ForensX Intelligence Services

Common Crypto Scams to Watch Out for: Part 1

What is Cryptocurrency?

Cryptocurrency (or “crypto”) has seen explosive growth since its inception with Bitcoin in 2009. The following year the first financial transaction using Bitcoin was completed when a Florida man negotiated to pay 10,000 BTC for two Papa John's pizzas priced at about $25. One Bitcoin was only worth .04 of a cent. But once it became available on the market its value began to grow crossing the $1 threshold in 2011.


At the time this article was posted, one Bitcoin is worth over $17,000 USD and there are more than 10,000 active cryptocurrencies in circulation.


image showing a hand holding a bitcoin with US currency and credit cards in background


So, what exactly is crypto? Well, it’s a digital currency and only exists electronically, so it must be bought, sold, or traded online or bought at a cryptocurrency ATM. Unlike regular currencies which are regulated by national governments, crypto can circulate without a central bank acting as an authority. People like crypto for many reasons. Quick payments, avoiding bank transaction fees and perhaps its most appealing attribute - promised anonymity.


Crypto can be stored in various ways; on a custodial wallet via crypto exchanges such as and Binance, a software wallet via an extension on your computer or app on your phone such as Metamask, or on a hardware wallet or cold wallet.


Some forms of storing crypto have caused some big financial catastrophes for those who have lost their wallet or password, sent their crypto to the wrong person, or accidentally threw out their external hard drive. It can happen! The most famous case occurring almost 10 years ago in Wales when James Howell, during a house purge, forgot his Bitcoin was on the drive. The estimated worth is $184M. You can read about his latest plan to retrieve it from his regional landfill


But back to those scammers who will go to great lengths to get your crypto. They will:

  • Make promises for big crypto gains or free money
  • Tell you crypto is the only way you can pay for something
  • Ask you to commit to contractual obligations
  • Impersonate a celebrity, employer, government organization or crypto business
  • Build “romantic” relationships with you to gain trust before soft selling their “investment platform”
  • Give you minimal information about the money movement or investment
  • Push multiple transactions through in a day
  • Try to manipulate or extort you

Now let’s delve a little deeper into the top 4 types of scams in the crypto market. Next month, we will explore a few more and give you strategies on how to protect yourself.



1. Phishing Scams

When it comes to crypto, a phishing scam is when a bad actor goes after your personal online wallet information. They’ll rely on a variety of tricks often through a fake email or website to lure you into sharing your private key information.


This key provides access to the funds in your wallet. Once the hackers have it, they steal the crypto in your wallet.


Unlike passwords used for all sorts of online transactions, users only get one unique private key to digital wallets. If it’s stolen, it’s exceedingly difficult to change it. To update a key, you need to create a new wallet.



2. Fake Websites

Fake websites will pose as trading platforms or versions of official crypto wallets to trick you. Their domain name will look and sound similar to legitimate sites.


Fake crypto sites often operate in one of two ways:

  • As a phishing scam: Getting you to enter your crypto wallet's password and recovery phrase and other financial information.
  • Or as a ploy to get you to invest. They may even let you withdraw a small amount of money to gain your confidence. Suddenly your investment is performing well so you decide to purchase more crypto. Later, when you go to withdraw, the site has shut down or denies you access.
  • Don’t forget the fake app! Available for download through Google Play and Apple App Store, these fake apps are quickly found and removed. But not before thousands of people have downloaded them, unfortunately losing money in the process.


3. Investment Schemes

As cryptocurrency investors are typically interested in playing the market, it’s no wonder scams are designed to reward these behaviors.


And there are plenty of ways to do this:

  • You are approached by a fake Investment Manager who claims to have made millions investing in cryptocurrency and promises to grow your money. So, what’s the catch? You have to buy cryptocurrency and transfer it into their online account. The site they direct you to looks legitimate but as we already flagged above it’s a fake. After you log into your account you either lose access to your money or have to pay exorbitant fees to get it back.
    • OR they request an upfront fee. Then instead of making you money, they just keep that fee for themselves. Often, they will try and get your personal information as well, saying it’s to transfer or deposit funds, and then get access to your cryptocurrency.
  • Have you heard of the Pump and Dump? Scammers will promote a coin or token that’s “a great investment”. You may get it in an email blast or see it on social media. Traders and investors are encouraged to buy, often through FOMO (fear of missing out), and if they do, it drives up the price. Once it’s inflated the scammers sell their holdings and crash the value significantly and quickly. It can happen in a matter of minutes.
    • An infamous play on this trick was the Squid coin scam. Banking on the popularity of the Netflix series Squid Games, you could earn crypto by buying tokens for online games and earn more later to exchange for other cryptocurrencies. The price of a Squid token went from 1 cent to $90. Eventually when the trading stopped the money vanished. The scammers made about $3 million from these investors.
  • Other scams promise investors with a great cryptocurrency monetary exchange, sometimes [BL1] even with “additional bitcoin” to sweeten the pot. After you make your deposit, you discover there is no actual exchange. Because crypto uses blockchain for verification and isn’t backed by banks, it’s challenging to find out who the culprit is without legal assistance and a professional crypto tracing analysis.
  • The Ponzi scheme has a gameplan in crypto too. It will pay the earlier investors with the proceeds from new ones. New investors get lured with bitcoin. The scheme runs in circles, since there are no legitimate investments and it’s really about targeting new investors for money.
  • Fake ICOs, or initial coin offerings, rely on investors buying into start-up crypto companies. Typically, early investors are offered a discount on the new crypto coins in exchange for sending existing crypto like bitcoin or another popular cryptocurrency. There have been a few big scams with criminals deceiving investors, even going as far as renting fake offices and creating glossy marketing Ads to appear legit.


4. Impersonators

  • No one can resist a celebrity endorsement, right? Or maybe a DM from Elon Musk? Scammers will pretend to be a celebrity who can make you big money if you send them your cryptocurrency. But celebrities aren’t reaching out to regular people like us and if you click on a link they send or you send crypto to a link via a QR code, say goodbye to your money.
  • How about someone you’ve been chatting with awhile online? Dating sites and apps are notorious for tricksters and your crypto is an optimal target. Usually as part of a long con, that online romantic interest can spend months gaining your trust, until they start to offer advice and opportunities to invest your crypto or money. It’s a scam where you eventually say goodbye to your relationship and your money.
  • Maybe it’s your dream job. Scammers can seem like the best recruiters. They tell you about the perfect opportunity, but it requires cryptocurrency as payment for job training. They can list fake jobs on job sites. These jobs may even be related to finding crypto investors, selling, or mining crypto, or helping convert crypto to cash. But you only get the job if you pay a fee in crypto to get started.
  • Impersonating well-known companies is a favorite ploy. It could be Amazon or Microsoft, or even your bank. Their communications are strategic and come in many forms: text, emails, phone calls, DMs on social media, or you may even get pop-ups on your computer. They will tell you your money or account is at risk, and you need to buy and send crypto to fix it. But it’s a scam. If you reply, call them back, or click on a link, you have just connected with a scammer and have put yourself in a precarious position.
  • Any organization can be used. Scammers will pretend to be the government, police, or a utilities company. They can convince you that you owe money or have a legal problem and your assets have been frozen. You can only address the issue if you buy cryptocurrency and send it to them. And the scam begins with getting your information, access to your wallet or using a QR code to send crypto right into their criminal hands.


hackers are trying to steal your cryptocurrency online


To summarize, crypto scammers are inventive, sophisticated, and relentless. They recognize  weaknesses in the cryptocurrency marketplace;. The lack of authority and monitoring by government and large financial institutions leaves it vulnerable for the taking.


ForensX is a company that works on your side to help track and trace crypto currency transactions and get your money back. We work with financial institutions, insurance companies, private investigators and even individuals who have been wronged in a crypto scam.


Call or email to speak to a ForensX expert investigator today!


You are not alone and we are here to help you.


Come back next month to read Part 2, where we will explore a few more scams and discuss the best way to protect yourself and your crypto.




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Name: ForensX Media
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Last Post: July 11, 2023