Blockchain and cryptocurrencies are launching pads for innovation. Still, as an expanding business, they may become an appealing target for scams and fraud, with criminal actors always looking for new attack vectors to exploit. Financial incentives in the form of cryptocurrency or tokens, combined with the blockchain’s anonymity and capacity to transact with anyone, anywhere, result in a large amount of fraud going undetected.

Types of Cryptocurrency Scams

There are numerous forms of Bitcoin fraud, with new varieties arising regularly. These are some of the most common.

Exit Scams

Exit scams include someone, usually the project’s founders or other important contributors, raising the price of a token and then departing the project to profit at the expense of investors.

Pump-and-dump tactics, for example, entail one or more people purchasing huge numbers of a low-market-cap token and disseminating misinformation online in order to raise the price. Once a sufficient number of people have invested, the original buyers “dump,” or sell, their tokens on the market, causing the price to plummet.

Exit Scams

Rug pulls are another exit scam frequently involving a listing on a decentralized exchange (DEX). Token issuers, like pump-and-dump scams, will inflate the value of their tokens before selling them. In a rug pull, however, scammers will remove all liquidity from the DEX liquidity pools, leaving investors unable to sell their tokens.

Another option is to code the token so that it can only be sold by the issuer. Those behind the Squidcoin fraud used the latter strategy. The scammers took advantage of the popularity of the TV show Squid Game by generating interest before selling their tokens, leaving other holders in the dark about their inability to sell theirs.

Investment fraud and Ponzi schemes

Scams that demand an upfront investment in exchange for guarantees or astronomical returns fall under this general category.

Investment fraud frequently involves an “investment manager” who demands an upfront fee for advising services or an initial minimum commitment before vanishing with the money.

Investment fraud and Ponzi schemes

Ponzi schemes are a sort of fraud where money from newer investors is utilized to pay out older investors. These programs merely rely on a steady supply of new participants pouring in money; they do not provide any benefits or returns. OneCoin is an illustration of a Ponzi scheme.

Crypto Phishing

Phishing schemes are common in the crypto world because attackers use them to attempt to obtain private keys from both individual and corporate users. There are numerous varieties, but they all typically entail a con artist pretending to be a reputable organization to trick individuals into disclosing personal information that will enable the fraudster to steal money.

Phishing attackers may pose as representatives of banks, cryptocurrency exchanges, or project teams. They frequently employ sophisticated techniques to conceal their activity, such as leading users to “spoofed” domains that closely resemble their intended target but have one or two characters changed.

Crypto Phishing

Phishing can occur through many channels, including voicemail, SMS, social media, and email, among others. Phishing communications may be sent to a large number of people. Still, phishing assaults can also be directed at specific organizational groupings (such as the entire IT staff) or even at particular people. Spear phishing refers to these specialized phishing attacks.

The Singaporean cryptocurrency exchange DragonEx was the target of a spear phishing attack in 2019 when criminals pretended to be employees of a trading bot company to acquire access to the organization’s servers.

Airdrop phishing

The term “airdrop phishing” refers to fraudulent token-based giveaways and airdrops.

In these attacks, uninvited allocations of locked tokens or NFTs are sent to wallets to trick the recipients into taking steps to “unlock” their free gifts. These acts, nevertheless, are frequently a ploy to get the customer to link their wallet to a malicious website or user interface. Once joined, the website will siphon money from their wallet.

It was revealed in May 2023 that more than $300,000 had been taken from consumers who believed they were receiving actual airdrop tokens from Blur, a new NFT marketplace that had promoted an accurate airdrop.


Malware is software that is intended to steal cryptocurrency through a variety of channels.

Malware may scan for character sequences that resemble blockchain addresses on a user’s computer in an effort to find crypto-related activities there. After that, they can try to use their own recipient addresses in a transaction or try to retrieve private keys using monitoring software.

Another form of cryptocurrency fraud involving malware is called “crypto-jacking,” which is exploiting a computer’s resources, such as the GPU, to secretly mine cryptocurrencies, most frequently the privacy coin Monero.

Understanding and avoiding cryptocurrency scams

Although there are no foolproof ways to spot crypto fraud, there are many telling signals that should raise a red flag:

  • Offers platforms or tokens with minimal return guarantees.
  • The demand for upfront payments, deposits, or early investments to access future profits.
  • Any request for your personal information, such as your bank account information, credit card information, cryptocurrency wallet information, or login information for online finance or cryptocurrency sites.
  • Attempts to manipulate people by peer pressure or social engineering, such as the need to respond swiftly before a deal expires.
  • Communications with typos, poor language, or other writing defects, especially if they claim to be from respected businesses.
  • App or domain names that don’t perfectly match the brand name.

Any of these signals should serve as a warning to avoid interacting.

Guidelines for Protecting Your Crypto Assets

There are specific measures you may take to protect your crypto assets, including:

  • Never give out your login information or private keys to anyone.
  • Maintain private keys in a safe, off-line location.
  • For online logins, use a password manager and, whenever possible, implement 2-factor authentication (2FA).
  • Never open unsolicited emails from sources you don’t know.
  • Avoid sharing any personal information during online interactions with new contacts.
  • Use malware and antivirus software on all connected devices.
  • Update your programs and operating system frequently, as newer versions frequently come with security and bug fixes.
  • Avoid interacting with unauthorized airdrops.
  • Use a hardware wallet to store larger quantities of cryptocurrency.
  • Consider employing segregated storage, especially for significant quantities of cryptocurrencies. Splitting the total into smaller payments and keeping each in a separate wallet can be a risk mitigation tool if one wallet becomes compromised.
  • Only choose well-known websites with established domains.
  • Download applications from the official app store.

Users who have been victims of crypto fraud may be entitled to seek legal redress, depending on how the conduct was carried out.

If the fraud involves payments made using a credit card or an insured bank, users may be able to reclaim the funds through the institution that processed the transaction, which will also contact law authorities as needed.

Users who have lost funds outside the banking system, such as through self-custodial wallets, have fewer choices and may have to pursue the matter privately. Victims, for example, can hire blockchain tracing experts to gather enough information to identify and prosecute the fraudster legally.

Unfortunately, many victims of crypto fraud do not recoup their money, emphasizing the significance of remaining attentive and implementing necessary security steps.

The Future of Cryptocurrency Security

Individual users should expect two areas of development to assist improved bitcoin security in the future.

The first is blockchain identification solutions, which would improve blockchain transaction transparency by making it easier to identify individuals. It is possible to boost openness while keeping a general level of user privacy by utilizing advances such as zero-knowledge technologies, identifying individuals only when law enforcement needs to intervene.

Another advancement is using technologies like biometrics to lock wallets rather than large, unintelligible strings of characters that must be stored offline for security.

Essentials of Crypto Scams

· Exit scams, investment scams, Ponzi schemes, phishing, and virus fraud are all examples of cryptocurrency fraud.

· Users should avoid reacting with signals such as offers of guaranteed returns, requests for upfront payments, or personal data or credentials.

· Keeping private keys offline, utilizing a password manager for online credentials, and frequently updating your programs and operating systems can all assist in keeping your crypto safe.


Cryptocurrency scams and fraud pose significant risks to investors and users in the digital asset space. It’s imperative to exercise caution, conduct thorough research, and remain vigilant against fraudulent schemes such as phishing, Ponzi schemes, and fake ICOs. Staying informed about the latest scams and adopting security measures like using hardware wallets, verifying the legitimacy of projects, and employing strong cybersecurity practices is essential. As the cryptocurrency market continues to evolve, a proactive approach to fraud prevention is crucial to safeguarding one’s investments and ensuring a secure and trustworthy environment for all participants.


Q. Who is the king of crypto?
A. The term “king of crypto” is subjective and can vary depending on factors like market capitalization, adoption, and technology. As of my last knowledge update in September 2021, Bitcoin (BTC) was widely considered the king of cryptocurrencies because it was the first and most valuable digital currency. Still, the crypto market is highly dynamic, and rankings can change rapidly. It’s essential to check the latest data to determine the current leader in the crypto space.

Q. Can a crypto scammer be traced?
A. Yes, crypto scammers can be traced, but it can be challenging. Blockchain transactions are typically transparent, and with the right tools and cooperation from cryptocurrency exchanges, law enforcement agencies can follow the money trail. However, scammers often use various tactics to obfuscate their tracks, making it harder to identify them. Successful tracing depends on the sophistication of the scammer and the resources available for investigation.

Q. What to be careful about crypto?
A. When dealing with cryptocurrency, be cautious about security threats like hacking and phishing scams. Avoid investing more than you can afford to lose, as the market is highly volatile. Verify the legitimacy of platforms and projects before participating. Beware of promises of guaranteed returns and do thorough research. Also, consider tax implications and regulatory changes in your region. Lastly, keep your private keys secure and consider using hardware wallets for added protection.

Q. What causes cryptocurrency scams?
A. Cryptocurrency scams occur due to various factors, including anonymity in crypto transactions, lack of regulation, and the potential for high returns. Scammers exploit these features to deceive investors with fraudulent schemes like Ponzi schemes, fake ICOs, and phishing scams. Greed, ignorance, and the allure of quick profits make individuals susceptible to such scams, leading to financial losses and tarnishing the reputation of the cryptocurrency space.

Q. Who is the famous crypto scammer?
A. One of the most infamous crypto scammers is Bernie Madoff. Although not directly related to cryptocurrency, Madoff orchestrated one of the largest Ponzi schemes in history, defrauding thousands of investors of billions of dollars. In the realm of cryptocurrency, notable scams include BitConnect, a platform that promised high returns but turned out to be a Ponzi scheme, and OneCoin, another fraudulent cryptocurrency scheme that bilked investors out of billions before its leaders were arrested.