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How to Stay Safe from Bitcoin Scams And Frauds in 2024

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Steps to protect yourself from Bitcoin scams and frauds:

  • Verify Sources: Always check the credibility of the platform or person you are dealing with in crypto transactions.
  • Use Secure Networks: Make financial transactions over secure, private networks, not public Wi-Fi.
  • Enable 2FA: Activate two-factor authentication on all digital currency accounts.
  • Monitor Transactions: Regularly check your transaction history for any unauthorized or suspicious activity.
  • Educate Yourself: Stay informed about common cryptocurrency scams and red flags to watch out for.

In the first half of 2023, victims lost $656 million to scams, hacks, and rug pulls in the cryptocurrency space. This alarming figure underscores the urgent need for vigilance when dealing with digital currencies.

This article aims to arm you with crucial knowledge on safeguarding yourself from scams and frauds in the Bitcoin and broader cryptocurrency market. We will equip you with tips and proactive measures to protect your crypto investments.

By securing your assets, we aim to ensure your crypto landscape journey is safe and rewarding.

How do crypto scams and crypto fraud work?

Crypto scams and crypto fraud leverage digital technology to exploit unsuspecting users. Typically, these scams use social engineering and digital platforms to create plausible scenarios designed to steal cryptocurrency, personal data, or both. By understanding these basic mechanisms, users can better spot and avoid potential scams.

What are some common types of Bitcoin scams?

What are some common types of Bitcoin scams?

Bitcoin and the larger cryptocurrency world are fertile ground for scammers looking to exploit the market’s anonymity and lack of regulation.

Here’s a rundown of some common Bitcoin scams.

Scam Type Description Red Flags How to Avoid
Phishing & Fake Websites Cybercriminals create counterfeit websites or emails to trick individuals into divulging sensitive information like private keys. Incorrect URLs, grammatical errors, unsolicited requests for private information. Always verify URLs, don’t click on suspicious links, and never share private keys.
Investment Scams Offering extraordinary returns on crypto investments with little to no risk. Pushy sales tactics, promises of guaranteed returns, and unregistered platforms. Perform diligent research and invest through licensed and reputable exchanges.
Giveaway Scams Enticing users with false promises of free cryptocurrency in return for a small initial contribution. Offers to multiply your crypto that seems too good to be true are often pushed through social media. Disregard offers of free money, especially those requiring an upfront payment.
Man-in-the-Middle (MITM) Attacks Interception of transactions or communications to redirect cryptocurrencies to the scammer’s wallet. Unsecured Wi-Fi networks and any anomalies during a transaction process. Use secured networks for transactions and double-check recipient information.
Fake Exchanges and Wallets Scammers set up fraudulent exchanges or wallets to siphon funds or data from users. Limited history of the platform, too-good-to-be-true rates, and lack of security features. Use well-known and established crypto exchanges and wallets with robust security measures.
Employment Offers and Fraudulent Employees Offering fake job opportunities to gather personal information or funds. Job offers without interviews, demands for payment to apply or to get the job. Verify job postings through official channels and be wary of offers that require payment.
Pump-and-Dump Schemes Inflating the price of a coin by spreading misinformation, then selling off en masse. Sudden price spikes with no supporting news or fundamentals. Avoid making investment decisions based solely on social media hype or sudden price movements.
Guaranteed High Returns Promising risk-free returns that are consistently higher than the market average. Any promise of guaranteed returns or pressure to invest quickly. Remember that all investments carry risk, and avoid any that promise otherwise.

 1. Phishing and fake websites

According to the FBI’s Internet Crime Complaint Center (IC3), the total potential loss from Internet crime was over $10.2 billion in 2022.

Phishing attacks are a significant concern in cryptocurrency. These attacks often target digital wallets and exchange credentials.

A report by Kaspersky indicated that their anti-phishing systems prevented 5 million cryptocurrency-related phishing attacks in 2022, marking a 40% increase compared to the previous year.

Red flags to watch out for:

  • Emails or messages that imitate credible crypto companies asking for sensitive information.
  • Website addresses that mimic genuine platforms but contain slight misspellings or odd domain extensions.

How to avoid them:

  • Confirm the legitimacy of any request by contacting the company through official channels.
  • Utilize browser extensions that flag known phishing sites and verify SSL certificates of financial websites.

2. Investment scams

The Securities and Exchange Commission (SEC) has warned about a significant increase in investment scam complaints related to cryptocurrencies.

According to the SEC-Cebu Extension Office, the number of fraudulent entities and scam groups reported to their office during 2020’s first ten months was 400% higher than the previous year.

These scams often involve aggressive tactics and the promise of low-risk, high-return investments to lure victims. Fraudsters tend to advertise on social media, usually using images of celebrities to promote fake investments.

Red flags to watch out for:

  • Unsolicited investment offers through emails or social media.
  • Guaranteed profits or promises of exponential returns in implausibly short time frames.

How to avoid them:

  • Conduct independent research and due diligence on the investment opportunity.
  • Seek out investment platforms with proper regulatory compliance and established reputations.

3. Fake Giveaway scams

The Federal Trade Commission (FTC) reported that consumers lost more than $80 million to cryptocurrency scams from October 2020 to March 2021. This figure was derived from nearly 7,000 consumer reports about these scams in the last quarter of 2020 and the first quarter of 2021.

While the FTC report does not break down the losses by type of scam, it does note that these scams took various forms. One of them is the giveaway scam.

In a giveaway scam, fraudsters deceive cryptocurrency investors into believing that a major cryptocurrency exchange or celebrity is hosting a giveaway.

The catch is that to participate in the giveaway, you must first send a certain amount of cryptocurrency to a giveaway address. Once the victim sends money to the scammer’s address, there is nothing anyone can do to get it back.

Red flags to watch out for:

  • Social media posts or emails claiming to multiply your crypto if you send a smaller amount first.
  • Use celebrities or well-known crypto community figures to endorse the giveaway without verification.

How to avoid them:

  • Remember that authentic giveaways never require you to send your crypto first.
  • Double-check any alleged celebrity endorsements directly on their verified social media accounts.

4. Man-in-the-Middle (MITM) attack

Man-in-the-middle (MITM) attacks pose a significant threat in the cryptocurrency world. In early 2023, researchers discovered an MITM vulnerability in a popular Ledger hardware crypto wallet application.

This vulnerability allowed hackers to redirect victims’ funds to their wallets by altering cryptocurrency transactions’ destination addresses.

While specific statistics on MITM attacks in the cryptocurrency sector are scarce, it’s clear that these attacks are a growing concern. As the adoption of cryptocurrencies continues to rise, so does the potential for MITM attacks.

Red flags to watch out for:

  • Sudden requests for transaction confirmations or additional payments mid-transaction.
  • Unusual delays or errors during the transaction process on a previously reliable platform.

How to avoid them:

  • Avoid using public Wi-Fi to conduct any cryptocurrency payments.
  • Use a VPN for an added layer of security when trading or accessing your crypto wallet.

5. Fake crypto exchanges and wallets

Scammers create fake cryptocurrency trading platforms or fake versions of official crypto wallets to exploit victims. These counterfeit sites often have similar but slightly different domain names from the legitimate ones, sometimes making it hard for users to tell.

Scammers have turned to creating fake cryptocurrency exchanges and manipulating trading volumes on seemingly reputable exchanges to lure potential investors and fleece them of their funds. These exchanges may harass users, deny crypto withdrawals, charge high fees, or even walk away with your entire investment.

Red flags to watch out for:

  • Exchange or wallet platforms with no verifiable track record or endorsements from the crypto community.
  • Offers zero fees or other benefits that seem significantly better than what’s known to be feasible based on industry standards.

How to avoid them:

  • Look for user testimonials and reviews from trusted community forums.
  • Verify the platform’s history, such as the date of establishment and the team behind it.
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6. Employment offers and fraudulent employees

The Better Business Bureau (BBB) reported that job scams were the “riskiest” of all the ones they tracked in 2018 and 2019, and the numbers have only gone up. Losses reported to the FBI related to employment scams increased by 27% between 2018 and 2020.

These scams often involve aggressive tactics and the promise of low-risk, high-return investments to lure victims. Once you’ve invested, the scammers may act quickly, closing your account and taking your money.

Red flags to watch out for:

  • Jobs requiring upfront investment in cryptocurrency or payment to start.
  • Positions that promise unusually high returns for cryptocurrency payments or recruitment.

How to avoid them:

  • Never provide personal financial information as part of a job application process.
  • Research the company thoroughly and ensure the job offer is listed on the official site.

7. Unregistered platforms

The Commodity Futures Trading Commission (CFTC) has seen a steady rise in unregistered platforms involved in cryptocurrency scams. The CFTC has acted against several platforms for failing to register as futures commission merchants (FCMs) or falsely claiming to be registered.

For instance, in 2023, the CFTC issued orders against operators of three DeFi protocols for offering illegal digital asset derivatives trading.

These unregistered platforms can lead to significant losses for investors. While the exact amount of losses is not known, it’s clear that these scams pose a substantial risk in the cryptocurrency world.

Red flags to watch out for:

  • Platforms that are not registered with any financial authority or regulatory body.
  • Pressure to transfer or invest your crypto quickly without providing clear company details.

How to avoid them:

  • Confirm the registration status of the platform with the relevant regulatory authorities.
  • Take the time to understand the platform’s investment model and seek external advice if necessary.

8. Pump-and-Dump schemes

These schemes involve artificially inflating the price of a particular cryptocurrency through aggressive marketing and promotion, only to later sell off or “dump” the inflated assets at a profit.

A study conducted by researchers Jiahua Xu and Benjamin Livshits at Imperial College London found that pump-and-dump schemes account for about $7 million worth of trading volume per month. These schemes often target smaller, less well-known tokens whose prices are easier to manipulate.

Red flags to watch out for:

  • Sudden, unexplained spikes in a particular coin’s price and trading volume.
  • Social media hype surrounding a coin without any significant news or development.

How to avoid them:

  • Be cautious of tips from forums or social media groups promising inside information on a coin.
  • Research the coin’s fundamentals instead of relying on sudden price movements.

9. Guaranteed high returns

Scams promising guaranteed high returns have tricked numerous investors. They often lure victims with the prospect of quick and substantial profits, a common tactic to deceive individuals into investing in fraudulent schemes.

In 2023 alone, the FBI’s Internet Crime Complaint Center (IC3) reported a staggering $4.57 billion loss due to investment fraud. In cryptocurrency, scammers promote the opportunity on social media, presenting themselves as experienced crypto traders with secret insider knowledge.

Red flags to watch out for:

  • Promises of high returns on your crypto investment with no risk.
  • Investment opportunities that claim “this is not a scam” or use high-pressure sales tactics.

How to avoid them:

  • Understand that all investments carry risk without guarantees, especially in the volatile crypto market.
  • Be sceptical of anyone promising guaranteed returns and report such offers to the authorities.

By arming yourself with this knowledge and maintaining vigilance, you can protect your investments from these all-too-common Bitcoin scams. Always remember, if an opportunity seems too good to be true, it probably is.

How do you identify a crypto scam?

How do you identify a crypto scam?

Unfortunately, crypto scams are becoming more commonplace in the digital world. Identifying them quickly is key to protecting your assets.

Recognizing crypto scams often starts with identifying a phishing scam, which can appear as genuine requests from a reputable crypto exchange. Crypto scams also prey on the inexperience of new users, promising guaranteed returns without any risk.

Here are some general guidelines to help you spot potential scams and safeguard your investments.

  • Too-Good-to-Be-True Offers: Be wary of anyone promising guaranteed high returns or risk-free investments. In the world of crypto, such promises are nearly always false.
  • Unverified Sources: Scammers often use social media and emails to reach potential victims. If you receive unsolicited investment advice or requests for crypto details, proceed cautiously.
  • Unusual Payment Requests: Any legitimate crypto operation won’t ask for upfront payments or fees to access your funds or to participate in a reward program.
  • Pressure to Act Quickly: If you’re being rushed into making a decision or transaction, take a step back. Scammers often try to create a false sense of urgency.
  • Vague Details: Scammers are unclear about how their “investment opportunities” work. If you can’t get precise details, it’s a strong sign something isn’t right.

How to prevent cryptocurrency scams

Staying one step ahead of scammers requires knowledge and the implementation of best practices for cybersecurity.

Educate yourself on common scams

The first line of defence against cryptocurrency scams is education. Familiarize yourself with the most common types of scams. For example, protecting your crypto assets means being vigilant about phishing scams, often targeting login information through fake security alerts.

  • Stay informed about the latest scam tactics through credible financial news sources.
  • Attend webinars, follow reputable crypto advisors, and participate in community forums.

Use trusted platforms and wallets

Not all platforms are created equal when it comes to security and reliability. It’s crucial to use trusted, well-known crypto exchanges and wallets.

  • Conduct thorough research and read reviews before selecting a platform to trade or store your cryptocurrency.
  • Consider using services like swissmoney, which provide secure wallets and have measures in place to safeguard against unauthorized transactions.

Be vigilant with communications

Phishing scams are prevalent and can be very convincing. Always be cautious with unsolicited communications. To safeguard against crypto scammers, never share personal information and always verify the sender’s credentials.

  • Never click on links or download attachments from emails or messages you weren’t expecting.
  • Verify the authenticity of any communication by contacting the company through official channels.

Secure your private information

Your private keys and other sensitive information are the keys to your digital kingdom, and protecting them is paramount.

  • Never share your keys, two-factor authentication codes, or personal security details.
  • Use hardware wallets or secure software options to store sensitive information.

Also, before you send cryptocurrency, confirm the recipient’s address to protect against common phishing scams designed to intercept digital funds. By following these steps and maintaining a proactive approach to security, you can significantly reduce the risk of falling victim to a cryptocurrency scam.

📚Read more: Safest Ways to Store Your Cryptocurrency

What security measures protect Bitcoin?

Bitcoin, the first and most well-known digital currency, incorporates a variety of security measures to ensure the safety of transactions and to protect against fraud and theft.

Robust encryption techniques

Bitcoin security is grounded in encryption, utilizing cryptographic techniques that secure transactions and control the creation of new units.

  • Bitcoin uses the SHA-256 hashing algorithm, creating a secure and impenetrable environment.
  • Private and public keys ensure that only the owner of the Bitcoin can access their funds.

Decentralized network

The decentralized nature of Bitcoin is a bulwark against many crypto scams, including some Ponzi schemes that rely on centralized control. Its blockchain adds another layer of security, distributing data across a global network.

  • The distributed ledger technology means no single point of failure can compromise the network.
  • Bitcoin’s network requires consensus for verification, making fraudulent transactions extremely difficult.

Frequent software updates

The Bitcoin network is maintained by a community of developers who continuously work to improve security protocols.

  • Regular updates address vulnerabilities and enhance the network’s defences against potential attacks.
  • Open-source code allows for transparency and collective scrutiny, fostering a more secure ecosystem.

Multi-Factor Authentication (MFA)

Most platforms that manage Bitcoin, such as exchanges and wallets, implement MFA, which adds a security step when accessing Bitcoin funds.

  • MFA requires more than one authentication method to verify the user’s identity, often combining something the user knows (like a password) with something they have (like a smartphone).
  • This reduces the risk of unauthorized access, even if one security component is compromised.

By employing these security measures, Bitcoin creates a solid defence against many of the threats present in the digital world. However, while the blockchain technology underlying Bitcoin is secure, your vigilance is crucial to avoid falling prey to a crypto scam.

Users can enhance these protections by adopting personal security practices, such as using secure wallets, enabling MFA on their accounts, and being vigilant about online phishing attempts.

📚Read more: How to Secure Your Crypto Wallet Effectively

📚Related: Cryptocurrency Security

How and where do you report Bitcoin scams?

How and where do you report Bitcoin scams?

If you encounter a crypto scam or fall victim to blackmail and extortion scams involving Bitcoin, report it immediately to the appropriate authorities.

Reporting such incidents not only helps you possibly recover your losses but also assists in preventing future scams.

Internet Crime Complaint Center (IC3)

The IC3 is a reliable place to file a complaint for scams involving Bitcoin and other cryptocurrencies.

  1. Visit the IC3’s official website and provide detailed information about the scam.
  2. Include transaction details, communication records, and the scammer’s identity (if known).
  3. The IC3 analyzes the complaint and forwards it to relevant federal, state, or local law enforcement.
  4. You will receive a complaint ID and password to keep track of your complaint’s status.

Federal Trade Commission (FTC)

The FTC also accepts reports regarding Bitcoin scams through its consumer information portal.

  1. Go to the FTC’s website and navigate to the consumer complaint section.
  2. Fill out the form with specifics about the scam, including any correspondence and financial transactions.
  3. The information is entered into a secure database and may be used for investigations.
  4. The FTC also provides resources and assistance to scam victims.

📚Related: How to Recover Stolen Cryptocurrency

Commodity Futures Trading Commission (CFTC)

If the scam involves cryptocurrency derivatives or commodities, the CFTC is the appropriate agency.

  1. Submit a tip or complaint to the CFTC using their online Whistleblower form.
  2. Provide as much detailed information as possible to aid in the investigation.
  3. The CFTC reviews submissions and takes action if the Commodity Exchange Act or CFTC regulations are violated.
  4. Informants may be eligible for financial rewards if the information leads to a successful enforcement action.

Local law enforcement and financial institutions

In addition, local law enforcement and financial institutions can be informed about Bitcoin scams.

  1. Report the incident to your local police, especially if the scam involves a local actor or service.
  2. Contact your bank or financial service provider if the scam involves unauthorized transactions from your account.
  3. Local authorities may initiate their investigation and possibly collaborate with federal agencies.
  4. Banks and financial institutions can take steps to secure your accounts and might assist in recovering funds.

Knowing where and how to report Bitcoin scams is an essential part of your defence against fraud in the cryptocurrency market. Prompt reporting can increase the chances of catching the perpetrators and help recover lost assets.

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Our platform is designed for optimal security and ease of use, providing peace of mind for novice and experienced crypto users.

The swissmoney platform has these security measures implemented:

  • Your crypto is safeguarded with cutting-edge encryption, protecting it from prying eyes.
  • Every account is protected with two-factor authentication, fortifying your assets against unauthorized access.
  • The majority of assets are stored offline, offering an additional layer of protection.

With swissmoney, you get a streamlined experience managing your crypto and fiat currencies, with security and simplicity at the forefront.

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As the landscape of digital currency continues to expand, the importance of vigilance against Bitcoin scams cannot be overstated.

The key to safeguarding your assets lies in education, cautious practice, and secure platforms like swissmoney.

By being aware of the common scams detailed in this article and following the best practices for security, you stand the best chance of keeping your investments safe.

Remember, the crypto world, while promising, is still fraught with potential pitfalls. Approach each transaction with scrutiny, and never hesitate to question the legitimacy of sudden or unexpected opportunities.


What is a Bitcoin scam?

A Bitcoin scam is a fraudulent scheme designed to deceive individuals or organizations into withdrawing their cryptocurrency. It often involves promises of quick profits, phishing attacks, or other deceptive practices.

How do you spot a Bitcoin scammer?

A Bitcoin scammer typically uses pressure tactics, promises of outsized returns, unsolicited investment advice, or asks for private keys. They may also use fake social media profiles and phishing emails to lure victims.

How do you identify a legitimate Bitcoin transaction?

Legitimate Bitcoin transactions will occur through secure, well-known platforms, require standard network confirmations, and never ask for private keys. They should be verifiable on the blockchain with a transaction ID.

What do you do if you suspect you have been scammed with Bitcoin?

Immediately cease all communication with the scammer, secure your remaining assets, and report the scam to authorities like the Internet Crime Complaint Center, the Federal Trade Commission, and local law enforcement.

How do I stop Bitcoin scams?

Educate yourself about common scams, use secure and reputable cryptocurrency services, enable multi-factor authentication, and always double-check before sending funds or revealing personal information.

Is scammed crypto recoverable?

Recovering scammed crypto can be challenging due to the irreversible nature of blockchain transactions. However, if you act quickly and report to authorities, there may be a chance to trace and recover your assets, depending on the situation.

Read More:

Renata Pacheco

Renata is a seasoned financial market expert with over 30 years of experience in journalism and content creation, primarily focusing on the financial market. Throughout her extensive career, she has worked with leading financial institutions such as Citibank Brasil, Fiserv in Latin America, and other notable financial entities, further honing her expertise and credibility in the sector.

For more than six years, Renata has also been writing for the crypto market, collaborating with financial publications in Brazil, the US, and Europe. Her deep understanding and extensive knowledge make her a respected voice in the industry, appreciated for her ability to demystify complex financial concepts and market trends. This skill enables her to make financial insights accessible to a wide audience, from novice investors to seasoned professionals.

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Please be advised that the information presented in this article is intended for general informational purposes only. It should not be construed as professional advice from swissmoney. It is important to note that swissmoney does not act as a financial adviser, and individuals are strongly encouraged to seek independent advice from qualified legal, financial, or accounting professionals before making any decisions related to cryptocurrency investments. Furthermore, investing in cryptocurrency assets carries inherent risks, and individuals should be aware that they may potentially lose all of their invested capital.
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