a scam, often involving cryptocurrency. Red flags can be difficult to notice through rose-colored glasses, but be careful if your online significant other suddenly shows a serious interest in cryptocurrency.
  • Consider cold storage. You can store digital currencies online (hot wallet) or offline (cold wallet). While a hot wallet is more practical for active use, a cold wallet is not connected to the internet and, therefore, protects your funds from theft.
  • Use a scam-blocking app. A scam blocker like Robokiller may alert you to a suspicious transaction by intercepting the person’s calls and text messages. If you’re unable to interact with the other party by phone or their communications are flagged, don’t make transactions or engage with them.
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What to do if you fall victim to a crypto scam

Cryptocurrency is appealing to scammers because it’s relatively anonymous and impossible to reverse, so they’re likely to keep what they stole with little fear of consequences. However, there are steps you can take to attempt to recover your losses and hold the criminal accountable.

  • File a police report. Don’t wait to contact local law enforcement if you’ve fallen victim to a crypto scam. The sooner you reach out, the better the chances of a successful investigation.
  • Change usernames and passwords. If you’ve given a scammer personal information like email addresses, usernames, or passwords, change your login credentials with any accounts that use them.
  • Notify your financial institutions. If you revealed bank account or credit card information, consider freezing your accounts and opening new cards.
  • Report the scam to the authorities. Immediately notify the appropriate agencies about cryptocurrency fraud to help protect others from being targeted by the same scams. Notify the Federal Trade Commission (FTC), Internet Crime Complaint Center (IC3), Securities and Exchange Commission (SEC), or Commodity Futures Trading Commission (CFTC)
  • Hire an investigator. Unlike debit and credit cards, cryptocurrency doesn’t have a standard process for disputing a charge or addressing fraud. Although there’s no guarantee you’ll recover stolen crypto, an investigator may be able to help.

If you hire an investigator, be sure to:

  • Compile all relevant transaction IDs (TXIDs). Also known as a hash, a TXID is a string of letters and numbers representing an exchange of cryptocurrency from one account to another.
  • Lay out your story. Concisely walk the investigator through the scam. If possible, include screenshots, URLs, and any other details that may be pertinent to your case.
  • Prove ownership of the lost assets. The police may require proof that the crypto in question was actually yours. You can prove ownership by digitally signing a hash with your private key. 
  • Don’t trust investigators who make guarantees. Some “investigators” are scammers looking to steal more of your crypto and personal data while you’re vulnerable. Do your research and ensure you hire a legitimate investigator.

Staying vigilant in the crypto space

Digital currency is new and exciting, but it can also be dangerous and unpredictable. That’s why it’s vital to be cautious when storing and exchanging cryptocurrency. You can avoid the financial and emotional consequences of being conned by learning about crypto scams and using a scam blocker like Robokiller to protect your phone from fraudsters.

Robokiller not only provides personal data protection to help you stay off scammers’ lists in the first place, its unique algorithm blocks 99% of scam calls and spam texts, so they never get the chance to trick you. We’ve saved consumers over $740 million in prevented losses to phone scams, and our customizable features let you fend off scammers without sacrificing the calls and texts that you want to come through.

Stay safe from scammers in the crypto space and everywhere else when you start your 7-day free Robokiller trial.


What are the most common types of crypto scams?

Crypto scams may be done in many ways and take many forms, from phone calls, emails, and text messages to social media accounts and website pop-ups. They typically alert you to some fake issue or limited-time offer to get you to act quickly, requesting upfront payment, private keys, or other personal information that can be used to steal from you.

Crypto scams often deal with fake initial coin offerings (ICOs) or investment opportunities, unbelievable offers and guarantees, or mining jobs. Beware of online love interests who make cryptocurrency offers.

Can you get scammed if someone sends you crypto?

If someone sends you cryptocurrency, especially unexpectedly, it may be a scam. They may have sent it with the intention of getting more back from you, or they may be enticing you to buy more crypto from them. In some cases, they may even send you (stolen) money to purchase more. Unfortunately, you could be on the hook for the stolen money, and you probably won’t get the crypto payment.

How can I protect myself from cryptocurrency fraud?

Recognizing the red flags and being cautious with your digital currency can help you avoid cryptocurrency fraud and its potentially severe consequences. You should also download a comprehensive scam-blocking app like Robokiller to block phone fraud like scam texts and spam calls from reaching your device.

What should I do if I fall victim to a crypto scam?

If you’ve given away information or transferred money or cryptocurrency to a scammer, contact the police immediately. File a report with local law enforcement and notify agencies like the FTC, IC3, and SEC. Change your login credentials and freeze any bank accounts or credit cards that may have been compromised.

How does blockchain technology contribute to scam prevention?

Cryptocurrency appeals to many for its transparency, decentralization, and permanent ledger, all of which are owed to blockchain technology. Cryptocurrency transactions are typically public, and they undergo peer-to-peer verification that can’t be edited or changed by an individual figure later on. While blockchain security is virtually hack-proof, its users are not. That’s why it’s crucial to have a scam blocker like Robokiller.

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