How To Spot The Signs Of A Crypto Scam

With the exponential growth of cryptocurrencies in recent years, the rise of cryptocurrency scams and fraud have also grown, too. Similar to traditional bank fraud and scams, crypto scammers want access to crypto coins and wallets, and some will do anything they can to gain access. In order to protect your cryptocurrency assets, as well as yourself, from falling victim to a scam, one of the best things you can do is familiarise yourself with what the signs of a cryptocurrency scam could be.

When you know what to look for, this makes it easier to act in a timely manner in the event of a scam and potentially recover your stolen funds. Let’s take a look at some of the ways in which you can spot a crypto scam.

Know The Common Types Of Crypto Scams

In order to recognise the signs of crypto scams, it’s good to firstly understand and know the types of cryptocurrency scams. There are many different types of cryptocurrency scams, all with different aims, such as:

  • Scams looking to gain access to a digital wallet or authentication details. Access to these could mean that scammers can get access to your digital wallet or other sensitive information.
  • Looking to transfer cryptocurrency directly to the scammer through impersonation, fraudulent transactions or investments and other malicious ways.

There are also scams such as romance scams, where scammers will try to make targets believe they are in a real relationship and ask them to send funds or information, with the end goal of the eventual transfer of coins or account credentials. Around 20% of all money lost through crypto scams was the result of romance scams.

Find And Read The White Paper

Before becoming live, actual currencies, all cryptocurrencies go through a developmental process. During this process, a document called a white paper is published for the public to read. This document explains the blockchain, protocols and outlines of formulas used within the coin. Fake cryptocurrencies will not have one of these, but scammers will look to publish fake white papers which are typically very poorly written or the predicted figures don’t quite add up.

Look At The Marketing Used

Cryptocurrencies are, generally, not a money making scheme. They are sole projects that have a stated purpose and have tokens or coins designed to help the function of the blockchain. Valid crypto projects are unlikely to be posted on social media channels. The majority of, if not all, valid cryptocurrencies and coins aren’t marketed. Instead, they will post documentation online which outlines the purpose of this new crypto.

There are, however, some legitimate cryptocurrencies that advertise or use marketing, but this will appear very official and of high quality. Often, they’ll use high-end celebrity endorsements and have a secure website to back up claims or information stated in the adverts. Instead of asking people to buy the crypto, they will instead advertise blockchain services, which are much more secure.

Last year, an NFT scam was advertised on Twitter when thousands of fraudulent accounts were set up in an attempt to push them across the platform. These accounts promised high returns, and unfortunately some investors did fall for them. In 2020, another crypto scam on Twitter managed to hack the accounts of over 130 high profile users, including US celebrities and sport stars, to share their posts and messaging, evidently using the celebrity approach that is frequently missing from fraudulent and scam advertising.