Crypto scams: 10 ways to recognize them


Once the funds have been transferred, it is difficult to get your money back.
Therefore, it is good to learn to recognize the dangers of possible platform-related scams before deciding to invest money on an exchange

The context of Crypto Fraud 

Hundreds of exchange platforms have failed. The Rock Trading is just the latest in a months-long saga.  

There are so many crypto investors around the world who have lost their savings after investing them in companies that are poorly regulated and not transparent enough. Certainly, it is necessary to distinguish between outright fraud, which alone weighed more than $14 billion in 2021, and exchange failures due to mismanagement. In any case, the world of cryptocurrency is attracting more and more people, often with low skills but a high appetite for risk, lured by the promise of quick and easy money.

It is precisely this bias that fraudsters are banking on to lure their victims. The mechanisms are always the same, but the peculiarity with cryptocurrencies is that the fraud, once triggered, is guaranteed to succeed because there is no legal protection. Unlike credit card transactions, for example, a crypto transaction is irreversible and virtually anonymous; no addresses or other useful information is given. In practice, once you send your cryptocurrency to someone, the chance of getting it back is virtually nil.

How to recognize a crypto scam 

The only way to avoid losing your money, therefore, is to be cautious and learn to recognize a scam when it is in front of you. 

Here then are 10 practical tips to avoid falling into the trap.

How to recognize a crypto scam

  1. The promise of high returns and financial independence
    Scammers know that in order to convince a person to send money (including in the form of cryptocurrencies) they need to be able to silence the logical part of their brain and awaken the emotional part. Therefore, in the case of a scam the messages used present unclear data, but come across as very pushy, such as "Guaranteed 3 times your investment!" or "Achieve 'financial independence!" 

  2. Rough Websites
    Because scams require sites to last only a few weeks, days, or even just a few hours, scammers typically do not hire a team of designers to create them. They are almost always full of typos, broken links and false testimonials from investors, perhaps even known in the business.

  3. A confusing or nonexistent white paper
    All serious cryptocurrencies have a white paper written by the founders that explains their purpose and operation. In the case of scams, this paper is either not present or, if it is, it is vague and confusing. When this is the case, better not to invest (this applies to any investment, not just cryptos).
  4. No information about the corporate team
    Another key difference between scammers and founders of real cryptocurrencies is that the former never show themselves. If you cannot identify who is behind the platform you are about to invest in, that is not a good sign. Similarly, if you can't find clear information about the founders on either LinkedIn or industry sites, that's also a red flag. And even if they are listed, it is still always a good habit to Google their names and see if they have been previously implicated in scams.

  5. Request to communicate private keys
    The private key is the cryptographic equivalent of the username and bank account access code. A legitimate founder, broker, or exchange will never ask for the user's private key. If someone does, it is best to let it go.

  6. Free cryptocurrency giveaways
    Any proposal for free cryptocurrencies should be approached with extreme skepticism.
    To send someone cryptocurrency you need to know only their public key. If someone asks for anything else, such as personal information, banking information, the private key, or worse to send a small amount of cryptocurrency to "verify your account," it should not be trusted, especially if the proposed gift is in bitcoin or ethereum.
  7. Hosting provider and website verification
    Sometimes, scammers use fake business websites with domains that closely resemble real ones. Before relying on an exchange, it is good to check through Google that the name is correct and is spelled exactly in the URL. For example, if the website is, it is useful to search for Coiinbase and check the results.
    Looking up the domain name through Whois is also a good idea. This site in fact indicates the country of registration, which must match the country publicly stated by the exchange. If it is different, it could be a fake site. When sites are fake, moreover, the images are often taken from the web and it is easy to find out by using Google's reverse search. Finally, it is advisable to check the company name against the business registry of the country of registration (directories are public and searchable online almost anywhere in the world).

  8. Terms of the agreement with the exchange unclear
    Even when a website turns out to be a genuine crypto trading platform, before investing money it is wise to make sure you understand exactly all the details and conditions. If in the agreement, the company does not take responsibility in case of cryptocurrency theft, better think twice.

  9. Don't trust famous influencers (especially if they write privately)
    If you suddenly receive a direct message from Elon Musk, before rejoicing better do some checking, even if you are one of his most active fans on social media. The first step is to check whether the username is spelled correctly (e.g., @ElonMask or @EllonMusk) and whether the blue checkmark is present. In any case always look skeptically at any requests for donations to charities via links or bank transfer.
  10. Email and clickbait ads
    Emails and ads with overly catchy headlines are designed to make people act on impulse, and if an ad, email, or Telegram message sounds too good to be true, it probably is. If the message is from someone you know, best to check with the person that the profile has not been hacked. If you have clicked on a link or ad, better not to leave any personal information even if requested and exit the site as soon as possible. If the offer of "a huge investment opportunity" came through a dating site such as Tinder might be for example, it certainly is scamming. There are valid reasons why LinkedIn is not used to meet your soul mate, and venture capital funds do not discuss pre-seed investments on Tinder. It is more likely to be phishing, so the profile should be blocked immediately. On social media, in general, you should always watch out for shills, i.e., users who advertise a particular currency for a fee with fake profit updates even though they have never invested.

Beware of phase 2 of the scams

It is possible that in spite of all the caution exercised, we may end up victims of a scam. Fraud is increasingly precisely orchestrated, and anyone can fall for it, even the most careful. The risk in these cases is to end up in what is called "two-step scam": a user has been trading on a particular platform and when he tries to withdraw his capital he begins to encounter a series of increasing difficulties, such as being asked to execute a very large number of trades, or additional payments for nonexistent tax charges.

It is at this point that the phase 2: the victim is contacted by a self-styled international investigative organization with an often high-sounding and credible name, which holds out the prospect of repossessing his or her money. With the goal of obtaining the funds, the victim agrees to pay additional sums of money, sometimes large, even several tens of thousands of euros, without ever being able to come to terms with the situation.

In case you have fallen into this trap, you should immediately contact law enforcement, particularly the Postal Police, with the knowledge, however, that the chance of getting your money back is almost nil. If the website were true, however, the arbitrator for financial disputes is the Acf located at Consob.

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