Crypto scams can take many forms. Here are a few of the most common examples.

Types of Online Scam

Investment Scam
Investment scams involve a bad actor enticing people to send their cryptocurrency to the fraudster with promises of “huge gains.” Scammers can play many parts, such as an “investment manager,” a celebrity or even a love interest on an online dating site. Whatever role is assumed, they promise to grow your investment if you transfer your cryptocurrency to them.
If you follow through with their request, kiss goodbye to your crypto. Investment scams include pump-and-dump schemes. A fraudster entices you to buy an obscure crypto at a “low price,” with promises that the asset’s value will soon go through the roof. When you buy, the price rises, at which point the scammer dumps their holdings at the new higher valuation, which causes the price to collapse, leaving you and any other victims underwater. “Typically, the new token is worth a few cents, or even fractions of a cent. But a little bit of momentum can drive it up the charts on sites like CoinMarketCap.com to make it look like the sky’s the limit on price appreciation,” Webber says.
“Given the speed at which new coins are created and marketed to investors on the internet without regulation, some investors looking to earn a quick profit are drawn in by reports of triple-digit percentage gains in a digital asset over a short period of time and want to jump on the bandwagon,” he says.

To spot an investment scheme, look for promises of excessive profits or zero risks. These schemes often begin on social media or online dating sites, so be wary of anyone contacting you out of the blue about your crypto assets. Watch out for anyone talking up a particular crypto asset on Reddit or other social media platforms, too. These are known as socially-engineered scams.

Phishing Scam
Phishing scams are an old favorite among scammers. Fraudsters are aiming to access your account details, including your crypto keys. As any crypto user knows, he who holds the key holds all the crypto. Phishing scammers often lure you into clicking on a link to a fake website, where they can then steal your account details. They can impersonate well-known companies, like Amazon or your bank, utility companies, or even government agencies, and may post links on social media or contact you directly.

For example, they might send you an email or text saying a withdrawal was initiated and give you a link to cancel the transaction. “The link directs to a fraudulent website and harvests the investor’s account credentials, allowing thieves to login and withdraw assets,” Cummings says. Anyone can fall prey to a phishing scam and any digital asset can be the target of such a scam, as actor and film producer Seth Green realized earlier this year when four of his Bored Ape NFTs were stolen.

Upgrade Scam
Software is constantly being updated, and cryptocurrency platforms are just a form of software. Since many have become accustomed to upgrades in the digital age, scammers can easily trick crypto holders into giving up their private keys as part of an “upgrade.”

Upgrade scammers can piggyback on legitimate migrations, such as the recent Ethereum merge, which had both the Ethereum Foundation and Robinhood concerned enough to issue a warning that users be on “high alert” for upgrade scams.

SIM-Swap Scam
SIM-swap scams are among the newer crypto scams taking place today. They occur when a scammer gets access to a copy of your SIM card and can access all of your phone’s data. “That information can be used to receive and use the two-step authentication codes required to gain access to crypto wallets and other accounts without the victim knowing,” Cohn says. “When this happens, the victim’s crypto accounts can be hacked and wiped out without the victim even being contacted.”

Fake Crypto Exchanges and Crypto Wallets
“If you browse your social media handles, you will come across sites that advertise cheap Bitcoin (BTC),” says Zeinsky, digital asset product strategist at Tracingia LLC. They may advertise cryptocurrencies at 5% below market value and promise huge savings when you buy through the site—but sometimes, these platforms are fake crypto products. These fake crypto products often quote outrageous returns on investment, and users are typically required to pay a high initial fee and then frequently asked to invest more and more. And when you try to withdraw your funds, you’ll likely find they’ve vanished.

“A fake crypto wallet is a malware scam,” Zeinsky says. “Scammers use it to infect a computer and eventually steal the user’s private key or password.” To avoid such scams, stick with reputable exchanges and wallets with long user history. “If a wallet’s website tries to resemble a reputable brand, you should consider it a scam and move on,” Zeinsky says.

How to Avoid Crypto Scams
Given the heightened risks with digital assets, prudence is essential. To avoid crypto scams, follow these tips:

• Don’t respond to unsolicited contact. “No matter who contacts you from your crypto brokerage—or any financial institution, for that matter— the best practice is not to respond,” Cohn says. “Look up the official number for the institution and initiate independent contact.”

• Check before you click. Don’t open hyperlinks or attachments from unfamiliar senders.

• Keep accounts separate. Don’t link crypto brokerage accounts and traditional bank accounts permanently.

• Place a hold immediately. “If you receive notice of unusual activity on an account, do not wait to place a hold on any future transactions based on fraud,” Cohn says.

• Use reputable companies. To ensure your information and crypto security, use a wallet from a reputable company,” Leinweber says. He points to Exodus and MetaMask as reputable hot wallets or Ledger, Trezor or Bitbox as reputable cold wallets.

• Look for HTTPS. HTTPS—as opposed to just HTTP—in a crypto exchange or wallet URL indicates the site has secured and encrypted traffic, Zeinsky says

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