Explore the most common cryptocurrency scams of 2023 along with tips to avoid cryptocurrency fraud.
Bitcoin, Ethereum, Tether, Polkadot, Dogecoin. Whether you’re investing in one of these cryptocurrencies or not, by 2022 you most certainly are familiar with at least one of these digital payment methods. And considering the total value of all cryptocurrencies is over $1 trillion and counting, these electronic payment methods aren’t going away anytime soon — and neither are the cryptocurrency scams associated with them.
Financial investments can be enough of a risk. Gambling on your cybersecurity doesn’t need to be a part of it. To that end, here’s an overview of how to detect some of the most popular cryptocurrency scams to know in 2022 and pointers to proceed with caution when making cryptocurrency transactions.
1. Investment or business opportunity scams
Investment or business opportunity scams often begin with an unsolicited offer, typically to become a cryptocurrency investor, that lures you to a fraudulent website to learn more about the opportunity. Once you’re on the site, you’re encouraged to begin investing and make money quickly. The website might even have celebrity endorsements or testimonials that are fake.
But once you complete your transaction, the offer never comes to fruition and you don’t see your money again. You might equate these types of cryptocurrency scams to multi-level marketing schemes or Ponzi schemes.
2. Imposter or impersonation cryptocurrency scams
An imposter or impersonation scam is when a cybercriminal poses as a trusted source to convince victims to complete a cryptocurrency transaction. This might be under the disguise of government authorities, credit card providers, banks, a service provider, or even a fake celebrity, and they’ll often reach out via email and request you complete payment via cryptocurrency.
Remember, cryptocurrency is not regulated by the government and it’s also not yet widely accepted by businesses, so you should exercise caution any time you receive email requests for crypto payments. For safe measure, double-check with the source through a different communication channel and verify a website’s security before completing a transaction.
3. Blackmail or extortion cryptocurrency scams
One of the oldest scamming approaches in the book, blackmail or extortion is when you receive an email that someone has compromising information about you — be it photos, videos, confidential data, etc. — and they request you pay them money or else they’ll release it.
This becomes a cryptocurrency scam when the scammer requests the payment in cryptocurrency, oftentimes because the transactions cannot be reversed. It’s best to delete these messages and report the sender to authorities.
4. Social media cryptocurrency scams
Social media cryptocurrency scams are just what they sound like: cryptocurrency scams that occur over social media. Oftentimes this is via a false social media post or advertisement requesting payment in cryptocurrency. You might even see other users responding to the post or leaving reviews. In reality, these could be bots. The post or message might even be from a friend whose account has been hacked.Alternatively, social media influencers might tout a new and potentially fake crypto and encourage users to sign up or send them payments that they might multiply. In some cases, influencers merely pocket the payments. These are considered influencer cryptocurrency scams.
Bottom line: Recognize that cryptocurrency isn’t yet a widely used payment method and any ardent requests to only pay with it are likely a scam.
5. Giveaway cryptocurrency scams
Somewhat of a cross between impersonation and social media cryptocurrency scams, giveaway scams are when victims are lured to an opportunity to send money to someone promising they’ll multiply the payment.
For example, this could occur from a fake celebrity social media account posting that if followers send them a certain amount of cryptocurrency, they will send back twice the amount. In fact, followers will be sending money directly to scammers, never to see their investment again.
6. Fake apps
As a digital payment method, different cryptocurrencies also have different apps, and cybercriminals can be skilled at replicating them. In 2021, there were over 300,000 downloads of a fake app that stole banking credentials from victims. Once users download these fake apps, they might begin sending payments directly to the crypto scammer.
Fortunately, there are some red flags you can watch for before downloading cryptocurrency apps to ensure they — and your investments — are legit.
7. Loader or load-up cryptocurrency scams
Believe it or not, some cryptocurrency scams will ask for your account logins outright. That’s how a loader or load-up cryptocurrency scam works: Scammers might reach out to victims with an ask to borrow their account because they need higher limits. In return, the scammer promises to give them a portion of the proceeds from their investments.
In fact, scammers load up victims’ accounts and drain them, taking all of the cryptocurrency for themselves. You should never provide your account logins to someone else, even if they appear to be a trusted source.
8. Romance cryptocurrency scams
Romance scams pull on victims’ heartstrings by way of social engineering tactics. How does it work? Cybercriminals play the part of an online love interest and gain a victim’s trust to a degree that they ask them to send money. Once the victim does, the cybercriminal pockets the funds and runs.
In the case of a romance cryptocurrency scam, it’s all the same approach but the funds are requested in cryptocurrency, and are much more difficult to reverse.
9. Phishing cryptocurrency scams
Another old-school cyberattack, phishing scams often occur over email and involve an ask for money. Oftentimes these messages are from cybercriminals posing as trusted sources, meaning phishing scams are similar to impersonation scams.
In the case of phishing cryptocurrency scams, the false ask for payment is in the form of cryptocurrency. The messages might even be from a cybercriminal posing as a cryptocurrency company that's divulging their initial coin offering (ICO) to appear authentic.
10. Employment cryptocurrency scams
Similar to investment or business opportunity scams, employment cryptocurrency scams often begin with an unsolicited job offer that lures victims to a fraudulent website to learn more about the opportunity.
Victims are often asked to pay for training to become fully onboarded to a company. They’re asked to pay for that training in cryptocurrency, which is then never returned to them.
Warning signs of cryptocurrency fraud
Now that you’ve learned some background on the most common cryptocurrency scams, it’s time to learn how to spot them.
Here are the red flags of a cryptocurrency scam to look out for:
The offer seems too good to be true
“Guarantees” you’ll get rich quick
A website’s address bar does not begin with “HTTPS”
The payment request is urgent
Payment requested in cryptocurrency
A social media user is asking you to pay for something using cryptocurrency
The advertisement or post has many enthusiastic reviews
Asks for cryptocurrency payments via social media
Unsolicited favors asked
Your account logins are requested
Unsolicited job offer
It's important to not underestimate crypto scammers and their devious tactics. Unfortunately, they’ve been able to see some success in recent years.
Crypto scam success rates and takeaways
Given they’re not entirely government regulated, cryptocurrencies can feel like the Wild West of the World Wide Web at times.
For further perspective, just since October 2021, nearly 46,000 people lost crypto assets totaling $1 billion. This amounted to a reported median loss of $2,600. Here are a few more trends indicated by data.
Young investors are prime targets
By no surprise, it’s younger digital generations that have embraced cryptocurrency quicker than most. As such, they’ve also become more susceptible to crypto fraud. Those ages 20 to 49 are more than five times more likely to lose money to cryptocurrency scams than older age groups. What’s more, people in their 20s and 30s lose the most money to investment scams, more than half of which is in cryptocurrency losses.
Impersonation cryptocurrency scams work
It turns out that impersonations work when it comes to cryptocurrency scams — especially if you’re Impersonating Elon Musk, once a big proponent of cryptocurrency. Cryptocurrency scam victims have sent more than $2 million to Elon Musk impersonators.
It’s not just celebrity impersonations that work, though. Cybercriminals have also posed as the Social Security Administration, resulting in the Office of the Inspector General issuing a warning. Looking at imposter scams as a whole, 14 percent of reported losses are in cryptocurrency.
Crypto scams rely on emotions
Romance scams have long been a successful cyberattack. Nowadays, these false pulls on people’s heartstrings involve pulling money out of their cryptocurrency wallets more than ever. Twenty percent of romance scam victims lose money through cryptocurrency.
How to avoid cryptocurrency scams
If you know how to spot a cryptocurrency scam, you can stop a cryptocurrency scam. Bank on these pointers to invest with confidence and a Cyber Safe state of mind.
1. Always research before investing
As new cryptocurrency types continue to emerge, it’s important to vet cryptocurrency exchanges before investing your time and money in them. This means questioning exchanges you haven’t heard of before and even researching whether they’ve been associated with scams or complaints before.
Investigate how transparent exchanges are about their liquidity and ICO rules — this is a sign of a reliable company. That might even mean reaching out to the exchange directly and asking. It’s also worth verifying if an exchange uses blockchain technology, which helps secure your transactions.
2. Remember nothing has to be paid in cryptocurrency
One of the biggest red flags of a cryptocurrency scam is requests to be paid in cryptocurrency. Remember, cryptocurrency is not entirely government regulated and it’s not yet widely accepted by businesses, so you should never have to pay in cryptocurrency. If someone, even a trusted online connection, insists you must, that’s a major warning sign that you could be scammed.
3. Ignore urgent requests
Especially if they’re unsolicited, urgent payment requests are a major red flag of cryptocurrency scams. It’s best to delete these requests right when they hit your inbox or mark them as spam. Trust that if an authority or loved one indeed needs a payment from you urgently, they will find a way to reach you — and it likely won’t be by requesting you complete a cryptocurrency payment.
4. Be wary of “get-rich-quick” scams
It can be tempting to jump at a get-rich-quick opportunity. But when it comes to cryptocurrency, remember that cryptocurrency itself is an investment. Generally, any unsolicited opportunities that come to you with “guarantees” or “promises” for you to make money are a get-scammed-quick opportunity. It’s best to avoid these proposals at all costs.
5. Report suspicious activity immediately
If you think you’re being targeted by a cryptocurrency scam, reporting it can keep cryptocurrency exchanges safe for all users. There are a few places you can do this:
Financial investments are enough of a risk as it is. Dealing with scammers and their slew of cyberattacks doesn’t have to be a part of the equation. In the end, bank on this: If something sounds too good to be true, it probably is. Play it safe and hold your money — cryptocurrency or otherwise — close.
FAQs about cryptocurrency scams
You probably still have a few questions, so here are some answers to frequently asked questions about crypto scams and cryptocurrency in general.
What is cryptocurrency?
Cryptocurrency is a digital currency designed to be more secure due to blockchain technology and unregulated by government authorities.
How is cryptocurrency different from the U.S. dollar?
Cryptocurrency differs from the U.S. dollar in that crypto is:
Unregulated by the government
Constantly changing in market value
Can I recover scammed cryptocurrency?
There are a few avenues to potentially recover scammed cryptocurrency. Those who lose crypto assets in a scam have the option to report their case to the FTC. You could also contact the crypto exchange company you used to complete the transaction.
Cyber threats have evolved, and so have we.
Norton 360™ with LifeLock™, all-in-one, comprehensive protection against viruses, malware, identity theft, online tracking and much, much more.
Clare Stouffer, a Gen employee, is a writer and editor for the company’s blogs. She covers various topics in cybersecurity.
Editorial note: Our articles provide educational information for you. Our offerings may not cover or protect against every type of crime, fraud, or threat we write about. Our goal is to increase awareness about Cyber Safety. Please review complete Terms during enrollment or setup. Remember that no one can prevent all identity theft or cybercrime, and that LifeLock does not monitor all transactions at all businesses. The Norton and LifeLock brands are part of Gen Digital Inc.