Types of Crypto Scams and How to Avoid Them

Bitsgap - 13 Jun 2024

According to FBI statistics, financial damages from cryptocurrency fraud escalated drastically in 2023, inflicting severe losses on investors. Approximately $3.94 billion was stolen through crypto scams, marking a stunning 53% increase over the $2.57 billion lost in 2022. American victims alone accounted for $1.56 billion of the 2023 theft total.

The Better Business Bureau attributed the rampant growth in cryptocrime to fraudsters finding novel, more manipulative methods to deceive consumers. Scammers demonstrated heightened creativity and technical sophistication in pilfering funds from unsuspecting traders and holders this past year. So it’s not just the hacks you should be aware of but a plethora of other types of fraud.

As fraudsters have honed remarkably cunning and persistent tactics, exercising caution is an absolute must in this landscape. For example, nefarious actors may falsely claim to represent a legitimate company like Bitsgap to ensnare targets. How do you spot such scams, report, and avoid them?

Below are among the most reported scams to watch for, though new ploys surface regularly. Remember that bad actors can come up with some new elaborate trickery, so it’s a good rule of thumb to remember that if something sounds too good or suspicious to be true, it probably is.

What Is a Crypto Scam?

A crypto scam involves fraudulent schemes designed to deceive individuals or groups into investing, transferring, or giving away their cryptocurrency or personal information. Similarly, a crypto scammer is an individual or group that engages in deceptive practices to steal cryptocurrency or sensitive information from others.

Below are just a handful of tactics that crypto criminals deploy to separate innocent investors from their funds:

Creating Fake Websites or Apps: Developing fraudulent platforms that mimic legitimate crypto services to deceive users into entering their personal information or transferring funds.
Impersonating Reputable Figures: Pretending to be well-known individuals or companies in the cryptocurrency space to gain trust and solicit investments or donations.
Running Phishing Campaigns: Sending fraudulent messages or setting up fake websites to trick users into revealing their private keys or login credentials.
Conducting Fake ICOs: Launching bogus cryptocurrency projects and collecting investments under false pretenses, then disappearing with the funds.
Manipulating Markets: Engaging in pump and dump schemes to artificially inflate the price of a cryptocurrency and then selling off their holdings at a profit, leaving other investors with losses.

Crypto scammers are often skilled in exploiting the lack of regulation and the relative anonymity provided by cryptocurrencies to carry out their fraudulent activities. But while crypto's current state invites targeted exploits, awareness curbs vulnerability. That’s why it’s so important to DYOR while always staying vigilant. By researching projects thoroughly, enabling security features, and confirming details before transactions, you can spot inconsistencies early and avoid traps. But more on that later. Now, let’s explore what types of crypto scams there are apart from the ones already mentioned above.

Types of Cryptocurrency Scams

Cryptocurrency scams are becoming increasingly sophisticated, targeting both novice and experienced investors. Understanding the various types of scams can help you safeguard your investments and personal information. Here are some of the most common cryptocurrency scams:

Bitcoin Bonus Scams: These scams promise free Bitcoin or other cryptocurrencies in exchange for a small initial payment. Scammers often use fake social media accounts or websites, claiming to double or triple your investment. Once you send your cryptocurrency, you receive nothing in return.
Fake Cryptocurrency Websites: Scammers create fraudulent websites that closely resemble legitimate cryptocurrency exchanges, crypto trading platforms, or ICO (Initial Coin Offering) sites. These sites often lure users with attractive investment opportunities or exclusive deals. Once users enter their private keys or transfer funds, the scammers steal their assets.
Impersonation: Impersonation scams involve fraudsters posing as notable figures in the cryptocurrency space or as support representatives from well-known exchanges or platforms. They often contact victims through social media, email, or direct messages, asking for personal information or requesting fund transfers.
Phishing: Phishing scams use deceitful emails, messages, or websites to trick users into revealing their private keys, login credentials, or other sensitive information. These scams often appear legitimate but are designed to steal your assets once you provide the requested information.
Ponzi Schemes: Ponzi schemes promise high returns with little to no risk by paying earlier investors with the funds from newer investors. These schemes eventually collapse when new investments stop coming in, leaving later investors with significant losses.
Fake ICOs: Fraudsters launch fake ICOs, promoting non-existent or fraudulent cryptocurrency projects to attract investments. Once they raise enough funds, they disappear, leaving investors with worthless tokens and no recourse for recovery.
Malware: Malware scams involve malicious software designed to gain access to your cryptocurrency wallet or private keys. This malware can be distributed through fake apps, email attachments, or compromised websites. Once installed, it can steal your cryptocurrency without your knowledge.
Pump and Dump: Pump and dump schemes involve artificially inflating the price of a cryptocurrency through misleading statements or coordinated buying. Once the price reaches a peak, the scammers sell off their holdings, causing the price to crash and leaving other investors with devalued assets.
Social Media Scams: Scammers use social media platforms to spread false information, hype up certain cryptocurrencies, or promote fake giveaways. They may impersonate well-known figures or create fake accounts to gain trust and trick users into sending their cryptocurrency.
Cloud Mining Scams: Cloud mining scams offer users the opportunity to rent mining hardware and earn a share of the profits. In reality, these services often do not own any mining equipment and simply take users' money without providing any returns.
Exit Scams: Exit scams occur when the operators of a cryptocurrency exchange or project suddenly shut down and disappear with users' funds. These scams are particularly devastating because they often affect a large number of people.
Rug Pulls: Rug pulls are a type of scam where developers create a new cryptocurrency or DeFi (Decentralized Finance) project, attract investments, and then abruptly withdraw all the funds, leaving investors with worthless tokens.
Fake Airdrops: Scammers promote fake airdrops, claiming to distribute free tokens to users who share personal information or send a small amount of cryptocurrency. In reality, these tokens never arrive, and the scammers steal the users' funds or data.

Being aware of the different types of cryptocurrency scams is essential for safeguarding your investments and personal information. By studying these use cases in scammers’ emerging playbook, we deny them the element of surprise — spotting subtle red flags early before traps spring shut. And by consolidating insights across the community, we collectively upgrade security protocols faster than thieves invent workarounds. As the ecosystem professionalizes, best practices will formalize — but for now, the responsibility falls on individuals, that is — you.

How to Spot a Bitcoin Scammer

In this section, we’ll share advice on how to spot a Bitcoin scammer to protect your investments and personal information. So, here are some key signs to watch out for:

Unrealistic Promises of High Returns: Scammers often lure victims with promises of guaranteed high returns on investments with little or no risk. If an offer sounds too good to be true, it probably is. Legitimate investments come with inherent risks, and no one can guarantee consistent high returns.
Pressure to Act Quickly: Bitcoin scammers frequently create a sense of urgency, pressuring you to act quickly without giving you time to think or do proper research. They might claim that the offer is available for a limited time or that prices are about to skyrocket. Always take your time to verify the legitimacy of any investment opportunity.
Lack of Transparency: Legitimate companies and projects provide clear and transparent information about their team, business model, and plans. Be wary of any investment opportunity that lacks detailed information or has anonymous or unverified team members.
Unsolicited Offers: Be cautious of unsolicited offers received via email, social media, or messaging apps. Scammers often reach out to potential victims with enticing offers or fake investment opportunities. Always verify the source and authenticity of any unsolicited communication.
Phishing Attempts: Phishing scams involve fraudulent emails, messages, or websites designed to steal your personal information or private keys. Look for red flags such as misspellings, generic greetings, and suspicious links. Always double-check URLs and ensure you are on the official website before entering any sensitive information.
Fake Endorsements: Scammers often claim endorsements from well-known celebrities, business leaders, or companies to gain credibility. Verify any endorsements through official channels and be skeptical of any investment opportunity that relies heavily on celebrity endorsements.
Requests for Personal Information or Private Keys: Legitimate investments and platforms will never ask for your private keys or sensitive personal information. Be extremely cautious if you are asked to share this information, as it is a common tactic used by scammers to gain access to your funds.
Promises of Free Bitcoins: Scammers may promise free Bitcoins or other cryptocurrencies in exchange for a small initial payment or personal information. These "Bitcoin bonus" scams are designed to trick you into sending cryptocurrency or revealing your private keys.
Poorly Designed Websites or Apps: Scam websites and apps often have poor design, grammatical errors, and lack professionalism. Be wary of platforms that seem hastily put together or have inconsistencies in their content. Always use well-known and reputable exchanges and wallets.
Dubious Investment Schemes: Be cautious of investment schemes that sound complicated or use jargon to confuse you. Ponzi schemes, fake ICOs, and cloud mining scams often use technical language to appear legitimate while hiding their true intentions.

Bitcoin scams are unfortunately common, but with vigilance and critical thinking, investors can avoid falling victim. It's essential to thoroughly research any crypto-related offers, platforms, and representatives you encounter. View any unsolicited proposals, investment "guarantees," or proposals that sound too good to be true with intense skepticism. Scammers often use these tactics to ensnare unsuspecting crypto buyers and traders. By staying informed on common crypto scams and exercising caution around where you trade and who you work with, you can steer clear of fraudsters. There are many trustworthy companies in this space, but due diligence is a must.

Bitcoin Scammer List

One critical precaution all cryptocurrency investors should take is learning how to identify potential scams. Thankfully, several valuable resources exist that compile and update lists of known bitcoin fraudsters, sketchy schemes, and suspicious activity. Here’s where you can look your next bitcoin scammer up:

Bitcoin Scam Database Websites

BitcoinAbuse: This site allows users to report and search for Bitcoin addresses associated with scams, ransomware, and other illicit activities.
BadBitcoin: A comprehensive list of known scam sites, fake exchanges, and fraudulent investment platforms.

Social Media and Forums

Reddit: Subreddits like r/BitcoinScams and r/CryptoScams often discuss and expose ongoing scams and fraudulent actors.
Twitter: Following accounts dedicated to cybersecurity and cryptocurrency can help you stay updated on new scams. Hashtags like #BitcoinScam and #CryptoScam can also be useful.

Official Exchange Resources

Many reputable cryptocurrency exchanges maintain their own lists of known scam addresses and entities. Check the support or security sections of exchanges like Coinbase, Binance, and Kraken for scam alerts and warnings.

Crypto News Websites

Cointelegraph: Regularly publishes articles on recent scams and fraudulent activities in the cryptocurrency space.
Coindesk: Another reliable source for news on cryptocurrency scams and security issues.

Blockchain Explorers

Etherscan: While primarily for Ethereum, it also lists known scam addresses and suspicious activities.
Blockchain.info: Can help you track Bitcoin transactions and identify suspicious addresses.

Cybersecurity Websites

Kaspersky Lab: Offers reports and alerts on cryptocurrency scams and security threats.
Symantec: Provides insights into different types of cryptocurrency frauds and how to avoid them.

Government and Regulatory Bodies

Federal Trade Commission (FTC): Offers warnings and information about cryptocurrency scams.
Securities and Exchange Commission (SEC): Frequently updates its site with investor alerts and warnings about fraudulent practices in the cryptocurrency market.

How to Get Bitcoin Back from Scammer

Losing money in a Bitcoin scam is extremely frustrating and upsetting. While cryptocurrencies pose unique challenges for tracing and recovering stolen funds due to their pseudonymous design, victims are not entirely helpless. There are several strategies you should try, which in some cases have enabled scam targets to rescue all or part of their lost investment:

Contact the Exchange or Wallet Provider

If the scammer’s Bitcoin address is associated with a known exchange or wallet service, reach out to their support team. Provide all relevant details, such as transaction IDs, messages from the scammer, and any other evidence you have. Some exchanges have measures in place to flag and freeze suspicious accounts.

Report to Authorities

Filing a report with local law enforcement or cybercrime units can increase the chances of recovering your funds. Provide them with all available information, including transaction IDs, communication with the scammer, and any identifying details. Agencies like the FBI’s Internet Crime Complaint Center (IC3) in the United States or Europol in Europe can be helpful.

Use Blockchain Analysis Tools

There are specialized blockchain analysis companies that track and analyze cryptocurrency transactions. These companies can sometimes trace the movement of your stolen Bitcoin and identify exchanges where the funds are sent. Examples include:

Hire a Professional Recovery Service

Some companies and legal firms specialize in cryptocurrency recovery. Be cautious, as this field can also attract scammers. Ensure you choose a reputable service with verified success stories and legitimate credentials.

Alert the Crypto Community

Post details of the scam and the scammer’s Bitcoin address on forums like BitcoinTalk, Reddit (e.g., r/BitcoinScams), and social media platforms. This can help warn others and may attract advice or assistance from community members.

Report to Scam Databases

Submit the scammer’s details to scam databases like:

These platforms compile reports and can help in tracking down the scammer.

Monitor the Scammer’s Address

Use blockchain explorers like Blockchain.info or Blockchair to monitor the scammer’s address. If the stolen Bitcoin is moved to an exchange, you may be able to notify the exchange and take action.

Seek Legal Advice

Consult a lawyer with experience in cryptocurrency and cybercrime. They can provide guidance on the best course of action and help you navigate the legal process of recovering your funds.

Ultimately, don’t despair — with determination and the right help, it may be possible to reclaim some or all of your funds. Time is of the essence — contacting authorities, legal experts, and analysis firms quickly can increase the likelihood of tracing your coins. Using multi-pronged strategies in parallel rather than sequentially boosts success rates as well.

But while one should remain hopeful, it's also vital to prevent repeat incidents by learning to spot red flags. Continually educate yourself on the latest cryptocurrency fraud tactics and best security practices.

Types of Crypto Fraud Reported By Bitsgap Users

Fake Sites, Emails, Links, Apps, and Accounts

Is someone writing to you from what seems at first sight like a legit Bitsgap account? Offering big rewards for an easy task? Asking for your private information? Urging you to follow a link?

Hold on a minute and check a few things first, as it’s most probably a scammer who’s out there for your money or information.

In an attempt to trick you into sending funds or disclosing information, scammers can often create fake versions of popular wallets or websites that look very similar to official websites (for example, payouts.bitsgap.com, bitsgapbot.com, etc.). The same goes for emails.

To avoid falling into a trap, pay attention to any links you follow or emails you receive. For example, Bitsgap’s official website is bitsgap.com, and all email addresses we sent are from the bitsgap.com domain. We’ll never email you from another business domain, especially gmail.com or yahoo.com.

Bitsgap strongly encourages you to follow our official channels to stay up to date and receive help from a legitimate representative:

Fake Websites and Apps as a Special Kind of Fraud

Last year, we detected, investigated, and stopped multiple phishing attempts both with fake websites shamelessly promoted with GoogleAds (Pic. 1) and fake mobile applications in Google Play Store.

Even though we took all possible steps to eradicate those fake websites and apps, some users still fell victim. We not only notified those users but also reset their passwords, urged them to issue new encrypted API keys, and doubled our security measures to prevent further attacks. So that you don’t fall into similar traps, please make sure you do the following:

Always check if you're accessing https://bitsgap.com when you log in to our platform;
Never download any unauthorized apps from either Google Play Store or iOS App Store — Bitsgap doesn’t have a mobile application;
Enable 2FA authentication or change your login method to Google or Facebook;
Never share your Bitsgap credentials or API keys with anyone.

By following these simple steps, you’ll make sure you’ll never fall prey to phishing attempts.

Fake Support Messages

Scammers can often claim to be support team members. Fake support reps will send you messages that could appear both legitimate and helpful but are neither of those things. It’s crucial to stay on high alert and report any suspicious interactions to our support team at support@bitsgap.com

Message 1: “There’s a Huge Problem; Let Us Log in and Fix It Now.”

A similar message might read: "This is Bitsgap technical support. Your API key is not working properly. The bots you set are issuing incorrect orders. To avoid further losses, urgently send us your exchange login and password to stop the bot on the exchange page."

Scammers frequently employ high-pressure tactics for you to act quickly — by promising high returns, intimidating, or using manipulative talk. The best thing to do in such cases is to take your time, do a bit of digging, reach out to our support team at an established channel, and ignore the message completely.

The Bitsgap support team will never ask you for your login, password, or credit card information, and we strongly advise you against sharing such information with strangers, whoever they claim to be.

Message 2: “Oh No! You’ve Run Out of Bots. Let Us Upgrade You to the Pro Plan”

A similar message might read: “Your membership has expired, please pay us to get your access back.”

After you choose a plan on Bitsgap, you sign up and pay for it. That’s all. Every other scenario is highly unlikely. If you’d like to change your plan, you’re welcome to do so without support staff on the Manage plans page.

The Bitsgap employees will never ask you to transfer money for additional services like extending memberships, fixing bugs, or altering the settings of your running bots.

Bitsgap also doesn’t provide investment advice, so beware of those trying to tell you otherwise.

Message 3: “You Asked a Question in the Chat. How Can I Help?”

If after you ask a question in a legit Bitsgap chat, someone contacts you via a direct message offering a helping hand, it’s best to be skeptical.

Social engineering scams are rising, so be careful with anyone contacting you via private channels.

Scammers work subtly and may not even ask you for account passwords immediately. However, they will use various deceptive tactics to coax you into revealing your personal information that can be used for an attack later.

We will never send a private message first!

So, please do not share data with anyone whose legitimacy you have not personally verified. If in doubt, please contact our customer service and confirm that you are dealing with a genuine member of the Bitsgap team.

Bistgap provides customer support services only via LiveChat on bitsgap.com, at support@bitsgap.com email, or in the Bistgap chat via an official representative.

Message 4: “Please Grant This App Access to Your Account.”

If you follow links that originate from a suspicious source and lead to Google-powered platforms, you may unwittingly grant access to your account to third parties.

Those windows typically appear automatically asking you to confirm your identity (by providing your Google account username and password) and allow access to your account to third-party applications.

So, it’s best to be careful and check several times which links you follow, where they originate, and whom you’re actually letting into your account.

Occasionally, our staff will ask you to rate the support team by giving you a link to Google Reviews. Unless you’re dealing with a genuine member of our staff, it’s best to avoid following any such links and granting access to your account.

Message 5: “You’ve Won!”

Scammers often promise easy rewards like free cash or giveaways and create fake images of celebrities or companies.

This way, scammers will contact you pretending to act on Bitsgap’s account and urge you to follow a link to redeem cash or claim a gift. By following the link, you end up on a fake website that will ask you to enter your personal information.

Bitsgap always informs about bonuses or rewards well in advance on its official channels and typically notifies users by email that is always sent from the bitsgap.com domain.

If you believe you’ve missed such an email, and there indeed was a giveaway, reach out to the support team directly at support@bitsgap.com, and we’ll see what we can do!

Bitsgap’s Anti-Scam Checklist: How to Spot and Avoid a Scam

Scammers often pretend to be support team representatives to trick you into parting with your funds or revealing data.

Common reasons that scammers use to contact you on behalf of Bitsgap are:

Activating bots in your account
Enabling the Smart Trade Terminal
Running an automated bot setup
Extending membership or switching to a different plan
Sending a private message to help you solve the issue raised in a public chat
Granting access to your account to a third-party app
Redeeming gifts, giveaways, free cash, and so on

Commonly used pretexting and impersonating tactics are:

Using a legit user “Full name” or an official-sounding name
Using a misspelled ”username” (e.g., bitgapSupport, bitsgpaBot, SmokCrypto, SmokyCrytpo, etc)
Using "Bio" or any other field to store a real legit “username”
Sharing a link with a misspelled or slightly different website name (e.g., bistgap.com, bitsgapbot.com)

What to do?

Take extra care in validating who you are talking to
Contact official Bitsgap support if in doubt
Do not provide personal information (logins and passwords) to strangers
Never send money to anyone

You can get any help from the official Bitsgap support team at support@bitsgap.com.

Conclusions

The cryptocurrency rading ecosystem unfortunately attracts unscrupulous fraudsters, constantly probing for opportunities to exploit others for financial gain. As exciting as crypto investing can be, it is critical to approach interactions and offers attentively and skeptically to avoid traps.

Maintaining robust personal security precautions provides the best defense. Never share personal data or account access unless certain of the recipient’s legitimacy. Double-check everything, and leverage official communication channels to verify questionable requests.

With cybercriminals working relentlessly to craft ever-more devious scams, no guide can cover every eventuality. We want to hear from you about any dubious activities not highlighted here or new approaches you’ve found helpful for staying safe. Together we can promote greater awareness of the crypto security challenges still unfolding while still reaping the incredible innovations this technology offers.