What is a scam in cryptocurrency: common types of fraud

The digital currency market opens up access to new opportunities, but at the same time attracts whole armies of scammers. Cryptocurrency scams have long turned into a tool for mass deception, disguised as investments, startups, and technological innovations. Behind the promises of easy profit are well-thought-out schemes capable of wiping out an account and stealing digital assets in a matter of minutes. Understanding the essence and recognizing the threat is the key to financial security.

What is cryptocurrency scam: how it works

A cryptocurrency scam is a trap disguised as an opportunity. According to the Chainalysis report, scammers managed to collect at least $9.9 billion in digital currency in 2024. Experts predict that this amount may increase and reach a record high of $12.4 billion. Every new trend or rise in the price of Bitcoin gives birth to a new wave of deception. Behind flashy covers and loud promises are simple schemes: take the money and disappear.

The development of digital assets, transaction anonymity, high volatility, and demand create a fertile ground for scam projects. At the same time, scammers are increasingly passing off crypto scams as reliable projects. It is almost impossible to trace the scheme to the final recipient, and the process itself turns into a game of “find the way out,” where knowledge is the way out.

Main types of cryptocurrency fraud

Cryptocurrency scams have long ceased to be limited to one scenario. There are dozens of scenarios. The methods transform, but the goal remains the same — to steal. It is important not just to know the names but to understand the essence of each format and how exactly the deception mechanism works.

Phishing

A phishing attack is a digital substitution of reality. Scammers copy the interface of a crypto exchange, wallet, or platform, and then lure the user to a fake website. Visually, the page does not differ from the original, but entering data is handing over the key to the attacker. Mailings with enticing tokens and offers are especially dangerous. Data is stolen instantly, there is no protection, and the transaction occurs without the possibility of rollback.

Giveaways and “gifts”

Cryptocurrency scams often take the form of “giveaways” on behalf of well-known companies. In one scheme, fraudsters posed as Binance, promising to triple investments. 80,000 users fell for the bait, transferring a total of $12 million. The distinctive feature is deliberately inadequate conditions, such as “deposit $500 and receive $1500.”

Fake ICOs

ICO has become a classic field for deception. Promises of revolutionary tokens, “transparent blockchain,” prominent names in the team, fake documents. An example is the Plexcoin project, which raised $15 million in 2 months before US regulators froze the accounts. But no one could recover the funds. There is no transparency, no guarantees.

Pyramids

Financial pyramids in cryptocurrency are the same old schemes, just in a blockchain wrapper. Such projects use cryptocurrency market terminology: tokens, investments, ROI. An example is BitConnect. Initially, the platform promised up to 40% monthly returns. A year later, the project closed, the token price plummeted from $463 to $1, organizers fled with $1.5 billion. A pure pyramid scheme.

Fake wallets

Under the guise of a mobile application, scammers offer to download a “convenient” wallet. In reality, it is spyware. It intercepts private keys and transfers tokens to the creators’ account. In 2022, 36 such applications were found on Google Play, infecting over 100,000 devices.

Manipulations on exchanges

Cryptocurrency scams also manifest on trading platforms. Some exchanges distort demand and supply data, creating an illusion of liquidity. Meanwhile, the asset price is artificially inflated, traders invest — and lose. Traffic accumulates, quotes fluctuate, withdrawals are frozen. And then — closure without warning.

How to avoid falling into the scam trap

Cryptocurrency scams spread rapidly, but avoiding losses is possible. It is enough to follow proven steps based on real practice and error analysis.

Source verification

Every project should be verified. Clarifying the domain, registration data, checking the whitepaper. The official website must be encrypted, and the presence of an SSL certificate is mandatory. The platform should be registered, the team verified, and the contacts active.

Conditions analysis

Excessive profitability signals deception. Real earnings in cryptocurrency are possible but without promises of 200% per week. When analyzing investment risks in cryptocurrency, it is necessary to compare them with the proposed conditions. Inconsistencies are a reason to stop interaction.

Avoid clicking on links

Phishing attacks through email, messengers, social networks. Never click on links from emails, even if they seem official. The best protection is to enter through bookmarks or manually input the URL.

Storage on cold wallets

Secure protection of crypto assets is provided by a hardware wallet. It is not connected to the network, denies access to scammers, and minimizes the risk of loss. Each transaction confirmation is done manually, and the keys remain only with the owner.

Using multi-factor authentication

Two-factor authentication reduces the likelihood of hacking by tens of times. When accessing an exchange, wallet, or any service, it is necessary to activate additional verification through an application or physical key. Even if the login and password are compromised, the account remains protected.

Attention to project structure

All blockchain projects require analysis: what monetization model is used, how tokens are distributed, whether there is confirmation of asset reserves. The absence of a roadmap, unclear goals, abstract promises without technical implementation are signs of a scam project. For example, the absence of a GitHub repository or activity in developers’ profiles indicates the risk of fraud.

What is important to remember about cryptocurrency scams

Cryptocurrency scams remain part of the ecosystem, changing along with the market. Scammers act not only through technologies but also through psychology — playing on greed and trust. Protection is provided only by knowledge: project analysis, composure, and digital literacy. Investments in crypto assets are always associated with risks, and trust is formed not by promises but by transparency, numbers, and actions.