Understanding Cryptocurrency Scams

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Author: Mr. KingsHOK
An accountant who turned cryptopreneur to pursue my interest in crypto and decentralized finance. Let me show you how to invest safely in the space with my experience over the years.

Bitcoin and cryptocurrency scams are real!

As the entire industry is still at infant stage, it already has many potentials that can be used to make money fast online.

Either good or through the bad ways mostly known in Nigeria as Bitcoin format scams.

Many people have tried investing in cryptocurrency, but instead, they got scammed of their fortune.

Maybe, they invested in the wrong asset that looked, or claimed to be better than the first cryptocurrency (i.e. Bitcoins).

Due to decentralized nature of cryptocurrencies, some Nigerian yahoo scammers have capitalized on the anonymity to steal funds from unsuspected individuals.

If you are keen to invest in the cryptocurrency world, then it’s also necessary that you familiarize yourself with some of the most common scams.

This will definitely help to protect you and your investment finances from getting lost.

Before we get started, let me first explain to you, what these scams are all about – just incase you’re not all that familiar with it yet.

Let begin...

What is a crypto scam?

Cryptocurrency scam is an activity that raises crypto complaints against some practices, which convince people to invest in fake projects.

These techniques are used by scammers to make people invest in fake crypto projects, or loose their investments entirely.

If you are a regular visitor of this crypto community, you may have known already that i once lost huge sum of money to HYIP scams.

As an amateur then, I use to invest in such schemes which projects to me as one of the ways to make money fast online with Bitcoin.

Little did I know they were all cryptocurrency scams.

Types of crypto scams

In this post, you will see the most popular BTC scams you should always try to avoid loosing your funded investment.

So, let’s get to dive straight into all the types of crypto scams already!

1. Mining cryptocurrency scam

Cryptocurrency mining is a specialized activity and requires a huge involvement of financed funds and technicality too yield any substantial profit.

However, newbies are being told otherwise by these ‘make-believe individuals’ who claim to offer you fixed returns for investing in their mining programs or platforms.

They normally use edited images, big profit promises and fake testimonials to convince clients to part with coins; after which they will disappear.

2. HYIP crypto investment platforms

A high yield crypto investment website mostly comes with variety of investment options.

For instance: When Bitcoin Crypto Doublers (Bitcoins – invest up-to $50 to get $500 in 7 days, or invest $100 to get $1000 in 10 days) kind of platforms.

Others are just regular persuasive comments on social media pages.

For example;

“All my life I have been looking for ways to invest in cryptocurrency/bitcoin and have failed till I met Mr John Doe who now trades or helps me earn $100 every 3 days…Contact…”

Sometimes, they could send out direct messages seeking to persuade you into pseudo-investing on their platforms and programs.

3. Fake bounty and airdrop giveaways

A classic example is the fake ‘5000 BTC Binance Giveaway’, where the perpetrators created fake social media profiles and web links, asking users to join.

They also come with a promise to get a part of the 5000 BTC available for grabs.

These kind of scam is the type you’ll be asked for some crypto deposit, before you become eligible to win in the giveaway.

Or you’re asked to register on a clone platform similar to the original, as they try to steal your log-in details for later access through phishing.

There are also cases of lofty promises for referrals and the unsuspecting victim goes sharing links to other parties in hopes of a big reward.

4. Crypto pump and dump scams

These ones mostly happens to day traders, when new crypto-coins are freshly introduced into the cryptocurrency market.

These coins sometimes, may lack the basic features that determines the value of cryptocurrencies.

The people behind such crypto projects may use FUDs, or controversies to push the price high, so their own investment can increase.

As soon as people starts buying into the coin due to price spike, they will start selling their own stakes in the project, which drastically drops the value.

Always do thorough research on any cryptocurrency you intend to start trading to avoid loosing your invested funds due to FOMO (most times).

5. Shit-Coin crypto project scams

Shit coin refers to fake cryptocurrency coins, or tokens with no potential for the long term value.

This type of cryptocurrency scam tries to convince an investor of the benefits of a relatively unknown coin – asking him to buy the fake project.

It is no longer news that most of these projects have either failed, leaving the investors with worthless ICO tokens, or have pulled exist scams.

The shit coin promoter says;

“Buy xyz coin, it will be worth… value in coming months, Buy xyz coin we have offices in… You’ll win a trip to…”

6. E-mail phishing and hacks

This level of scam is an advanced model which employs tools and behavioural predictability of the victim.

For e-mail phishing, they try to get access to your security passwords, or wallet by sending clone links of websites or infiltrating your PC/device through malware.

These phishing e-mails could have attractive headlines and call to action.

They usually send out mail to their victims – telling them that their investments account have been tampered, and they should reset their password(s).


“Your blockchain wallet password is under review, click here ‘blocchain.com’to reset password.”

Notice the deliberate omission of the letter ‘k’ in the second link; in a haste and panic response you may not notice immediately.

Hackers employ similar tactics by trying to break down your defences and security in an attempt to gain access to your cryptocurrency investment accounts.

7. Fake crypto exchanges

As Bitcoin has become more popular, people have sought to acquire it. Unfortunately, scammers also take advantage of this to set up fake cryptocurrency exchanges.

These fake exchanges may trick users into thinking they’ve got cheap transaction fees crypto exchange, with quick access to some cheap cryptocurrencies.

Be sure to use a reputable exchange when buying, or selling Bitcoin. I also wrote a review on how to buy BTC using CoinSwitch, without being forced, or tricked into scam.

8. Blackmailing for Bitcoin

Be wary of blackmail attempts in which strangers threaten you in exchange for bitcoin as a means of extortion.

The best common execution of this method is by email, where the sender transmits a message claiming that he/she hacked into your computer.

They’re mostly operating it via RDP (Remote Desktop Protocol) and VPN (Virtual Private Network).

The sender says that a key logger has been installed and that your web cam was used to record you doing something you may not want others to know about.

The sender provides two options, whichare;

  1. Send Bitcoins to suppress the material
  2. Send nothing and content i sent to your email contacts and across your social networks.

Scammers use stolen email lists and leaked user information to mass-mail thousands of individuals.

9. Social media scams

Social media networks (like; Instagram, WhatsApp and Telegram) are most popular as den of cryptocurrency and Bitcoin scammers.

The usual ways of they use these social media networks to scam people, is by projecting as an escrow service.

Once you use them as an escrow to pay business clients online, as soon as you make transfer to their wallet, your funds will disappear forever.

Sometimes, they would even go as far as extorting more money from you by telling you to pay for charges, so your deposit can be released.

If you fall for these social media format, they would keep going until you waste most of your crypto investments in their hands.

How to avoid Bitcoin scams

Always use long and strong alphanumeric passwords you can remember.

Do not share Bitcoin wallet info with anyone, or third party, and it could be better to enable 2-factor authentication on your crypto wallet and storage devices.

If you must participate in free crypto giveaways, look out for cryptocurrency airdrops organized by official handles.

Ignore and block off comments, or direct messages promising quick profits.

They are mostly scams that will in-turn ask you to deposit some amount of your investment to win gains.

Stick to trusted exchanges and websites, and always check that their URL (i.e. website link) is correct, and check if it has SSL (i.e. https) before clicking.

I strongly recommend using Binance cryptocurrency exchange for all your crypto trading, as they are trusted by many professionals.

To avoid spam mails, you can use VPNs with an email filtering services which requires e-mail sender to pay before his/her mail is delivered to your inbox.

This would deter phishing attempts and help blacklist them without stress, but you must do your own diligent research.

Study the coin’s development team, product and industry backers to avoid leaving your crypto investment in an exchange wallet to avoid getting hacked.

Recommended reading: Best cryptocurrency wallets for storing bitcoins

There is profit to be made in cryptocurrency, but to do so, you must understand how it works.

Avoid greed and quick profit schemes.

For clarity, the crypto market is highly volatile hence, no guarantees on a fixed amount of profit over a given period of time.

Profits vary with the market; so when promised a fixed return in quick succession set your red alerts.

If it looks too great to be true, please take a good look into the project and do thorough research before investing in it.