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Be aware of fraud

Have you ever wondered what the most common crypto scams are and how to avoid them? Our “Hello Crypto Safety” series analyses trends and shares best practices to stay safe from these attacks.

This episode focuses on frauds, a type of scam that can be particularly challenging to detect.

During a crypto fraud, the scammer lures their victim either to have them:

  • Provide personal information associated with login information. Scammers use this login information to sign transactions and transfer funds on the victim’s behalf.
  • Transfer crypto funds directly.

The scammer can lure their victim into pretending they are someone they are not, promising fake returns, and pretending they are associated with a fake project.

What are the different types of fraud?

Phishing Scam

Website phishing scam

A website phishing scam occurs when the scammer uses a fake website, often impersonating an actual crypto project, exchange, or organization, tricking users into providing personal information associated with login information.

NFT/ token Airdrop scam

An NFT/ token airdrop scam occurs when the scammer sends fake NFT/tokens in mass to a user, hoping they will visit a phishing website. On this phishing website, the victim is tricked into providing log-in information that the scammer will use to gain control over their account and sign transactions on their behalf.

Email phishing scam

An email phishing scam occurs when the phish is sent via email. The scammer may, for example, impersonate a project or company via email and ask for log-in information or tell the user they need to upgrade in the hope they will download malicious software.

Phone text phishing scam

A phone text phishing scam occurs when the phish is sent via text, often impersonating an organization.

Telegram phishing scam

A Telegram phishing scam occurs when the phish is sent via a malicious Telegram account, often impersonating an organization.

Discord phishing scam

A discord phishing scam occurs when the phish is sent via Discord, often impersonating an organization.

Employment phishing scam

An employment phishing scam occurs when scammers impersonate recruiters with fake job offers, actively seeking job hunters to steal cryptocurrency and personal information.

Technical support phishing scam

A technical phishing scam occurs when scammers set up scam customer support phone lines and impersonate organizations. They then make false claims to manipulate their target into providing personal information that will be used for fraudulent purposes.

Impersonation Scam

An impersonation scam occurs when the scammer pretends to be someone they are not - a celebrity, an established investor - or to be associated with an organization - such as an NGO or a project - when they are not. The goal is to have the victim invest with them or donate money to them directly - instead of phishing them to visit a malicious website or download malicious software.

Ukraine donation scam

A Ukraine donation Scam occurs when scammers pretend to be an NGO supporting Ukraine hoping the victim will donate crypto funds.

Nigerian Prince-type scam

Nigerian Prince-type scam occurs when a scammer pretends to be someone from overseas who has a fortune but needs help for a “huge” investment opportunity they cannot get out of the country without a victim’s help. The scammer promises a share in this fake investment opportunity.

Romance Scam

A Romance scam occurs when the scammer uses a fake identity and gains the victim’s affection to have them invest in a fraudulent scheme or transfer funds to them.

Pig Butchering scam

A Pig butchering scam occurs when the scammer stays in constant contact to build a relationship with the victim over time to have them invest in fake projects or transfer funds before they run away. The scammer tries to drain as much money out of the victim as possible, often using fake investment sites showing large fake profits and social engineering, such as intimidation via claims of needing to pay taxes.

Investment scams

Fake project scam

A Fake project scam occurs when the scammer pretends to be building a fake project and demands investments.

Rug pulls scams

A rug pull scam occurs when an individual or group deletes their online footprint after accepting investor funds.

Other fake project scams

Fake returns scam

A Fake return scam occurs when the scammer promises fake returns to convince their victim to invest. The scammer can lure their victim by:

Payout scam

  • Promising fake payments - payout scam or load-up scam

Ponzi Scheme

  • Faking returns by paying profits to earlier investors with funds from more recent investors - the Ponzi scheme

Pump and dump scam

  • Fraudulently and artificially inflate a cryptocurrency's price, such as during a pump-and-dump scam - using misleading information or other techniques.

Tax/fee scam

A tax/fee scam occurs when the scammer tells the victim they need to pay taxes to withdraw funds, to have the victim transfer additional funds, and then runs away.

An advance-fee scam

An advance-fee scam occurs when the scammer asks the victim to pay cryptos upfront to receive a good/service and then runs away.

Asset recovery scam

An asset recovery scam occurs when the scammer pretends to be a legitimate investigative firm that can help the victim of a scam to recover their funds when they cannot. They often ask for payments upfront and run away with the money.

How do frauds occur?

1- Fraudsters will most often cold reach victims on social media platforms, such as Instagram, Facebook, Discord groups, Twitter, and Reddit or Whastapp.

For romance scams specifically, fraudsters most often reach out on dating apps.

2- Fraudsters convince the victim to invest by:

  • advertising “get rich quick crypto investments” immediately and use artificial methods to give the illusion that the investment will provide great returns. They may use a fake established investor identity or logo, publish fake reviews of users, promise fake payments, and start paying a small initial profit to convince the victim to invest more. The fraudsters are actually using the money of earlier investors to pay out a small amount. Fraudsters may also artificially inflate the price of a cryptocurrency, using other accounts to invest in their fake project or website.
  • using a fake identity to pretend they are linked to an established investment firm, NGO, or celebrity by providing a fake media social profile or using fake reviews.
  • investing a lot of time to build an intimate relationship with their victim, often weeks or months, to give their victim the impression that they can trust them. The fraudsters then introduce the idea of “investing together” or “helping them invest” or letting them know about a great investment opportunity they learned about.

3 - Fraudsters will convince victims to sign up for cryptocurrency investment websites. The victim can be asked to provide their personal details, such as credit card details and driving license information, to open a trading account. The victim can be asked to make an initial minimum deposit, after which the fraudster may ask them to persuade them to invest again in order to achieve a greater profit.

4- The fraudster may then do the following:

  • Run away with the deposit the victim made, close the website, or disappear on social media, such as during a fake project or impersonation scam.
  • Try to convince their victim to invest more by showing them fake profits (e.g., during a Ponzi Scheme).
  • Ask the victim to deposit more funds when the victim tries to withdraw their funds,  telling them they need to pay “taxes” or “withdrawing fees,” such as during a Romance Scam

It is often too late when the victim realizes they have been scammed.

The information provided on this website does not, and is not intended to, constitute legal advice; all information, content, and materials available on this site are for general informational purposes only.

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