Top crypto scams in 2023 and how to avoid them

Crypto scams are one of the most concerning issues within the crypto world. They are getting more sophisticated with each passing day and affecting more people. According to the Federal Trade Commission, crypto scammers have stolen more than $1 billion since 2021, and this number is constantly growing. So, what schemes do fraudsters use to deceive you and how can you avoid them?

What is pig-butchering

Pig-butchering is a popular type of fraud where criminals typically lure victims into long-distance and strictly online relationships to siphon off their money. They message you on Tinder, Grindr, and other dating apps, as well as on Facebook or Instagram. And usually, these artful seducers don’t start speaking about crypto.

First, romance scammers build trust and then convince you to invest in particular crypto platforms by promising to grow your money. But all these platforms are controlled by scammers, and as soon as you send crypto, you can kiss goodbye to it. Your “love interest” will take it all and vanish. So never send crypto to anyone you haven’t met in real life.

Pump and dump schemes: how to recognise them

The “pump and dump” scheme is also common among romance scammers. This form of scam is based on hype, speculation, and greatly exaggerated statements. Fraudsters usually entice you to buy a new unknown crypto at a very “low price” by promising that its value will soon go to the moon, and you will have whooping returns.

Of course, when you and other victims buy it actively, the price rises rapidly. Then, scammers just sell all their holdings at an inflated price, causing an instant collapse of the coin. As a result, you are left underwater.

However, not only romantic scammers make money from such a scheme. Fraudsters can play many parts to promote a new obscure project, make you invest in it and then steal your money. Many pretend to be “investment managers”. For instance, recently, scammers have contacted our traders on behalf of EXMO.com employees. Remember, we never contact our customers through personal correspondence or social networks.

What’s more, many scammers won’t even try to reach out to you directly! You can see phony ads about scam coins almost everywhere – on your favorite crypto Telegram channel, Instagram stories, news websites on crypto you usually read, and even on a billboard at the city mall parking entrance! Literally everywhere!

Remember, even if a new coin seems trustworthy because you have learned about it from a relatively reputable source, that doesn’t mean that you should invest in it. Research it thoroughly to make sure it’s not a scam. Because there are many more scams than you might think. According to Chainalysis, almost a quarter of the crypto tokens launched in 2022 were nothing else than a pump-and-dump fraud scheme.

How scammers make money on NFTs

When it comes to NFTs (non-fungible tokens), fraudsters often use so-called “rug-pull” schemes. They mostly pretend to be celebrities to reach out to you and encourage you to invest in a fake NFT. As soon as they receive your crypto, they instantly disappear.

Such scammers usually take real photos of celebrities and impose them on fake accounts, articles, or ads to make it appear as if the celebrity is promoting their own NFT project. Therefore, carefully check the websites and accounts of your favorite stars. As a rule, real accounts have a blue checkmark. Also, remember that celebrities are very unlikely to contact you personally.

Another common scheme for making dirty money on NFTs is author scams. For example, you receive a message that your NFT is purchased for a crazy amount, but in order to receive it, you need to make a minimal deposit. Never believe such messages because big money rarely comes easy.

How the Ponzi scheme of perpetual growth works

Even though crypto is a relatively new trend, thieves use old methods to steal your money. One such method is called a Ponzi scheme. In this scheme, early investors are paid off with the proceeds from new ones, not from actual investing. To get more people involved, scammers lure new investors with crypto by promising profits with little risk. But in fact, there are no guaranteed returns and no legitimate investments!

You may even start making some profit at first, but will end up losing almost all of your crypto in most cases. So be very careful! While schemes may be different, one thing is common. Every fraudster promises instant financial gain or big returns. Bear in mind that only scammers will guarantee profits.

Phishing attacks: definition and purpose

Phishing scams are another old favorite among hackers. The goal behind phishing is to steal your personal data, account details, or even private keys to your crypto wallet. The scheme is as simple as ABC. Fraudsters send emails with malicious links to fake websites or documents and encourage you to follow them.

An attacker usually pretends to be a reputable entity, like Walmart, Amazon, your bank, various utility companies, government agencies, among others. Some may even pose as technical support agents to steal your credentials. Please note that the EXMO.com support team never requests your login details, password, or any banking information. We never make phone calls to you or ask you to register on any third-party platform.

How to recognise fake websites

You can come across fake websites not only through phishing attacks. If you see a platform that advertises cheap crypto, there is a high chance that it is fake. For instance, it may advertise bitcoin at 5% below market value and promise huge profits when you buy through that particular platform.

But in reality, there is no exchange. When you try to withdraw your assets, you’ll likely find that they have vanished. The problem is that investors don’t know they’ve been duped until they lose their money. So don’t be fooled by cheap money!

What’s more, fake websites usually mimic well-known crypto platforms. They have similar but slightly different domain names from the websites they mimic. Recently, we have found that scammers have created a fraudulent website that illegally uses EXMO’s old logo. Bear in mind, there are only two official resources of EXMO.com: https://exmo.com/ and https://exmo-coin.exmo.com/.

Fake crypto apps

Another widespread way scammers deceive crypto investors is through fake apps. These are available for download through Google Play or the Apple App Store. The good thing is that they are quickly found and deleted. Nevertheless, thousands of people have already downloaded fake apps and lost money. So beware!

Crypto giveaway scams and how to spot them

Giveaway frauds have also gained immense popularity among scammers. There are lots of scam posts on social media offering bitcoin giveaways. Often, fraudsters may add you to dubious Telegram channels offering giveaways or tag you on Instagram, informing you that you have already won free crypto. But remember, there is no such thing as a free lunch!

Don’t let these supposed ‘once-in-a-lifetime’ opportunities mislead you! Because as soon as you click on the giveaway, you will be asked to verify to receive free BTC. This is where they steal your data! The verification may also include making a payment or a few small payments. In all these cases, you will never recover your money. And free bitcoins either!

Unfortunately, the chances of getting your money back from a crypto scam are very low. That’s because crypto transactions are immutable, and attackers benefit from this feature.

Top tips on how not to become a victim of fraudsters

Although fraudsters are becoming increasingly persistent in their attempts to steal your crypto, there are simple tips that will help you stay safe from them.

• Always DYOR – do your own research! Before investing in any crypto project or choosing a crypto exchange to invest in, learn about it as much as you can. Attackers often use psychological pressure to make you invest quickly before you have a chance to do your research. Never fall for this! Make sure the token or coin is legitimate and has a strong reputable community. Check their website and read articles from trustworthy sources and reviews from other investors or traders.
• Keep your private keys away from envious eyes! Your private keys are like your password that gives you access to your crypto holdings. If someone gets a hold of them, they can nab all your assets. So never share your private keys or any crypto-related information, even with people you know. Keep them in a secure place, such as offline storage. For more information, read our detailed article on how to secure your assets.

• Don’t trust unsolicited messages! Be very careful if you receive a message promoting a crypto asset or NFT. Attackers often use email, social media, and other messaging platforms to lure people into their scams. They pretend to be a reputable entity, famous brand, celebrity, or even a love interest.
• Control your greed. An investment that promises high returns with little risk, is always a scam. No one can guarantee easy and fast money without risks, especially with crypto. The crypto market is very volatile, and you should always manage risks.