The Most Common Crypto Scams and How to Avoid Them

The world of cryptocurrencies has grown significantly in recent years and has become more accessible to the general public. However, its growth has also been accompanied by new threats and scams that users need to watch out for.

Cryptocurrency payments differ significantly from traditional payments. Transactions are generally irreversible and are not covered by the same level of consumer protection or the same rules as card payments. If you send cryptocurrency to the wrong address or to a scammer, only the recipient can return the funds to you.

At the same time, transactions are not completely anonymous but pseudonymous. Most of them are recorded on a publicly accessible blockchain, where it is possible to see the amount sent, the sender’s address and the recipient’s address. In some cases, these addresses may be linked to a specific person, for example, if they belong to a user registered with a cryptocurrency exchange or another platform providing crypto-asset services. However, information about who owns a particular address is usually held by these platforms rather than by ordinary network users.

The Most Common Warning Signs of Scams

Cryptocurrencies are among the most important innovations of the 21st century and offer new opportunities in finance and digital ownership. Unfortunately, their popularity and specific characteristics also create opportunities for fraudulent schemes and cybercrime. Before sending any funds, always pay attention to warning signs that may indicate a scam:

• someone requires you to pay exclusively in cryptocurrency,
• someone promises guaranteed profits or high returns without risk,
• someone asks you to send cryptocurrency in advance,
• someone offers you “free” cryptocurrency or promises to multiply your tokens,
• someone unexpectedly contacts you with an investment offer,
• someone asks you to pay a fee to obtain a job,
• someone impersonates a company, bank, government authority or well-known public figure.

Investment Scams

Scammers often pose as investment managers and persuade people to buy cryptocurrencies and send them to a fake platform. The platform may display supposed profits, but withdrawing the funds is either impossible or conditional on paying additional fees or depositing more money into the account.

Investment offers from people met through dating apps or social media are also risky. If someone you have never met in person tries to persuade you to invest or asks you to send cryptocurrency, it is probably a scam.

Fake Companies, Government Authorities and Job Offers

Scammers may impersonate banks, delivery companies, technology firms or government authorities. For example, they may claim that your account is at risk and that you need to “protect” your money by buying and sending cryptocurrency.

No reputable company or government authority will ask you to resolve a problem by sending cryptocurrency to an unknown wallet. You should also be cautious about job offers that require you to pay an upfront fee, purchase cryptocurrency or send money to supposed clients.

The Most Common Types of Crypto Scams

1. Investment Scams and Ponzi Schemes

Cryptocurrency investment scams attract victims with returns that are too good to be true. They use fake trading platforms or fabricated portfolio statements. Victims send real money and watch fake profits grow until they attempt to withdraw their funds. While the victim is still excited about the supposed returns, the operator demands additional “fees” or “taxes” and then disappears.

This is one of the most common scams to watch out for. It is therefore advisable to invest through reputable platforms with an established track record. In the European Union, such entities are now required to be regulated under the MiCA legislative framework.

2. Pig-Butchering Scams

Pig butchering is one of the most widespread cryptocurrency scams. It combines long-term trust-building with investment fraud. Over a period of weeks or months, scammers gain the victim’s trust through social media, messaging apps or dating platforms.

Once they have gained the victim’s trust, they recommend investing in cryptocurrencies through a seemingly trustworthy platform that is, in reality, controlled by the scammers themselves. The victim often sees fictitious profits on the platform, which motivates them to invest increasingly large amounts. However, when they attempt to withdraw their funds, they are asked to pay additional fees or taxes, and the money can no longer be recovered.

How can you protect yourself? Never invest based on the recommendation of someone you only know from the internet, and always verify the credibility of both the investment platform and the service provider.

3. Bitcoin Scams and Phishing Websites

In phishing scams, attackers create almost identical copies of legitimate cryptocurrency exchanges, wallets or other services in order to obtain users’ login details, payment information or seed phrases.

Example: A user receives an email or message warning them that their account has supposedly been compromised and that they must log in immediately using the attached link. The link redirects them to a fake website that looks like a genuine cryptocurrency exchange. Once the user enters their login details, the scammers obtain them and may then attempt to access the account and withdraw the funds.

Before logging in, always check the website address, use only official websites and never enter your seed phrase into any form or share it with another person. Legitimate services will never ask you for it.

4. Rug Pulls and Exit Scams in DeFi

In this type of scam, developers create a new token or DeFi project and then promote it intensively on social media and through influencers. After attracting enough investors and increasing the value of the token, the creators may suddenly withdraw liquidity from the project or sell a large amount of their own tokens. The price then drops sharply, and investors may lose a significant part or even the entirety of their investment.

Rug pulls are among the most common risks in decentralised finance, or DeFi. Attackers often use aggressive marketing, promises of high returns and artificially generated interest in the project to attract as many investors as possible. Before investing in a new token, it is therefore important to examine the team behind the project, its operational transparency, available liquidity and security audits.

5. Fraudulent Crypto Airdrops

These scams use fake airdrop campaigns that impersonate campaigns run by well-known projects. Users are directed to phishing websites that ask them to connect their wallet or enter their seed phrase. After signing a malicious transaction, attackers may steal all the assets from the connected wallet within seconds.

Example: A user sees an offer on social media for free tokens supposedly distributed by a well-known crypto project. After clicking the link, they are redirected to a fake website that asks them to connect their wallet and sign a transaction. Instead of receiving the airdrop, the attacker gains access to their assets and can steal them from the wallet.

6. Crypto ATM Scams

Scams involving crypto ATMs are a growing form of cryptocurrency fraud. Attackers often impersonate representatives of banks, government authorities, the police or technical support and contact victims with claims that their bank account has been compromised or blocked.

They then persuade the victim to “protect” their money by depositing cash into a crypto ATM and sending cryptocurrency to a specified address. In reality, the funds are sent directly to the scammers, and the transaction generally cannot be reversed.

These scams often target older people who may not have sufficient experience with cryptocurrencies. No legitimate government authority, bank or technical support service will ask you to send money through a crypto ATM in order to “protect” your funds.

7. Crypto Romance Scams

Crypto romance scams are a specific form of pig-butchering scam in which attackers exploit the victim’s emotions and trust. The scammer first creates a fake romantic or close personal relationship through social media, dating apps or messaging platforms.

After gaining the victim’s trust, the scammer begins persuading them to participate in a supposedly profitable and verified investment opportunity, often involving cryptocurrencies. The victim may gradually invest increasingly large amounts, while the scammer may encourage them to use their savings, take out loans or obtain money from other financial sources.

The scam is usually uncovered only when the victim attempts to withdraw their funds and discovers that the investment platform or the person they trusted either does not exist or can no longer be contacted.

8. Malware Used to Drain Crypto Wallets

So-called crypto wallet drainers are phishing tools designed to trick users into approving a transaction that allows funds to be stolen from their wallet.

Inferno Drainer, one of the most widespread “drainer-as-a-service” operations, managed to steal funds from more than 30,000 wallets over a six-month period spanning 2024 and 2025. These tools are now offered for sale through Telegram, with some packages costing less than $500.

9. Pump-and-Dump Schemes

The organisers of this type of scam first purchase a large amount of a token with a low market capitalisation. They then attempt to artificially increase interest in the project through social media, paid promotions or influencer involvement. When the token’s price rises significantly as a result of the increased interest, they sell their holdings, often causing a sharp decline in value and losses for other investors.

Example: The $LIBRA token experienced significant growth following its launch and public support from Argentine President Javier Milei. Its market capitalisation briefly reached approximately $4.56 billion. However, after large holders sold their tokens, the price fell sharply. The token’s value dropped by approximately 94% within a few days, causing significant losses for many investors.

Chart: Pump and Dump

Source: CoinGecko

10. Artificial Intelligence Deepfake Scams

The development of artificial intelligence has also created new opportunities for scammers. Using deepfake technology, they can create realistic videos and audio recordings in which they impersonate well-known public figures, government officials, cryptocurrency exchange support agents or financial advisers.

These scams often use the trustworthy appearance and voice of real people to persuade victims to invest in fake projects or disclose sensitive information. As AI-generated content becomes increasingly realistic, it may be difficult for ordinary users to detect.

Example: A fake video appears on social media showing a well-known entrepreneur or public figure supposedly recommending a particular cryptocurrency and promising high returns. In reality, both the video and the voice were generated using deepfake technology, and the link in the post leads to a fraudulent investment website.

How Can You Protect Yourself?

Just as the crypto industry continues to evolve, so do the technologies and methods used by scammers. It is therefore important to understand the basic types of scams, recognise their warning signs and remain cautious whenever you encounter a suspicious offer. The same level of caution is also necessary when dealing with traditional financial instruments.

Here are several tips for protecting your funds:

• Before sending cryptocurrency, verify the recipient, the company and the website. Do not click links in unexpected messages, and never send money under time pressure.
• Search for the name of the person, company or project together with terms such as “scam,” “review” or “complaint.” Do not trust promises of guaranteed returns, and do not send cryptocurrency to people you only know from the internet.
• If someone threatens to publish your personal information and demands payment in cryptocurrency, do not pay and contact the police.
• Protect your accounts with strong, unique passwords and enable two-factor authentication. Never share your login details with anyone.
• Keep your seed phrase in a secure place and never enter it on a website or send it by email or chat. A legitimate platform will never ask you for it.
• Before confirming any transaction, carefully check the wallet address, amount and selected network. Cryptocurrency transactions are usually irreversible, meaning that even a small mistake may result in the loss of your funds.

Conclusion

Crypto scams are becoming increasingly sophisticated, and scammers are making more frequent use of artificial intelligence. It allows them to reach larger numbers of people and tailor their messages and offers to individual victims.

Most scams nevertheless share similar warning signs. Scammers create a sense of urgency, attempt to trigger fear or excitement and offer something that sounds too good to be true.

Caution is therefore the best protection. Carefully verify unexpected offers and the people who contact you, use only official communication channels and never share your seed phrase with anyone.

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