All You Need To Know About Crypto Scams

Lost money to a crypto or trading scam? Read this first:

If your losses exceed £3,000 (in the UK) or $10,000 worldwide The Crypto Adviser offers FREE advice on recovering your funds. 

>> GET IN TOUCH

Crypto scams cost people billions of dollars each year – a figure that’s set to rise as Bitcoin becomes more widespread.

There’s a never-ending stream of new crypto scams springing up and they all have one thing in common – they’re all designed to steal your cash and crypto.

Common crypto scams include romance or pig butchering scams, work scams, crypto mining scams, Bitcoin trading scams and even crypto recovery service scams.

Here, I’ll look at some of the common crypto scams, the cost, crypto scam recovery companies and how to avoid becoming a victim of a crypto scam.

Romance or crypto pig butchering scams

Some of the most common crypto scams at the moment are what are known as pig butchering scams or romance scams.

‘Pig butchering’ is translated from the Chinese ‘sha zhu pan’ and is the name given to a scam where the victim is fattened up before they’re bled dry, aka drained of their cash.

In crypto, a pig butchering scam is where a victim is approached by a stranger – often a scammer posing as an attractive member of the opposite sex – on social media platforms such as Telegram or WhatsApp and befriended.

The scammer will build the victim’s confidence over several weeks before encouraging them to get involved in a crypto investment scheme.

They’ll claim that the scheme is risk-free and offers huge returns. They often give victims the link to a social media channel where loads of successful investors are apparently talking about their profits.

But none of this is real – it’s a simple confidence trick designed to convince victims that the scheme is legitimate.

Once they’ve been convinced to invest, the victim will see their account balance soar, often piling in more cash after this initial success.

The apparent profits will continue to grow until the victim tries to withdraw their funds when the scammers will block them from doing so.

The scammers will then demand various payments, such as fees, commissions or taxes, in order to release the victim’s cash.

But this is all part of the scam and designed to extract more cash from victims.

Read more:

• What are crypto pig butchering scams and how do they work?
• What are crypto romance scams and how do they work?

Crypto mining scams

One area of the cryptosphere that people are often fascinated by is mining cryptocurrencies.

This is the process of minting new coins using computing power to solve complex mathematical problems.

It used to be that you could mine Bitcoin using a home PC, but this is no longer possible due to complexity now involved in solving new problems.

Instead, vast warehouses filled with dedicated computers known as ASICs are used to mine Bitcoin and secure the network.

There are some cryptocurrencies that you can still mine at home using a GPU/CPU, such as Ravencoin or Kaspa, although it’s currently not profitable to do so due to the high cost of electricity and low value of the coins mineable at home.

There is another option though – cloud mining services – and this is where the scammers are cashing in.

They’re setting up websites purporting to be reputable cloud mining service providers but really, they’re just a front to steal cash and crypto from would-be miners.

This scam can take various forms, and sometimes delves into the even more complex area of crypto liquidity mining, where users are rewarded for using the crypto they hold to provide liquidity in a trading marketplace.

There are completely legitimate ways to get involved in both cloud mining and liquidity mining, but scammers are using people’s lack of knowledge about what’s a real service and what’s not to cash in.

You can see some examples of scam cloud mining and liquidity mining platforms here.

Bitcoin trading scams

Most people with an interest in crypto have fancied themselves as a trader at some point or another.

The riches apparently on offer are frequently paraded on social media, with teenage crypto millionaires draped over Lamborghinis flashing wads of cash.

But while some people have made fortunes out of crypto (often through luck rather than judgement), very few people have the skills, knowledge and time it takes to be a successful crypto trader.

However, that’s not stopped the scammers from selling the dream and setting up countless fake crypto trading platforms in the hope of defrauding would-be investors.

Sometimes these are simply websites set up to appear to be straight forward crypto exchanges.

Other times, the scam is far more complex, and involves fake traders calling victims to take instructions on their behalf, even though in reality this involves simply stealing their crypto.

Either way, countless people are falling victim to this type of scam each month, partly due to the lack of education surrounding crypto and partly because of the largely unregulated nature of the sector.

Take a look at some examples of scam crypto trading platforms.

Crypto work scams

Crypto work scams are generally designed to con a large number of people out of small sums of crypto before shutting down.

The scammers set up websites and apps designed to appear as if they’re affiliated with large, legitimate companies.

A common scam involves apps that appear to be part of Tripadvisor, with the scammers claiming to be offering part-time work opportunities.

At the start of the scam, victims are given free ‘credits’ which enable them to perform simple tasks, such as clicking star reviews on travel destinations and hotels or copying and pasting pre-written reviews.

Often, they’ll be allowed to withdraw small amounts of ‘profit’ as well.

But when their initial balance of credits runs out, they’re told they need to pay for more, with incentives given to keep on piling in crypto, such as better paying jobs.

When the victim has deposited a significant sum, the scammers block their account and eventually disappear.

I’ve written about crypto work scams in more detail here.

Crypto recovery service scams

People who’ve been scammed are often desperate to track down the scammers and get their funds back.

Often, they trawl the internet in the hope of finding someone who can help recover their money.

There are genuine crypto recovery companies who can help, but there are also a lot of scammers in this sector as well.

Fake crypto recovery service platforms are often set up claiming they can guarantee to recover stolen funds in return for a fee. But any money that’s sent to them will be stolen.

The fraudsters will operate the site until it becomes too well known as a scam before shutting it down and starting a new one.

It’s highly likely that the site will have shut down by the time you read this, but dozens more will still be operating.

Other crypto scams

Scammers will target any area where they think they can make a profit, and the different aspects of the crypto industry are no different.

One example of this is the motor trade. As a growing number of car dealers start to accept crypto as payment for vehicles, the scammers are starting to move in.

Check out this feature on scams surrounding buying and selling cars with crypto.

Crypto scam recovery companies

I want to make it clear that it’s very difficult to track down crypto scammers and recover your funds.

The crooks go to great lengths to cover their tracks and often operate from countries where the judicial systems aren’t particularly robust.

However, there are some occasional high-profile successes where crypto scam gangs are caught and prosecuted.

There are also a growing number of genuine companies who offer to help crypto scam victims in one form or another.

While there are lots of fake sites as discussed earlier, there are genuine Crypto scam recovery companies in the UK, USA and further afield do exist and might be able to help you if you’ve fallen victim to a scam.

Some offer simple tracing services where they follow the blockchain transactions involved in the scam, while other companies claim to go much further.

Either way, you need to be careful when engaging with a crypto recovery company to ensure they’re genuine.

You can find out more about crypto recovery experts in this feature.

The Crypto Adviser has partnered with Cybertrace, who are experts in the crypto recovery sector. They have offices in Europe and Australia.

There are other things you should do if you’ve been caught up in a crypto scam, such as reporting it to the authorities in your country.

Here’s a round-up of some of the actions you can take if you’ve lost money to a crypto scam.

Crypto scam cost

As I’ve already mentioned, crypto scams are big business.

I routinely speak to people who’ve lost anywhere from a few hundred dollars to hundreds of thousands of dollars.

Some lose it all in one go, while others are gradually milked of their life savings over a prolonged period of time.

One victim who contacted me had sold her house to pay the scammers, who were trying to get her to remortgage her mother’s house to continue paying into the scam investment.

But the cost isn’t just financial. The toll it takes on people’s health, both physical and mental, can be huge.

Scam victims often experience a range of emotions, from embarrassment and anger, to denial and hope that they still might get their money back.

It’s the former that can cause the most problems as they’re often reluctant to tell those close to them what has happened.

This has the potential to have significant repercussions in their lives, especially if they’re facing serious consequences as a result of the scam, such as losing the ability to support their family, which has happened to one victim who contacted me.

How do I spot a crypto scam

Spotting crypto scams can be difficult, especially as fraudsters are using increasingly sophisticated ploys to part unsuspecting investors from their hard-earned cash.

However, the most important action you can take is to thoroughly research any company that you’re planning to invest with.

I’ve spoken to many scam victims who’ve sent thousands of dollars to one crypto platform or another without carrying out any checks at all, only to see their funds, predictably, disappear.

Often, they’ve been approached by a random stranger via a social media platform who has encouraged them to invest.

In some cases, the approach has been made by someone who claims to have a romantic interest in the victim and strikes up an intimate friendship.

Some scam victims are quick to believe these relationships are genuine and, not wanting to disappoint their new love interest, are keen to take them at their word about the investment opportunity they invariably mention after a few weeks.

Often this is done without ever speaking to their new ‘friend’, aside from messages online.

It’s crucial that you carry out as much research as possible. Simple things like a quick Google search where you include the company name followed by the word ‘scam’ can help.

Often someone else will have written a review about the company or website which will help you decide if it’s legitimate or not.

Equally, if you can’t find any mention of a platform online then you should be very suspicious.

You should also think about the profits on offer through the ‘investment opportunity’.

More often than not they’re completely unrealistic and unobtainable, which is why it’s crucial to think critically about what you’re being told.

After all, why would a complete stranger offer you vast returns on your money rather than simply taking advantage of it themselves?

It simply doesn’t make sense and you need to ask yourself questions like this if ever you’re in a situation where you’re being offered something that seems too good to be true.

Here’s an in-depth guide covering ways to spot a crypto scam.

I’ve also written a feature about how to spot scam crypto exchanges.

Common crypto scams and how to avoid them

Despite the scammers using ever more advanced methods of tricking people out of their coins, there are certain firm favourites that continue to do the rounds.

The name of the website/platform might change, but fundamentally most scams revolve around gaining your trust, offering you an incredible investment opportunity then convincing you to part with your cash or crypto.

As I’ve already mentioned, one of the best things you can do to protect yourself against the scammers is research.

Here’s a step-by-step guide to researching a crypto platform.

Find out more about some of the common crypto scams doing the rounds and the how to avoid them.

Final word

Each week I hear about several different crypto scams, invariably from victims who’ve already become embroiled in them.

It has become abundantly clear that many of these individuals have not properly researched the platform before parting with their cash.

People continue to believe that crypto is a way to generate huge wealth overnight and are still being sold this dream on social media.

But the days of buying a $100 of Bitcoin and becoming a millionaire are long gone.

The old adage ‘if something sounds good to be true, it invariably is’ should be applied to tempting offers in all walks of life, including crypto.

However, what sets crypto apart is the fact that in some respects it’s still a Wild West of unscrupulous operators and people looking to prey on those who are unclear about how crypto works.

So, another golden rule to follow is ‘never invest in something you don’t understand’.

The vast majority of people who contact me have little knowledge of crypto, how it works and or how to spot a legitimate trading platform.

So, to recap:

• Do your own, thorough research. Google is your friend.
• If something sounds too good to be true, it generally is.
• Never trust anyone who contacts you out of the blue about financial products.
• Don’t invest in assets that you don’t understand. Educate yourself first.
• Don’t let your heart rule your financial decisions.

It’s also wise to remember that crypto is a fascinating space but investing in this sector is extremely high risk.

So, never invest more than you’re prepared to or can afford to lose.

Related post: Crypto scam help and resources