Most Common Crypto Scams and How to Avoid Them

If you’re a beginner and haven’t fallen for any of the common crypto scams yet, congratulations—but stay alert. The chances of encountering a crypto scam are alarmingly high, even for cautious investors.

Here’s a startling fact: 1 in 10 crypto investors gets scammed each year. That’s millions of people losing money—sometimes their entire savings—within moments.

Take Mark, for example. Excited to buy Bitcoin for the first time, he found an offer that seemed legitimate, promising high returns. Hours later, his entire investment was gone, and there was no way to trace the fraudsters.

The crypto world is full of opportunity but also rife with bad actors hunting for easy prey. If you’re not careful, you could become their next target.

The good news? You’re here, and that changes everything. This guide will help you recognize the most common crypto scams and teach you how to avoid them.

This isn’t just another post—it’s your first step toward securing your investments and staying ahead of crypto scams.

7 Most Common Crypto Scams and How to Avoid Them

There are lots of common crypto scams out there, but here are some of the ones you’re most likely to encounter:

1. Phishing Scams

Phishing scams are a common tactic used by scammers to steal sensitive information. These scams often start with fake emails, text messages, or social media posts. They are designed to look like they’re from trusted cryptocurrency companies or exchanges.

The goal? To trick you into acting quickly. Scammers create urgency with messages like “Your account is at risk” or “Secure your funds now.” Others tempt you with fake rewards, saying, “Congratulations! You’ve won a prize!” These messages include links urging you to take immediate action.

Clicking the link leads to a fraudulent website that mimics a legitimate one. At first glance, it might look authentic, but small details—like misspelled URLs or slight design flaws—can reveal the scam.

Once on the fake site, you’ll be asked to enter sensitive information, such as your login credentials or cryptocurrency wallet details. Once this information is entered, the scammers now have your credentials. They can then use it to access your real account, drain your wallet, and transfer the funds to their accounts.

How to Avoid Phishing Scams:

Avoid clicking on unsolicited links in emails, texts, or messages, especially those with urgent warnings or offers that seem too good to be true.
Before entering personal information, carefully inspect website URLs. Look for extra characters, subtle misspellings, or anything unusual.
Activate 2FA on all cryptocurrency accounts. This adds an extra layer of security, making it harder for scammers to access your accounts.
If your platform offers anti-phishing codes, enable them. These unique identifiers verify that messages truly come from your platform.

Want more tips to stay safe? Check out my guide on How to Avoid Phishing Scams on Crypto Exchanges.

2. Fake Crypto Exchanges and Wallets

Fraudulent cryptocurrency platforms are designed to steal your funds. These fake exchanges and wallets often use professional designs and familiar features.

Scammers aggressively promote these platforms through social media, websites, and paid promotions. They lure users with tempting offers like bonus rewards, ultra-low transaction fees, or exclusive deals that seem too good to pass up.

Once you sign up, they prompt you to deposit cryptocurrency. They may promise advanced trading tools or “free” tokens that are usually fake. However, after you deposit funds, withdrawing them becomes impossible. Scammers transfer your crypto to their wallets, leaving you with no way to recover your money.

How to Avoid Fake Crypto Exchanges and Wallets:

Use reputable exchanges with strong security and a proven track record. Well-known platforms like Binance, Bybit, and Gate.io are safer choices.
Research online reviews across multiple sources. Be cautious if a platform has many negative reviews or no established reputation.
If you’re unsure about a platform, start with a small deposit. Verify that withdrawals work smoothly before committing more funds. If you encounter issues, stop using the platform immediately.

3. Pump-and-Dump Schemes

A pump-and-dump scheme is a fraudulent tactic where scammers artificially inflate the price of a cryptocurrency to profit at the expense of others. They create hype using false or misleading claims, driving up the price. Once it peaks, they sell their holdings, causing the value to crash and leaving others with losses.

These scammers use social media, forums, and messaging platforms to spread rumors about a cryptocurrency. They often call it a “hidden gem” or claim it’s about to skyrocket in value.

Excited investors start buying, driving the price higher. The rising value creates a feedback loop, drawing in more buyers. Sometimes, the buzz spreads to trading platforms, boosting visibility further.

Once the price peaks, scammers sell their holdings in bulk. This sudden sell-off causes the price to crash.

The cryptocurrency’s value plummets, leaving late investors with crypto worth a fraction of what they paid. Meanwhile, the scammers walk away with large profits.

How to Avoid Pump-and-Dump Schemes:

Be wary of cryptocurrencies with steep price increases that aren’t backed by credible news or developments. Unexplained spikes often signal manipulation.
Don’t invest in cryptocurrencies based solely on promotions from influencers or social media posts. These are common tools for pump-and-dump schemes.
Stick to cryptocurrencies with real-world use cases and long-term potential. Avoid chasing quick profits based on speculation or hype.

4. Ponzi Schemes and Fake Investment Platforms

A Ponzi scheme is a fraudulent investment model where money from new investors pays returns to earlier participants. These schemes don’t generate legitimate profits. Instead, they rely on continuously attracting new investors. When new participants stop joining, the scheme collapses, leaving most investors with heavy losses.

Fake investment platforms operate like Ponzi schemes. They lure investors with promises of high, risk-free returns, often claiming to profit through cryptocurrency trading, mining, or other ventures. In reality, scammers pocket the funds and vanish when withdrawal requests start.

To appear legitimate, scammers use social media promotions, fake influencer endorsements, and fabricated testimonials. Some even create professional-looking websites showing fake earnings.

Eventually, these platforms fail to attract enough new participants. When payouts stop or the platform disappears, investors lose their money with no way to recover it.

How to Avoid Ponzi Schemes and Fake Platforms:

Seek advice from financial advisors or cryptocurrency professionals to assess opportunities and identify scams.
Be cautious of platforms guaranteeing high or risk-free returns. If it sounds too good to be true, it probably is.
Research online reviews and feedback. Look for warnings from regulatory authorities and complaints from past users.
Investigate the company’s background, team, and business model. Legitimate platforms are transparent about their operations, goals, and results.

Want to ensure you never fall for fake platforms? Check out my comprehensive guide: How to Know if a Crypto Site is Legit or Fake.

5. Fake Initial Coin Offerings (ICOs)

Legitimate ICOs are created to raise funds for new blockchain-based projects. Investors buy tokens representing a stake in the project, expecting their value to grow as the project develops. Fake ICOs, on the other hand, are scams. They either promote nonexistent projects or steal funds collected from investors.

Scammers use aggressive marketing to promote fake ICOs. They offer tokens at discounted rates or promise exclusive benefits, claim the project has massive profit potential, branding it as a “once-in-a-lifetime” chance, and create urgency with limited-time offers or guaranteed high returns, leaving little time for thorough research.

Eager investors often pay in popular cryptocurrencies like Bitcoin or Ethereum. To appear credible, scammers use polished websites and professional marketing. Once the ICO ends and enough funds are collected, they vanish. The project is either abandoned or was never real.

How to Avoid Fake ICOs:

Look for discussions about the ICO on platforms like Reddit or Bitcointalk. A lack of engagement or frequent complaints about the project is a warning sign.
Verify the credentials of the founders and team members. Legitimate projects are led by transparent, experienced teams. A lack of credible information is a red flag.
A trustworthy ICO provides a detailed whitepaper outlining objectives, technology, and development plans. If the document is vague or full of technical jargon without substance, it’s likely a scam.

6. Giveaway Scams

Giveaway scams are a common tactic used by fraudsters to steal cryptocurrency or personal information. Scammers often impersonate celebrities, crypto influencers, exchanges, or blockchain projects. They create fake social media accounts, websites, or emails to promote fake giveaways.

These scammers announce fake giveaways to celebrate events, milestones, or product launches. They offer large cryptocurrency rewards, like Bitcoin or Ethereum, to lure victims. To increase urgency, they present these offers as limited-time opportunities.

To participate, victims are asked to send a small payment to “verify” their account, or share sensitive information like private keys or seed phrases. Scammers claim these steps are necessary for eligibility. After victims comply, they receive nothing, and the scammers disappear with their funds or data.

How to Avoid Giveaway Scams:

Avoid giveaways requiring upfront cryptocurrency payments. Legitimate giveaways don’t ask for money to distribute rewards.
Check the official website or social media accounts of the individual, project, or organization hosting the giveaway. Only trust announcements from verified, official channels.
Never share private keys, passwords, or seed phrases. Legitimate giveaways will never request this information.

7. Airdrop Scams

Legitimate airdrops distribute free tokens to promote cryptocurrencies or grow communities. However, scammers exploit this method to steal funds or personal information from unsuspecting participants.

Scammers create fake websites, social media accounts, or posts offering free tokens. These offers are crafted to sound irresistible and legitimate.

To build credibility, they may ask you to follow their social media accounts, share posts, or join groups on platforms like Telegram.

Eventually, they request wallet details or ask you to connect your wallet to their platform. They may claim this is necessary to “verify” your account or distribute tokens.

Some scammers go further by demanding a small “processing fee” or “network fee.” Once paid, you receive no tokens or worthless, fake ones.

How to Avoid Airdrop Scams:

Create a dedicated wallet for airdrops. This reduces the risk of compromising your primary wallet in case of phishing or malware attacks.
Legitimate airdrops are always free. If asked to pay a fee, it’s likely a scam.
Never share private keys, seed phrases, or login credentials. Real projects won’t ask for these details.
Look for reviews or discussions on trusted cryptocurrency forums. Scams are often exposed quickly by the crypto community.

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Most Common Crypto Scams and How to Avoid Them

DISCLAIMER:

The information provided here is for informational purposes only. Do not rely solely on it for making investment decisions. It is not financial, tax, legal, or accounting advice. Always do your own research or consult a financial advisor before investing in cryptocurrency.