crypto currency fraud

Are you worried about falling victim to the countless crypto scams floating around the internet? Unfortunately, scams and fraudulent activities have become a growing concern in the world of cryptocurrencies.

This article aims to shed light on such deceptive practices and reveal ways to safeguard your investments. Get ready; it’s time to dig deep into the dark underworld of cryptocurrency fraud!

Understanding Cryptocurrency

Cryptocurrency is a digital form of currency that can be used for transactions, stored in digital wallets, and obtained through various methods, with risks involved due to its decentralized nature.

What is it?

Cryptocurrency is a type of money. It's digital, meaning you can't touch it like a dollar bill or coin. People use computers to make this money. Cryptos are stored in what we call a digital wallet online.

One popular type of cryptocurrency is Bitcoin. Other types include Ethereum and Dogecoin. You earn cryptos when you use your computer to solve hard puzzles first before other people do the same thing online.

This process is called mining.

How is it used?

People use cryptocurrency in many ways. Buying items online is one such way. Many sellers from around the world accept this type of digital money as payment. Some folks also make crypto investments, hoping to earn more money over time.

Cryptocurrency offers a new way to send cash across borders too. People can move it fast and without big fees that banks often charge. Some scammers exploit this feature for crime, causing crypto scams and frauds.

They cheat people out of their money and vanish on the dark web before getting caught.

crypto assets

How do you obtain it?

To get cryptocurrency, you buy it with real money. You can also sell things and let people pay you with it. Some people get coins by mining them. This means using your computer to solve a tricky puzzle that opens up new coins.

But this can take a lot of power from your computer, so be careful! Once bought or mined, the currency gets stored in an online account called a digital wallet.

Where is it stored?

Cryptocurrency is stored in digital wallets, which are like virtual bank accounts. These wallets can be online, on your computer or phone, or even on a physical device called a hardware wallet.

They securely store your cryptocurrency keys, which are needed to access and manage your funds. It's important to keep these wallets safe and protected from hackers because if you lose your keys or someone steals them, you could lose all of your cryptocurrency forever.

How is it different from traditional currency?

Cryptocurrency is different from traditional currency in a few important ways. Firstly, while traditional currency exists in physical form, cryptocurrency only exists online. Secondly, cryptocurrency is secured using cryptography, which makes it difficult to counterfeit, unlike traditional currency.

Additionally, cryptocurrency is not regulated or controlled by any government or financial institution like traditional currencies are. This means that the value of cryptocurrency is not subject to the same regulations and fluctuations as traditional currency.

cryptocurrency scams

Risks of using cryptocurrency.

Using cryptocurrency comes with several risks. Firstly, the value of cryptocurrencies like Bitcoin can be very volatile, which means their price can change dramatically in a short period of time.

This makes it risky for individuals who are investing or using them as a form of payment. Additionally, because transactions made with cryptocurrencies are difficult to reverse or trace, there is a higher risk of fraud and scams.

Cryptocurrency wallets and exchanges can also be vulnerable to hacking attempts, leading to potential loss of funds. Lastly, some criminals may use cryptocurrencies for illegal activities such as money laundering or purchasing illegal goods on the dark web.

Scammers and Cryptocurrency

Scammers exploit the growing popularity of cryptocurrency by using common tactics such as phishing scams and demanding payment in digital currency, making it crucial to be aware of their schemes.

Use of common scam tactics

Scammers in the cryptocurrency world often use common tactics to trick people and steal their money. One of these tactics is creating poorly written white papers that make grand promises about making you rich quickly.

They also engage in excessive marketing pushes, bombarding you with emails and messages to pressure you into investing. These scammers may even claim to have guaranteed returns or secret investment strategies that no one else knows about.

It's important to be cautious and skeptical of these claims, as they are often too good to be true. Stay vigilant and do your research before investing in any cryptocurrency opportunity.

Demand for payment in cryptocurrency

Scammers often demand payment in cryptocurrency because it allows them to remain anonymous and makes it difficult to trace the money. Legitimate businesses rarely request payment in cryptocurrency, so if someone asks you to pay with digital currency, be cautious.

Scammers know that once they receive the cryptocurrency, it's nearly impossible for victims to get their money back. Remember, never send cryptocurrency to someone you don't know or trust.

Stay vigilant and protect your hard-earned money from these fraudulent schemes.

crypto scammers

Top ways scammers use investment scams

Scammers use investment scams in various ways to deceive people and steal their money. Here are some common methods they employ:

  1. Promising high returns: Scammers entice victims by guaranteeing unrealistically high profits on their investments. They create a sense of urgency and pressure victims into making quick decisions.
  2. Impersonating reputable companies: Scammers pretend to represent well-known and trusted financial institutions or cryptocurrency projects. They use fake websites, emails, or phone calls to gain victims' trust and convince them to invest.
  3. Manipulating market information: Scammers spread false news or manipulate market data to create a sense of fear or excitement among investors. This manipulation aims to persuade victims to make impulsive investment decisions that benefit the scammers.
  4. Offering insider tips: Scammers claim to have insider knowledge or secret strategies that can generate massive profits. They lure victims with the promise of exclusive investment opportunities, but it's all part of their scheme.
  5. Pyramid schemes: Some scammers operate pyramid schemes where they recruit new investors to pay off existing ones. They promise extraordinary returns through referral bonuses, but these schemes are not sustainable and inevitably collapse.
cryptocurrency investment scams

Recent Cases of Cryptocurrency Fraud

In recent years, there have been several high-profile cases of cryptocurrency fraud, including one where the leader of a $70 million fraud scheme was apprehended. These cases serve as a stark reminder of the need to be vigilant and cautious when dealing with cryptocurrencies.

To learn more about these incidents and how to protect yourself from falling victim to similar scams, continue reading.

Leader of $70M fraud scheme

Sam Bankman-Fried, the founder of FTX, has been exposed as the leader of a massive $70M fraud scheme. He has been convicted of fraud and is accused of stealing at least $10 billion from customers and investors.

This fraud scheme is one of the largest in American history. Bankman-Fried is on trial for fraud in New York.

Seizure of fraudulent funds

The authorities have taken action against cryptocurrency fraud by seizing millions of dollars in fraudulent funds. The Justice Department has recovered over $112 million, while the Manhattan District Attorney's Office has also seized scam cryptocurrency assets.

In another significant case, federal authorities have confiscated $3.36 billion worth of bitcoin, marking one of the largest seizures ever made in such instances. These actions demonstrate a commitment to cracking down on crypto scams and protecting individuals from financial exploitation in the digital world.

internet crime complaint center

How to Avoid and Report Cryptocurrency Scams

To avoid falling victim to cryptocurrency scams, it's important to be cautious and follow these tips. And if you do encounter a scam, know how to report it and protect yourself. Read more to stay informed and safe in the world of crypto.

Tips for avoiding crypto scams

To avoid falling victim to cryptocurrency scams, follow these tips:

  1. Do thorough research and investigate before investing in any cryptocurrency.
  2. Never wire money or provide credit card or bank account information without verifying the legitimacy of the investment or transaction.
  3. Stay informed and educated about cryptocurrency scams to protect yourself from fraudulent schemes.

FBI guidance for victims

If you become a victim of a cryptocurrency scam, the FBI has some guidance to help you. They advise being cautious and vigilant when dealing with cryptocurrency scams because they expect an increase in these types of scams.

If you're targeted by a scammer, it's important to provide the FBI with transaction details like cryptocurrency addresses when reporting the scam. The FBI has noticed that romance scammers often pressure victims to invest in cryptocurrency as part of their deception.

Stay alert and report any suspicious activity to help protect yourself and others from falling victim to crypto scams.

Reporting scams to the FBI Internet Crime Complaint Center

To report scams to the FBI, you can:

  • Contact your local FBI field office.
  • File a complaint online at the Internet Crime Complaint Center (IC3) website.
  • Provide as much information as possible about the scam and the individuals involved.
  • Include any relevant evidence, such as emails or text messages.
  • Be prepared to provide your personal information for the investigation.
  • Remember that reporting scams can help stop scammers and protect others from falling victim.
common cryptocurrency scams

Common Types of Cryptocurrency Fraud

Common types of cryptocurrency fraud include financial crimes, scam initial coin offerings, market manipulation, and Ponzi schemes.

Financial crimes

Cryptocurrency has become a breeding ground for financial crimes. Scammers use various tactics to defraud investors and steal their money. They may create fake investment opportunities, manipulate the market, or run Ponzi schemes.

These scams have led to record losses in recent years, with crypto scammers taking $14 billion in 2021 alone. The dark web is often associated with these fraudulent activities, prompting government efforts to combat misuse.

It is crucial for users to be aware of these risks and take precautions when investing in cryptocurrency.

Scam initial coin offerings

Scam initial coin offerings (ICOs) are a major problem in cryptocurrency fraud. Scammers impersonate legitimate businesses and deceive investors by offering fraudulent crypto coins or tokens.

They promise high returns on investment but ultimately defraud unsuspecting victims of their money. Many people fall victim to these scams due to the allure of getting involved in the booming cryptocurrency industry.

However, it is important to be cautious and do thorough research before participating in any ICOs to avoid becoming a victim of this type of fraud.

Market manipulation

Market manipulation is a common type of fraud in the cryptocurrency world. It involves dishonest practices that aim to deceive and manipulate the market for financial gain. This can include spreading false information, manipulating prices, or creating artificial demand or supply to benefit certain individuals or groups.

Market manipulation undermines the integrity of the crypto market and can lead to significant losses for unsuspecting investors. It's important to be aware of this type of fraud and take necessary precautions when engaging with cryptocurrencies.

Ponzi schemes and scams

Ponzi schemes

Ponzi schemes are a type of financial fraud that tricks people into investing their money in fake opportunities. These scams promise high returns and often target inexperienced investors who are looking to make quick and easy money.

In a Ponzi scheme, the scammers use funds from new investors to pay off previous investors, creating an illusion of profitability. However, the scheme eventually collapses when there aren't enough new investors to sustain it.

This results in significant financial losses for victims. In the world of cryptocurrency, Ponzi schemes can be particularly prevalent, with scammers taking advantage of the hype around virtual currencies like Bitcoin.


In conclusion, the world of cryptocurrency may hold promises of excitement and profit, but it also has a dark underbelly filled with scams and fraudulent activities. It is crucial to be aware of the risks involved, stay vigilant, and report any suspicious activity to authorities like the Federal Trade Commission (FTC).

By staying informed and taking necessary precautions, we can protect ourselves from falling victim to crypto frauds and scams.


What is crypto currency fraud?

Cryptocurrency fraud occurs when scammers in the crypto world trick people into sending cryptocurrency or giving access to their crypto accounts for fake reasons.

How do common cryptocurrency scams work?

Common cryptocurrency scams can take many forms such as romance scams on dating websites, free money scams promising huge returns from a small upfront payment, and unsolicited job offers demanding investment in cryptocurrencies.

What steps should I take if my money disappears from my cryptocurrency account?

If your digital assets are missing from your wallet address, reach out to the Federal Trade Commission or Commodity Futures Trading Commission right away for help.

crypto account

Are there any legal protections against cryptocurrency investment scams?

In general, buying legitimate cryptocurrencies comes with less legal protection than traditional investments because many transactions of this nature aren't controlled by established institutions like Exchange Commission.

Can anyone become a victim of pig butchering and other money scams involving virtual currencies?

Yes! Many scammers use social media messages and emails to lure unsuspecting victims into purported investments and fraudulent transaction fees schemes based upon fake promises in the name of trading or mining virtual currencies.

Are there red flags I should look out for to avoid falling prey to these types of fraud?

Be wary if someone you've met on dating apps asks you for sensitive information related to private keys of your crypto account; lures you with get-rich-quick schemes that involve investing through them; Or they will pressure you into making quick decisions about investing large amounts in specific coins.

About the author 

Willis Wesley

Are you ready to navigate the exciting world of cryptocurrencies with confidence? Look no further. I'm Willis Wesley, your go-to cryptocurrency expert blogger, here to provide you with the knowledge and insights you need to thrive in the digital finance space.

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