Cryptocurrencies make for a hot topic. We’ve seen Bitcoin, Ethereum, Dogecoin, and thousands of other digital currencies outpouring with a cosmic followers army. They are and have been making headlines effortlessly. Its technological advancements within the market only add up to their glory. Traders are also growing smarter and choosing cryptocurrencies to make their profits. Despite the market volatility and risk factor, traders continue to dive into trading opportunities that aim for quick money-making. This is where cryptocurrency scams take advantage of the situation.

Cryptocurrencies are digital currencies created and traded on a decentralized platform. No central authority or banks monitor their undertaking. However, they are known to be established on a secure network – the blockchain. Blockchain technology encrypts the data to a security key, making the network tough to break into. Many users are now implementing crypto to purchase goods or services or are interchanging it against the dollar or other currencies within the digital world. The introduction of specialized crypto ATMs is also a new initiative for a progressing market.

The difference between centralized currency and cryptocurrency is that the government backs centralized money. Contrarily, digital currencies derive their value based on their demand and supply without any interference from the government authority. It explains the abrupt and massive fluctuations that lead to giant investors’ gains and losses. Moreover, investments in cryptocurrencies aren’t secured by way of any regulatory aid for the investors, unlike other financial assets.

With noticeable developments in the crypto market, Cryptocurrency scams have also taken a giant leap. From Oct 2020 to March 2021 alone, the FTC recorded more than 570 scams and losses beyond $80 million.

While these crypto frauds keep upgrading, growing, and emerging in new forms, here are some classic scams you should know about;

  • Pump-and-Dump Scheme

A scheme that tricks the investors into holding or selling off their cryptos is known as the pump-and-dump scheme. The scheme operator spreads false rumors or information to get an impulsive reaction from the spectators. As the market behaves in a frenzy, they sell off their holdings as the prices elevate, making tremendous profits. Once they’ve sold all their investments, the prices drop, and the investors sell out of fear, further lowering the prices. This is the ideal time for the scammers to buy or “pump” more funds to make more profits. 

  • Celebrity Endorsements

These scams occur in every industry since celebrities have an extensive fan base who they easily influence. Celebrity endorsements, ads, and testimonials are commonly used to persuade people and control their buying options. Many celebrities and successful investors on social media continually post about their lavish lifestyle, financial status, and prosperity, thereby promoting the phony broker. They might even promise to grow your earnings tenfold.

  • Fraudulent Websites

The scammers use duplicated sites with familiar domain names to fool the users. Their website may feature paid testimonials, false success stories, ensure fixed returns, etc. Unfortunately, most of these sites are unregistered or lack security. Hence, crypto traders should always check the reliability of a platform before staking their finances with them.

  • Ponzi Schemes

A conventional fraud similar to the Pyramid Scheme is the Ponzi Scheme. Here, the founder publishes a scheme that gives out lucrative returns. Investors join the scheme and are requested to promote their deals and bring more investors. However, the returns earned by investors are merely funds taken from the new investors and passed on to the old ones. For instance, BitConnect was a similar fraud that stole approximately $2 billion or more before it shut down and reported to the federal authorities.

  • Romance Fraud

Romance scam involves deceptive people hunting for their targets across social media platforms or dating sites. These frauds are built with the concept that users seeking love through online platforms can be conveniently played with by erecting an understanding, bond, and trust with them. Once the target has a close connection with the scammer, they might urge them to transfer cryptos or invest in the scammer’s crypto account.

Romance scams are the worst since they leave a financial and emotional dent in the victim. According to records from the first half of 2021, the FBI witnessed about 1,800 cases of crypto-based romance scams, totaling a theft of $133 million.


Cryptocurrency Scams are prevalent, but you don’t have to sail that boat. Securing your funds can work if you pay attention to the necessary details and practice due diligence. Here are some essential red flags that could give you a helping hand as you try and detect scams;

  1. Don’t transfer money to anyone you’ve met through a social messaging platform.
  2. Avoid firms that allow you a risk-free exposure as the investment market and risk are intrinsically linked. It is impossible to deal in the market with no risks involved.
  3. Likewise, Guaranteed profits are used as a persuasive tool by scammers.
  4. Any central agency or governing body won’t ask for your money over a call.
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