Cryptocurrency Scams and Tips to Avoid Them (Part 1 of 2)

Written by BTSE

August 9, 2021

Cryptocurrency Scams and Tips to Avoid Them (Part 1 of 2)

Cryptocurrency scams, in different forms, remain a threat to traders’ investment goals. This first article in a two-part series calls out the common types of scams with basic tips to avoid them.

Although the cryptocurrency industry has made significant developments since the inception of Bitcoin in 2008, it is still susceptible to hacks and thefts. In a high-profile example in April 2021, the founder and CEO Faruk Fatih Özer of the Turkish cryptocurrency exchange Thodex went missing after users filed complaints claiming their funds had been stolen.

In what may be Turkey’s most significant financial scandal in 40 years, the founder fled the country with at least $2 billion in investor assets. The exchange had nearly 400,000 users with 390,000 actively trading, according to reports. Before the exchange went down, popular “meme token” Dogecoin (DOGE) accounted for 53% of its $585 million trading volume, compared to a meager $10 million in Bitcoin.

Although the underlying blockchain technology that underpins cryptocurrencies is hugely secure, hackers and fraudsters have devised sophisticated techniques to steal cryptocurrencies from unsuspecting victims. Crypto investors can avoid falling victim to cryptocurrency scams by employing preventative actions. But before we look at these actions, let’s first understand the different types of cryptocurrency scams. 


Types of cryptocurrency scams


Phishing scams 

Most people navigate the Internet through Google search results, and scammers have often tried to trick users with almost identical-looking or sounding crypto exchange domain names. By doing this, they trick users into giving out their account access credentials, such as passwords and seed phrases, among others.

Phishing scammers also fish out their victims’ private information through emails, fake websites, telephone calls, or social networks. They usually send emails or messages asking the user to follow a link that redirects them to a fake domain that prompts them to fill in their login details, which are then stolen and used to access their crypto assets. 


Ponzi schemes

Ponzi schemes aim to mislead investors by guaranteeing enormous profits from their invested capital and do not offer any real framework or product to monetize. On the contrary, they are scams designed to draw out funds from investors by promising them exorbitantly high returns. 

Usually in a Ponzi scheme, the earlier investors are rewarded with their rate of return from gaining fresh members, and so on. The pyramid scheme is upheld until the fraudsters ultimately make off with investors’ funds.

An excellent example of a crypto Ponzi scheme is the infamous Onecoin Ponzi scheme, defrauding investors by almost $2 billion in 2017. Dr. Ruja Ignatova promised millions of investors worldwide that her new digital asset would be more significant than Bitcoin. Its early investors would be promised ways to accumulate significant wealth, prompting many people to go all in with their life savings. 

In fact, many ICOs in the cryptocurrency industry turn out to be scams. Deploying crafty marketing, these fraudsters raise funds through an ICO while guaranteeing massive returns. But they ultimately turn out to be exit scams and effectively rip off investors. 


Social network scams

Social media platforms like Telegram, Twitter, and Facebook have become apt avenues for scammers to target unsuspecting victims to try and steal their cryptocurrencies. Social media have become a powerful tool for mainstream society, so it’s no surprise that scammers have good use of them to perpetuate their fraudulent intentions. 

A notable case can be traced back to July 2020, when high-profile VIP Twitter accounts were hacked. The popular Twitter accounts of well-known persons and companies, including Barack Obama, Donald Trump, Elon Musk, Warren Buffet, Apple and Uber, among others posted similar tweets to the effect of: Send Bitcoin, and the famous person or firm would then transfer back double your funds.

Twitter is just one of the various social media networks affected by scams. Popular video platform YouTube, for instance, is often plagued with fake giveaways urging individuals to send funds to the provided addresses, promising to double their funds in return. Seemingly simple, yet effective.


Fake wallets, mobile apps, and exchanges

Some scammers have become adept at developing fake wallets to mimic an original wallet’s interface in order to lure unsuspecting victims through fake promotions and offers. Notably, cryptocurrency transactions are irreversible, and there is no way of retrieving the funds once they are sent. 

What’s more, these fake mobile applications are commonly found in Google Play and Apple’s App Store. Once they are installed, they might extract vital and sensitive information, risking the security of your other cryptocurrency accounts. 

Fake exchange platforms draw unsuspecting cryptocurrency traders by promising them huge bonuses paid and very low transaction fees charged. These counterfeit platforms make it as hard as possible for users to withdraw their funds. Also, sometimes exchange platforms lure in profits by listing fraudulent ICO tokens. 


Tips to avoid cryptocurrency scams

To reiterate, cryptocurrency transactions are irreversible, and once funds are sent, there is no way of retrieving them. Fraudsters commonly use all of the above methods in the crypto space to steal from unsuspecting traders, but there are ways to avoid falling victim to manipulative scammers. 

To avoid phishing scams, one should always double-check the URL to make sure it is the correct one. Phishing scammers often create fake websites closely resembling the exchange URLs to lure unsuspecting victims. 

Additionally, one should avoid providing support staff of any cryptocurrency project with sensitive information related to one’s funds, such as seed phrases, private keys, or 2FA codes. The support staff of genuine exchanges doesn’t ask users to give up their private confidential information regardless of whatever the case may be. Also, it is advised never to send cryptocurrency to any third-party address on behalf of support agents. 

Want to learn more about how to avoid falling prey to sophisticated schemes? In the upcoming part 2, we’ll look further into the best practices to help traders avoid cryptocurrency scams.


Our aim is to create a platform that offers users the most enjoyable trading experience. If you have any feedback, please reach out to us at or on Twitter @BTSE_Official.

Note: BTSE Blog contents are intended solely to provide varying insights and perspectives. Unless otherwise noted, they do not represent the views of BTSE and should in no way be treated as investment advice. Markets are volatile, and trading brings rewards and risks. Trade with caution.

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