Cryptocurrencies are more volatile than traditional securities like stocks. The prices of digital currencies like Bitcoin can swing wildly within a few minutes, making them a goldmine for traders. Today, you can exploit the ever-changing prices of crypto assets and bag mouth-watering returns.
Before you venture into crypto trading and investing, note that these activities will make you an irresistible target for modern scammers. If you are not careful, these criminals will rip you off and leave you with immense losses. Avoid this unfortunate fate by familiarizing yourself with common crypto scams and how to avoid them before proceeding.
Common Cryptocurrency Scams
The crypto universe is a hotbed of scammers and other cyber criminals. While interacting with it and investing/trading different crypto assets, you’ll be exposed to different types of scams, including:
Fake wallets and exchanges
Cybercriminals often create fake wallets and exchanges that bear an uncanny resemblance to legitimate ones. Their primary purpose is to exploit the trust you have in legitimate providers and steal your data, funds, and assets.
Many fake wallets rely on seed phrase theft and clipboard hijacking, In other words, they steal your money and assets by allowing the criminals running them to access your secret seed phrase or alter your crypto address. On the other hand, fake exchanges mostly use manipulated trading data and exit scams to rip off unwary clients.
Ponzi and pyramid schemes
Crypto’s popularity has led to a proliferation of Ponzi and pyramid schemes. Most Ponzi schemes ask investors like you to invest in certain crypto and guarantee you’ll earn high returns without being exposed to any risk. But instead of investing your money in crypto and sharing real profits with you, they simply use your investment to pay older investors and then use money from new investors to pay you. Ultimately, Ponzi schemes run out of new investors and a lot of people lose their money.
Pyramid schemes are quite similar to Ponzi schemes. But the latter requires you to invest and then recruit others to earn money. You still get paid commission from the fees or investments made by the newer recruits. Like their counterparts, pyramid schemes eventually hit a dead end when the number of new recruits dwindles down, and many investors lose their money.
Phishing scams
Fraudsters often masquerade as legitimate service providers and trick crypto investors into providing crucial information like their exchange passwords and private keys. For instance, upon realizing you use MetaMask, a fraudster can pretend to be this provider and send you an email requesting to verify your identity. The link they’ll provide will lead you to a fake website that will record your seed phrase, allowing the fraudster to empty your wallet easily.
In addition to fake emails, fraudsters use fake airdrops, platform update notifications, and support scams to defraud their victims. As of 2025, these criminals are using the aforementioned means to steal crypto worth billions with alarming success.
Fake ICOs
In the past, legit crypto startups used ICOs to raise funds by simply selling new coins or tokens to early investors. But today, scammers have hijacked ICOs and now use them to steal vast amounts of money from crypto enthusiasts. How does this work?
Basically, fraudsters pretend to launch a very promising new crypto or blockchain project and ask interested investors to fund it. But instead of working on an authentic product once they’ve raised enough funds, these criminals disappear with investors’ hard-earned money, never to be heard of again.
Malware and hacking
Suppose you like to download apps from unofficial sites. In that case, at some point, you might install a malicious app that’s infected with malware. It will infiltrate your device and, if designed by crypto scammers, expose you to immense losses.
Crypto scammers can use malicious software to monitor your keystrokes and steal your passwords, seed phrases, and private keys. And with this information, they can access your wallets and steal your crypto or funds without breaking a sweat. What’s more, with infected software they control, these entities can replace any wallet address you copy with one of their own and make you unknowingly send assets to their wallets.
Steps to Safely Trade Cryptocurrency
To avoid being scammed by cybercriminals and losing your crypto assets and hard-earned money, you need to do the following:
Interact exclusively with reputable exchanges authorized and regulated by trusted authorities like the SEC and the FCA. Ensure your chosen platform has a good online reputation and a limited history of successful hacking attempts. You can read more here and easily find the best exchanges in your region.
Protect your crypto wallet and exchange accounts with strong security measures. If possible, use a combination of strong passwords, 2FA, and biometric identification. Don’t save your passwords online, where cybercriminals can steal them.
Since cybercriminals can use malware to hijack your clipboard, double-check wallet addresses before sending crypto. All you have to do is confirm the first and last few characters, especially when large amounts of funds are involved.
Avoid crypto companies that ask you to invest in exchange for high fixed returns. Crypto investments don’t have fixed profits.
Never invest in ICOs from startups with unknown team members, no working prototype, and overhyped promises. Check every company’s background and track record before becoming an early investor.
Red Flags to Watch Out For
Scammers are always looking for new ways to steal from you. The least you can do is match their energy and always watch out for the following red flags that might lead to losses:
Guaranteed, risk-free profits from shoddy crypto trading gurus or investment companies
Suspicious crypto exchanges with no digital footprint and proof of valid licensing
Sketchy emails, messages, or calls from people asking you to share your password, seed phrases, and other sensitive details
ICOs associated with anonymous teams or projects with no clear real-world use case
Unrealistic referral boons from investment companies with no discernible track record
Crypto airdrops and giveaways that are too good to be true
What to Do If You Fall Victim to a Scam
If you suspect you’ve been scammed by a specific exchange or company, the first thing to do is stop interacting with the entity. Don’t send any more funds or respond to messages asking you to share certain information. The scammer may ask you to send more money to get access to your assets; don’t do it. Report it to the proper authorities in your region and wait for their feedback.
Your experience and testimony can also help many others avoid the issue you’re facing. You should share your problem and warn others through social media, crypto communities, popular review sites, and other platforms.
