Cryptocurrency Scammers Are Getting Sneakier. Here’s How to Outsmart Them

Drastic price changes, minimal regulation, and the proliferation of coin-based scams make cryptocurrency a volatile market. If you’re looking to invest, be careful. After all, the FBI recently reported that a group of people lost $225 million in a crypto investment scam.

That may seem like a massive sum, but according to the bureau, those losses are but a drop in the crypto fraud bucket. The FBI reported that crypto scams are to blame for $9.3 billion in losses in 2024. And that’s just the ones that were reported.

“And $5.8 billion of those reported losses can be attributed to cryptocurrency investment fraud schemes, specifically,” said Matthew R. Galeotti, the acting assistant attorney general of the Criminal Division of the Justice Department. “Individuals over the age of 60 were the most affected, with roughly $2.8 billion in losses.”

That’s a lot of retirement money gone. The protections in place for fiat currencies like the US dollar don’t typically exist for crypto, so when it’s lost, there’s little hope of getting any of it back.

Artificial intelligence adds another layer of treachery to these scams, as fraudsters are using AI-enhanced tools to clone familiar, trusted faces and voices of celebrities, and even people you know in real life, to get you to invest in fake cryptocurrency or to steal your crypto wallets.

So, again, be careful. Below, we’ll tell you what you need to know before you invest in a new coin and how to report a crypto scam to the authorities.

4 Questions to Ask Before Investing in Crypto

Here are some things you should reflect upon before pouring any amount of money into a cryptocurrency scheme:

1. Who else is talking about this coin? Don’t take financial information at face value. Before you invest in a memecoin, investigate the claims around it, especially if they seem too good to be true or promise riches overnight.

   If the coin is brand-new, or the only people talking about it are on one social media platform, or podcasters, or someone who messaged you on social media, simply wait and see. You usually don’t have to wait long for a scam to reveal itself. Remember, the people who poured their life savings into a coin endorsed by the “Hawk Tuah girl” on social media last year lost it all, literally overnight.

2. Do I know the person who is sharing this investment advice? Don’t trust anyone—government officials, public figures, strangers—who ask for payments in cryptocurrency or offer you an “investment opportunity.” For example, earlier this year, a man lost $10,000 in a cryptocurrency scam because he thought he was messaging with Elon Musk.

   Knowing the person you’re talking to isn’t a recipe for scam-spotting either. As I mentioned above, scammers can create frighteningly accurate deepfakes of your family members and friends and use them to call you and ask you to buy fake cryptocurrency. I strongly suggest creating a “safe word” for your family and friends to use when verifying their identity on the phone or during video calls to prevent getting duped by a scammer.

3. Is this person asking me for money up front? Reject any offer that comes with a fee, especially if the sum has to be paid in cryptocurrency. Also, never agree to share your private key or the seed phrase to your cryptocurrency wallet with anyone, and store that information somewhere offline, aka a cold wallet.

   Enabling multi-factor authentication on your crypto wallet and exchange account is also wise. But be aware that this is not a surefire solution for stopping scammers, as we saw when Coinbase was hacked.

4. Is this a legit cryptocurrency exchange website? Double and triple-check website URLs. Criminals attempting phishing scams will copy the URL of legitimate sites and swap letters and numbers—an “l” for “1” or “0” for the letter “O,” for example.

How to Identify Common Crypto Scams

While some crypto scams are unique to the world of digital currency, many are variations of existing scams. Some target people looking to invest in cryptocurrency, while others rely on spreading digital cash to steal money without being tracked.

Extortion Scams

Some scammers will contact you, claiming they have embarrassing or incriminating information about you and threaten to release it if you don’t send them payment in cryptocurrency.

To make the scam more convincing, they might show you something they obtained via a data breach, like an old password. This will often be all they have, and the perpetrator is simply bluffing to get you to give in to their demands. If this happens, it qualifies as criminal extortion, and there are a few actions you should take.

First, mark the email as spam. You can then report the incident to the FBI’s Internet Crime Complaint Center (IC3) and local authorities. Ensure you run a malware scan on your computer or device to be safe. If the scammer shows you they have a password you’re currently using, change that password immediately wherever it’s being used. Remember, these scam messages are designed to scare you, which is why they’re called scareware. Don’t fall for it!

Giveaway Scams

Since some celebrities and online influencers talk about crypto fairly often on their social media accounts, scammers will organize fake giveaways using their names and likenesses to get money from people. They may even respond to the giveaway posts with other fake accounts to make it seem legit.

One of the earliest and most high-profile giveaway scams involved hackers targeting over 100 high-profile, verified accounts on the site formerly known as Twitter and using them to send messages about fake Bitcoin giveaways.

The scam posts will often include screenshots designed to make the giveaway seem real and a link (or even a QR code) to a website where people can go to enter. Once there, you’ll be required to “verify” your crypto wallet address by sending payment. Never trust giveaways that require you to pay anything.

If you receive a message on social media or a messaging app like Telegram asking for crypto, ignore it. Legit companies will never contact you unsolicited to ask for payments or login credentials.

Investment Scams

If someone contacts you with a “once in a lifetime” investment opportunity, you should run the other way. They’ll often claim their company or app is the next big thing and that you can get rich if you get in on the ground floor. They’ll sell you hard on their product and couple that sales pitch with a sense of urgency, then disappear with your money.

Sometimes this scam takes the form of “investment managers” offering to help grow your assets if you hand them over to invest. They’ll set up what they claim is an investment account for your crypto, but you won’t be able to access your money unless you pay them a fee.

Other investment scams in the crypto space operate like pyramid schemes. The scammer will convince you to pay them in crypto for the right to recruit other people into their program, claiming you’ll make even more money once you bring in others. They claim the more you “invest,” the more you’ll make down the line, but all you end up with are broken promises.

Sometimes, a scam company launches a new cryptocurrency coin or token, claiming it solves some critical unmet market needs. They pitch you on their product and ask you to buy into their coin as an investment that will pay off a hundredfold later, then vanish.

When investing, check out the company’s website to see what they do to protect its customers. Be on the lookout for abundant grammatical errors and typos, which can signal a scam. Search for verifiable reviews from public sources. Searching the company name with “review” or “scam” is a good start.

Loader/Load-Up Scams

These brazen scams involve someone asking for your crypto wallet or credit card credentials because they need a higher account limit. In return, the scammer offers a portion of the proceeds they say they’ll make from their investments.

Instead, the victim’s crypto is stolen, and they’re often left holding the bag on fraudulent credit card charges. They “load up” the victim’s account with crypto and then take it all for themselves, leaving the victim responsible for the transactions made with their wallet credentials.

Never provide your credentials to a third party, even if they say you can trust them. If you see this behavior on a legitimate, regulated exchange, report it so they can stop it.

Phishing Scams

Where conventional phishing scams go for your email or banking login credentials, crypto phishing scams try to get the keys to your crypto wallet. These are also called “technical support scams” since the person running them will often pose as tech support to try and get your information.

Representatives from fake companies—or claiming to be from legitimate ones—will contact you and offer to help manage your crypto if you give them your login credentials. They might also say they need remote access to your computer or other device, or want you to send crypto to a suspicious wallet address.

Never provide sensitive information to people who make unsolicited contact, no matter how convincing or urgent they may seem. If they say they’re with a legitimate company, double-check their information. Coinbase, for example, tells people only to accept calls from the help number or email listed on their website.

How to Report Crypto Scams

If you encounter any of these scams or think you’ve been the victim of one, contact the FTC, the Commodity Futures Trading Commission, or the Securities and Exchange Commission.

It’s also a good idea to report scams to the platforms people are operating on. If you see a scammer claiming to represent Gemini, for example, the exchange should know about it. If someone is spreading fake giveaways on X, report it to X.

As with all scams, protecting yourself from crypto-related fraud comes down to keeping your data secure and your eyes open. Remember, no legitimate company will approach you asking for money, and you should never send currency to random strangers either.

If an investment opportunity seems too good to be true, it probably is. And if someone requires you to pay in crypto (or gift cards or via a wire transfer), it’s a scam. Report them, and ignore any further messages.