From Social Media Giveaways To Job Opportunities, 10 Crypto Scams To Watch Out For

From enthusiasts to beginners everyone should watch out for these scams

PUBLISHED OCT 24, 2023

The number of people falling prey to scammers has gone up significantly in recent years. Getty Images | Photo Illustration by Chesnot

The latest scams involve rug pulls, romance scams and phishing

A woman walks past the entrance of a cryptocurrency exchange office | Getty Images | Photo by Chris McGrath

Besides the convenience, the boom of digital currency has brought with it a number of scams and frauds. Cryptocurrency became mainstream in the past couple of years. The number of people falling prey to scammers has also gone up significantly. The FTC has estimated that over 46,000 people lost over $1 billion in crypto to various scams from January 2021 through June 2022. Not just users, and customers, even cryptocurrency exchange platforms like Wormhole lost $320 million in a cyber-attack last year. From enthusiasts to beginners, here are 10 cryptocurrency scams that everyone should watch out for.

1. Rug pull scams

Representational Image of John Aurre, of Wilmington, Delaware, selecting which bill is fake | Getty Images | Photo by William Thomas Cain

Rug pull scams are executed by investment scammers who pump up a new project, nonfungible token (NFT), or coin to gather funding. Once the scammers get the money, they disappear leaving investors with an asset that has been coded in a way to prevent any sale. A popular example of it was the ‘Squid coin scam’, in which investors had to play to earn cryptocurrency. The Squid token was supposed to be exchanged for other currencies and its value went from 1 cent to about $90 per token. Soon, the trading was blocked (or the rug was pulled) and investors failed to sell or exchange their tokens, losing about $3 million. Thus, investors should only trust well-known and established tokens to be safe.

2. Romance scams

Vintage illustration of a redheaded woman kissing the empty silhouette of a fantasy boyfriend | Getty Images | Photo by GraphicaArtis

Romance scams have existed for decades and they successfully adapted to the world of cryptocurrency as well. In this scam, fraudsters pretend to become the investor's love interest online through impersonation and an intricate web of lies. They often spend months gaining confidence and building up romance. They then start asking for crypto payments or lure people into investing in crypto with them, often claiming it’s for their future together. After they get the money, they simply disappear with it.

3. Phishing scams

Photo illustration of a spam 'Phishing' email | Getty Images | Photo by Peter Dazeley

Phishing scams are also one of the good-old scams that have been around for some time. In this, scammers send emails with malicious links to a fake website of a platform or a token exchange that appears to be authentic. These websites then ask for personal details, such as cryptocurrency wallet key information. Unlike passwords which can be changed anytime, users only get one unique private key to their digital wallets which is troublesome to change. Thus, users end up losing everything that is stored in their wallets. To be safe, it is advised to avoid clicking on any unknown email links and visit the platforms directly.

4. Social media cryptocurrency giveaway scams

Representational image of people playing roulette for give-aways at the Bitpay stand | Getty Images | Photo by Marco Bello

Since Bitcoin blew up, several accounts and platforms have held giveaway contests where users can win the cryptocurrency. This gave rise to fraudulent posts on social media often from fake celebrity accounts promising Bitcoin giveaways. To participate, users need to go through a verification process which often includes making a payment. With this, the victim can lose the payment or click on a malicious link to have personal information stolen. One example of the scam was the Elon Musk “Freedom Giveaway” scam.

5. Blackmail and extortion scams

Representational image of a city office employee working into the night | Getty Images | Photo by Christopher Furlong

According to the FTC, in this scam, anonymous people claim to have private or personal information, including photos or videos, to lure them into their trap. They typically threaten to make the information public, if they don’t pay up or do what they ask the users to do. The demands are mostly for crypto transfers. The FTC recommends users report such crimes to the FBI immediately and avoid any communication with the scammers.

6. Job listing scams

Representational image of a pedestrian walking by a vending box for a job listing newspaper | Getty Images | Photo by Spencer Platt

In this scam, fraudsters create fake job listings or send unsolicited job offers to lure victims. Mostly the jobs are in the field of crypto itself including things like crypto mining and crypto investments. Regardless of their nature, all of these jobs need the same thing, a payment in crypto to get started. The scammers may even convince users to make additional payments, or they'll show a fake deposit made in the victim’s bank account and ask them to send cash or crypto.

7. Investment scams

Representational image of a close-up of person's hand holding smartphone with the Robinhood investment app | Getty Images | Photo by Smith Collection

In investment schemes, scammers reach out to mostly new investors pretending to be seasoned "investment managers." They claim to have made millions investing in cryptocurrency and promise to take their victims as clients and help them make money. They request an upfront fee and then instead of making money for their clients, the thieves simply disappear. The thieves may also request personal information, claiming it's for transferring or depositing funds, to further steal funds.

8. Impersonation scams

Representational image of Snoopy with a Snoopy look-alike | Getty Images | Photo by Kimberly White

In impersonation scams, the crypto thieves often pretend to be celebrities or from the government or law enforcement agencies to gain some credibility. Some scammers even claim to be from large companies like Amazon or Microsoft to convince the victims. They then convince the victims that their accounts or assets will be frozen as part of an investigation, or due to a pending payment. Naturally, they then ask the victims to pay an amount to resolve the issue and then disappear with it.

9. Pump and dump schemes

Representational image of a man looking at the Bitcoin trading graph | Getty Images | Photo by Chris McGrath

In the pump-and-dump scam, fraudsters create a group of people to get together and invest in a particular token or coin. They entice others into investing as well usually by posting on social media to build up hype. The scammers then work to drive up the price of the asset until the original group of scammers simultaneously cash out and leave the victims who joined the bandwagon. As a result, the price of the asset crashes, and the unsuspecting victims end up losing money. All investors should avoid engaging with such groups.

10. Fake cryptocurrency exchanges

Photo illustration of the Coinbase cryptocurrency exchange app and other platforms | Getty Images | Photo illustration by Chesnot

In this scam, the fraudsters lure victims onto a new platform with promises of a great cryptocurrency exchange and even rewards of additional bitcoin. However, these scammers only have a fake exchange platform where the victims have to make deposits to get their accounts going. Soon, both the platform and the scammer disappear with the deposit.