Crypto Scams: How They Work, Real Examples, and How to Dodge Them

The Canadian Anti-Fraud Centre (CAFC) reported that in 2023, Canadians lost nearly $309.4 million to investment scams, with cryptocurrency-related frauds accounting for 50% of these losses.

From “romance” scams that begin on social platforms, to whale-sounding “trading experts” who promise quick returns, to random airdrop tokens that magically land in a user’s wallet and drain it upon interaction, the range of scams seems endless.

But beneath it all, scammers usually capitalize on a few human tendencies: greed, desperation, loneliness, and a lack of security knowledge regarding crypto transactions.

Now, some folks roll their eyes and think, “Scams won’t happen to me.” However, the reality is that even crypto influencers, dev teams, and crypto veterans occasionally slip up.

This article is drawn from anecdotes, tips, and cautionary tales shared by countless users. We will reveal how to spot cryptocurrency scams, the sneaky emotional and psychological triggers crypto scammers exploit, the typical scripts they deploy, and the steps that can be taken to avoid falling victim. All in all, The overarching message is this:

“Assume everything is a scam until proven legitimate. And even then, keep your guard up.”

The Psychology of Crypto Scams

While the below can vary in their specific mechanics, they share one core ingredient: social engineering. This tactic plays on trust, urgency, greed, fear, or a combination of these. Scammers expertly manipulate these key emotional triggers:

• FOMO (Fear Of Missing Out): They create artificial urgency and exclusivity. We're all susceptible to the fear that everyone else is getting rich without us.
• Greed: Promising guaranteed returns and "unrealistic" profits to entice victims to invest more money than they normally would. What's interesting is how well it still works, even when the promises are obviously unrealistic. We seem hardwired to hope that maybe, just this once, there really is a free lunch.
• Authority Bias: Exploiting trust in influencers and experts
• Social Proof: They create an illusion of community support through fake testimonials and manufactured engagement.
• Panic: Threatening potential losses if immediate action isn’t taken, pushing victims to act out of fear rather than reason.
• Sad or Romantic Stories: Scammers might pose as lonely hearts seeking companionship, only to pivot to a pitch about “lucrative crypto.”

According to cybersecurity firm Avast, 90% of cyberattacks incorporate social engineering. It's telling us something important about where our real vulnerabilities lie.

What are the Red Flags for Cryptocurrency Scams?

What's interesting about crypto scam red flags is that they're almost comically obvious - once you're not the one being scammed.

Here's what to watch for:

1. Free Stuff with No Explanation: Nobody gives away free money at scale. If someone's offering you an NFT or token that's supposedly worth a fortune, ask yourself why they're not keeping it.
2. Low Effort Websites: Typos, broken links, suspicious domain names, or cloned branding with incomplete or mismatched designs.
3. No Community History: Brand-new social media accounts with no prior activity or zero mentions of the project on reputable channels.
4. Guaranteed Returns: The crypto market can do many things, but guaranteeing returns isn't one of them. Anyone who says differently is either lying or doesn't understand how markets work. Neither is it someone you want handling your money.
5. Immediate Payment Requests: Demanding funds upfront for “advanced assistance” or “priority membership.”
6. Pressure to Act Quickly: Creating a sense of urgency to bypass rational thinking and force hasty decisions.
7. Unsolicited Offers: Think about it: would a genuine crypto whale randomly message you with an amazing opportunity? The answer tells you everything you need to know.
8. Lack of Transparency: Avoid platforms that are vague about their operations, team members, or contact information
9. Unregulated Platforms: Platforms that do not comply with local laws or lack Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures.
10. Requests for Sensitive Information: Anyone asking for your private keys, seed phrases, or personal financial details is planning to empty your wallet. No exceptions.
11. Overenthusiastic Reviews: Fake or overly positive testimonials without verifiable sources.

Common Cryptocurrency Scams and How to Avoid Them

Let's examine the most prevalent cryptocurrency investment scams in detail.

1. The Crypto YouTuber Scam

How It Works

Yes, even a beloved crypto influencer with a million subscribers can be part of a giant con. The Crypto YouTuber Scam thrives on trust. Influencers build an audience by offering “insights,” “picks,” and “hot tips.” Over time, loyal viewers might think, “This person must know what they’re talking about,” especially if that influencer has had a couple of winning picks in the past.

But behind the scenes, some of these personalities are taking undisclosed payments or pre-sale tokens to shill a new project. The flow goes something like this:

1. Early Access: Influencer receives a huge batch of tokens at a discount or before public sale or accepts undisclosed payments to promote certain crypto coins.
2. Promote: Influencer posts half-truths or hypes the project, telling viewers it’s the “next big thing.”
3. Dump: After viewers pump the price by buying in, the influencer dumps tokens at a big profit.
4. Radio Silence: Followers are left holding the bag, with tokens that could collapse in value.

Suddenly, the recommended tokens are revealed to lack genuine backing. As the backlash begins, the influencer’s video or social media post is quietly taken down. The influencer moves on unscathed while their viewers are left with worthless coins and depleted wallets. The tragic part? Many victims still defend their favourite influencers even after being scammed, a testament to the powerful psychological bonds these content creators forge with their audiences.

Real Example

The crypto space is littered with influencer manipulation cases. One prominent example involves a YouTuber with over 580,000 subscribers who promoted a project called Polkamon. while secretly holding pre-sale tokens. He compared it to popular NFT projects and claimed that getting in at ground level was a sure bet.

On March 31st, when the sale occurred, a deposit of 10,000 tokens landed in his digital wallet via a private distribution contract. Within hours, he swapped all those tokens—worth over $300,000—for stablecoins, effectively dumping them on his own followers who had just gotten in.

This pattern of behavior aligns with pump-and-dump schemes, where an influencer promotes a cryptocurrency to inflate its value and then sells off large holdings for profit, leaving other investors with devalued assets.

It doesn’t stop there. A well-known blockchain investigator, ZachXBT, compiled a massive list exposing YouTubers who charge big bucks for paid promotions, often with no disclaimers.

How to Avoid It

Never take investment advice blindly from random influencers, no matter how big their audience is. Instead:

• Do Your Own Research (DYOR): Check the project’s whitepaper, team, road map, and social channels.
• Stay skeptical: A project promises unrealistic returns or is heavily promoted without substance; it’s likely a scam.
• Look for disclosure: Always assume that content may be biased. Check for disclaimers such as “paid promotion” or “sponsored content”. Genuine content creators will transparently disclose sponsorships or partnerships. In Canada, the Competition Bureau mandates that influencers and businesses disclose any material connections, compensation, or financial incentives they receive for promoting investment products, including cryptocurrencies.

2. Impersonation and AI Scams: Fake Admins, Impersonators, the ‘Helpful’ Stranger, and Brand Hijacking

How They Work

Crypto scammers frequently pose as trusted entities—wallet providers, exchanges, or even official “verified” social media accounts to extract sensitive information from unsuspecting users. More recently, fraudsters have added AI-driven tactics such as voice cloning, deepfake videos, and chatbots to enhance their credibility and pressure victims into making hasty, risky decisions.

Fake Admins & ‘Helpful’ Strangers

• Discord/Telegram Impersonation: Newcomers who ask questions in public channels or group chats often receive direct messages from someone claiming to be an “admin” or “support rep”.
• Phishing for Details: Under the guise of “assisting”, they request passwords, seed phrases, 2FA codes, or even remote access to a device.

Brand Hijacking

• Verified Account Takeovers: Scammers commandeer social media accounts that already hold verified or “gold check” status. They rename them to mimic major crypto brands and then announce “giveaways” or promotions.
• False Authority: The large follower count or verified badge tricks many into believing these digital currency scams are legit.

AI-Enhanced Impersonation

• Voice Cloning & Deepfake Videos: Criminals use samples of real interviews or social media posts to create near-perfect imitations of famous crypto influencers or executives. For instance, deepfake videos featuring Elon Musk have been circulated, falsely endorsing cryptocurrency giveaways or investment opportunities.
• Chatbots & Fake Chat Support: AI bots can engage in human-like conversations, building trust over time while feeding victims misinformation or malicious instructions.

Initiated Contact via Customer Support Searches

• Search Engine Exploitation: Sometimes, the target initiates contact by searching for a customer support number or channel. For example, a user might type “XXX customer support phone number” into Google. The first or second result could be a scammer’s site, designed to look legitimate. When the victim calls, the scammer picks up, pretends to be official support, and requests personal information. By the user initiating the contact, scammers bypass initial skepticism and gain a sense of authority, making it easier to extract sensitive data.

Red Flags to Watch For:

• Legitimate support teams rarely, if ever, initiate contact with users
• Requests for sensitive information such as seed phrases, private keys, or two-factor authentication codes
• Instructions to install software on your device
• Demands for remote screen-sharing access
• Pushy or urgent messages threatening account suspension or irreversible losses
• Any requests for payment to "fix" the situation
• Requests to transfer funds between accounts
• Odd sentence structure or glitchy voice. AI can replicate someone’s face/voice but might slip up.
• Videos that loop or freeze. Even advanced AI can produce small visual or audio stutters.

Real Example

Plenty of people have reported wanting help from a popular crypto exchange or a popular wallet provider, only to end up talking to a scammer who asked them to install “remote access” software or to “verify account ownership” by sharing private details. Once the scammer sees the user’s screen or obtains those codes, the user’s wallet is an open target.

In September 2024, during Apple's iPhone 16 launch event, cryptocurrency scammers broadcasted fake livestreams on YouTube featuring an AI-generated deepfake of Apple CEO Tim Cook.

In these streams, the counterfeit Cook encouraged viewers to send cryptocurrencies like Bitcoin and Ethereum to a specified address, falsely promising to double their contributions. This classic "double-your-money" scam exploited the high viewership of Apple's event, deceiving many into transferring funds to fraudulent digital wallets.

The streams were eventually identified and removed, but not before causing substantial financial harm to unsuspecting individuals.

How to Avoid It

• Verify official channels: Visit an exchange’s official website or verified social pages for the correct support info. To confirm authenticity, compare handles carefully, check the account’s posting history, and see if recognized sources follow them.
• Refuse to share personal details: No genuine support representative will ever ask for your password, seed phrase, or two-factor authentication (2FA) code.
• Don’t be rushed: Scammers rely on urgency and fear. Take time to confirm claims.
• Stay Updated on AI Tools: Knowing how scammers can clone voices or create deepfake videos helps you spot oddities (unusual face movements or mismatched lip sync).

3. Phishing Scams

How They Work

The mechanics of crypto phishing are deceptively simple. The scammer sends you a link through email, text, or social media. That's it. No complex hacking, no sophisticated code. Just a link that looks important enough to click.

With just one click, the victim is directed to a fake website designed to mimic a legitimate platform. Once the user connects a digital wallet, the site requests suspicious transaction approvals, which can grant the scammer total access to the user’s assets.

Phishing can also be in the form of a simple email as the one above.

When recipients click the link provided, they land on a fake login page. If they enter credentials, the scammer can use that info on the real platform. Cryptocurrency scammers also frequently deploy advertisements on social media and search engines, promoting "new meme coins" or "unmissable ICOs" (Initial Coin Offerings). These ads can instantly redirect users to phishing sites when clicked.

Real Example

One of the biggest cautionary tales of phishing + impersonation cryptocurrency scams comes from Ethereum co-founder Vitalik Buterin’s social media account hack. Attackers posted about a “free NFT drop,” and in only 20 minutes, they managed to siphon away over $691,000  worth of digital assets from people who connected their wallets and signed transactions.

How to Avoid It

1. Never connect a main wallet: It’s best to maintain a “burner wallet” with minimal funds for interacting with dApps or NFT claims. Transfer assets to cold storage immediately after legitimate transactions.
2. Double-check URLs: Even a single different character or extension in a domain name can be a scam site.
3. Watch for urgent or “too good to be true” offers: Free money isn't a thing, even in crypto. Especially in crypto. If someone random is offering you free NFTs or tokens, they're probably trying to take something more valuable. Check community responses for scam reports and wait at least 24 hours before engaging with new project announcements.
4. Avoid unknown DMs and emails: Treat unsolicited links like threats. They often are.

4.Airdrops, Freebies, and Random Tokens in Wallets

How It Works

Airdrops are among the most common ways for new users to get absolutely wrecked. The concept sounds innocent enough: free tokens given away by a project, either to build community or reward early adopters. However, scammers exploit that excitement by sending random tokens to any public wallet address they can find. This might be done en masse using tools that scrape blockchain data. These tokens show up in unsuspecting users’ wallets but often have no real value and are designed to lure users to phishing sites where they’re prompted to connect their wallets or approve malicious transactions.

The typical script goes like this:

1. Scammer sends a random token. The user notices it in their wallet, sometimes with a suspicious name like “FreeClaimCoin,” “AirdropX,” or “UnlimitedGains.” Alternatively, the scammer may announce a major airdrop via a tweet or a credible social media account.
2. Token comes with a Link: A website link typically accompanies the token’s contract info, urging the user to “claim more” or “swap to realize profits.”
3. User tries to swap the token: The user finds they can’t swap it on a normal DEX. The spam token might be locked or flagged.
4. The user visits the token’s website, possibly using a domain name eerily similar to a
5. legitimate site. The site claims, “Click here to claim your bonus!” or “Unlock your tokens!”
6. Phishing transaction: The site asks the user to connect their wallet and sign in to complete the transaction. This hands over a malicious transaction approval, leading to the user’s wallet being drained

Real Example

In April 2024, Wormhole, a cross-chain bridging platform, conducted an airdrop of its native governance token, W, distributing approximately $850 million worth of tokens to eligible users. This event attracted significant attention from scammers and malicious actors who sought to exploit the excitement surrounding the airdrop. Scammers quickly deployed a classic impersonation strategy on social media.

They created accounts that looked nearly identical to Wormhole's official presence, even securing gold checkmarks to appear more legitimate. The situation became even more complicated when scammers managed to hack the account of Wormhole's founder, Robinson Burkey, using it to spread malicious links aimed at draining users' wallets.

Taking advantage of the buzz, some opportunistic developers launched spoof tokens(copycat tokens). One notable example was "Warmhole" - a parody token that emerged right after the airdrop announcement. This token saw an astonishing price surge, with its market value jumping from $100,000 to $8.3 million in less than six hours - an 83,000% increase. This rapid rise likely drew in many investors hoping to catch a "second wave" of profits, though such astronomical gains often signal potential pump-and-dump schemes.

How to Avoid It-Verifying Airdrops

Verify everything, even things that look official. Even verified accounts get hacked. Look at who follows them, read the comments, and most importantly, wait. Bad news travels fast in crypto - if something's a scam, you'll usually know within 24 hours. Take a day or two to verify.

There should also be discussion on social media platforms like Twitter, Discord, or Telegram. If the site is brand-new, proceed with extreme caution.

5. Rogue Smart Contracts

How It Works

A “Rogue Smart Contract” scam typically unfolds when unsuspecting users interact with malicious or tampered dApps (decentralized applications). At first glance, the contract might appear legitimate—perhaps it’s a new DeFi protocol, an NFT mint, or some enticing “yield farm.” However, buried within the smart contract’s code is malicious logic designed to seize control of users’ tokens or NFTs the moment they approve a transaction.

1. Enticing Front-End: Scammers create a polished website or dApp interface that mimics established protocols. It may offer compelling features like high APYs or new NFT collections to lure in participants.
2. Hidden Malicious Code: Buried within the contract code are functions that grant the dApp the right to move or “revoke” assets at will. Often, this takes the form of an “infinite spend approval,” letting the contract transfer an unlimited number of tokens on the user’s behalf.
3. Approval Transaction: Users connect their wallet and sign a transaction, believing they’re just approving a standard function (such as depositing tokens or minting an NFT). In reality, they’ve handed the contract full or near-full access to their assets.
4. Immediate or Delayed Drain: The malicious code can activate instantly, siphoning tokens or NFTs before the user suspects anything. Sometimes scammers lie in wait, letting the contract appear normal until a high number of approvals accumulate—then drain them all at once.

Real Example

In October 2024, a significant incident involving a rogue smart contract led to substantial financial losses within the cryptocurrency ecosystem. A malicious actor deployed a deceptive smart contract on the Arbitrum blockchain, targeting the SUN token associated with Sunray Finance. This contract exploited vulnerabilities to mint an excessive amount of SUN tokens illegitimately.

The attacker then swiftly exchanged these fraudulently created tokens for stablecoins and other cryptocurrencies, effectively draining liquidity from the platform. The total loss was estimated at approximately $2.8 million.

How to Avoid It

• Read Before You Sign: Look for any suspicious approvals in your wallet interface (e.g., “Allow this dApp to spend up to X tokens?”). Never sign transactions from unknown dApps.
• Use a Burner Wallet: If you’re exploring new dApps or minting from unknown sources, set up a dedicated burner wallet with minimal funds. That way, if the contract is malicious, you only risk a small amount of crypto or test tokens.
• Check Contract Verification: Well-regarded platforms often have open-source or audited contracts. If the contract is unaudited or if the project refuses to share the code, it’s a red flag.
• Periodically Revoke Permissions: Tools like Etherscan’s Token Approval Checker (or chain-specific alternatives) let you see and revoke contract spending permissions. Regularly review and remove any suspicious or outdated approvals.

6. Fake Cryptocurrency Exchanges

How It Works

Fake cryptocurrency exchanges are fraudulent platforms designed to deceive investors by mimicking legitimate trading sites. Cryptocurrency scammers create these counterfeit exchanges to attract users with the promise of secure trading, high liquidity, and attractive incentives like bonus Bitcoin or low trading fees. These fake platforms often replicate the look and feel of well-known exchanges to gain trust and appear credible.

Typically, the scam follows this pattern:

1. Enticing Offers: Promises of exclusive features, additional bonuses, or high returns to attract users.
2. Fake Website: Creates a website that closely resembles legitimate exchanges, complete with similar logos, branding, and user interfaces.
3. Deposit Process: Encourages users to deposit funds, often in cryptocurrency, through the fake platform.
4. Loss Realization: Once deposits are made, the scammer disappears, and the website becomes inaccessible, leaving investors unable to withdraw their funds.

Scammers will also sometimes try to submit fake mobile apps that are knockoff versions of legitimate apps to the Apple App Store or Google Play Store. Unwitting victims may download the app that will take them to a fake website or ask the user to input their seed phrase–thereby stealing all the crypto associated with that seed phrase.

Real Examples

Once considered Canada's largest cryptocurrency exchange, QuadrigaCX was revealed to be a Ponzi scheme following the death of its founder, Gerald Cotten. An investigation found that Cotten had been operating multiple cryptocurrency accounts under aliases, crediting them with fictitious currency and crypto asset balances and covering shortfalls with other clients' deposits.

BitKRX impersonated a branch of South Korea's legitimate trading platform, KRX, to defraud investors. By mimicking a reputable exchange, it lured users into depositing funds, which were subsequently misappropriated.

In a notable case, fraudsters created a counterfeit website resembling Coinbase Pro, a legitimate cryptocurrency exchange. Unsuspecting users who entered their credentials had their information stolen, resulting in the loss of approximately $20 million in cryptocurrency.

How to Avoid It

1. Stick to Known Exchanges: Limit your trading to regulated, well-established cryptocurrency exchanges with proven track records and proper security measures.
2. Confirm Registration with Regulators: Verify exchange registration with relevant regulatory authorities. In Canada, for instance, consult the Canadian Securities Administrators' (CSA) list of authorized trading platforms.
3. Verify Official Information: Always access exchanges through their official websites, never through links in emails, messages, or advertisements.
4. Check Reviews and Feedback: Research thoroughly by checking independent user reviews while remaining skeptical of testimonials that seem overly enthusiastic or scripted.

7. The Address Poisoning Scam

How It Works

In an address poisoning scam, fraudsters try to “poison” your transaction history by sending spam tokens or fake transactions designed to look like they originated from or were sent to your real wallet. For example, you might see a suspicious transaction labeled “NFT sent” in your blockchain explorer, even though you never initiated it. The goal is psychological misdirection. By placing a familiar-looking address (the scammer’s address) into your transaction logs, the scammers hope you’ll later copy their address by mistake when sending funds in the future.

Here’s the typical flow:

1. Scammer Launches a Fake Transaction
2. A malicious contract or automated script sends a zero-value token or dummy NFT to your wallet or emits an event that falsely appears as a sent transaction in your transaction history.
3. Transaction Shows Up as ‘Sent’ or ‘Received’
4. Because blockchain explorers and wallets display events triggered by smart contracts, it can look like you actually participated in sending or receiving the NFT. This “poisons” your recent addresses list.
5. Future Confusion
6. Later, when you’re about to send real funds, you might glance at your recent transaction history, see the scammer’s address, and accidentally copy it, thinking it’s your own or a trusted contact’s address. If you paste that poisoned address, your crypto is in the scammer’s wallet.

Despite these ominous messages in your transaction feed, address poisoning does not inherently compromise your wallet or private keys. As long as you haven’t shared your 24-word recovery phrase or signed a malicious transaction, your crypto remains safe.

How to Avoid It

• Always Verify Your Receive Address on Your Device: Whenever you generate a receiving address, confirm it directly on your account or cold wallet rather than copying it from the transaction history on your wallet interface.
• Ignore Unsolicited Tokens and Fake NFTs: If suspicious or unknown tokens appear in your portfolio, do not interact with them. Don’t attempt to transfer, trade, or burn them.
• Double-Check Before You Send: If you ever need to copy a recent address for a follow-up transaction, scrutinize it closely. Compare the address you’re about to paste to the one shown on your hardware wallet screen or your verified address list. A single mistaken character can send your funds into the scammer’s hands.
• Never Sign Unknown Transactions: Even if you see a prompt to “fix” or “cancel” a suspicious NFT in your wallet, confirm that the transaction is legitimate before signing. If you’re not sure, reject it.

8. The NFT, Meme Coin Scam: Fake Drops and Rug Pulls

How It’s Done

Scammers create fake NFT projects, often using stolen artwork or impersonating legitimate creators. They lure buyers with promises of exclusive drops, only to disappear with the funds.

Meme coins aren’t always scams; some have real communities, but plenty of criminals target them because hype-driven traders might be less cautious. Meme coins are especially prone to rug pulls and pump-and-dumps. They generate FOMO through tweets from newly hijacked or bot accounts, artificially inflate the price, and then pull the rug out. If a user invests heavily without verifying token contracts, liquidity locks, or reputable audits, the possibility of losing everything is high.

Real-World Example

In January 2022, the Frosties NFT project emerged, offering a collection of ice cream-themed digital artworks. The creators promised various benefits to investors, including giveaways, early access to a metaverse game, and exclusive mint passes for future projects.

These incentives generated significant interest, leading to the sale of all 8,888 NFTs and raising approximately $1.2 million. However, shortly after the sale, the project's developers abruptly deactivated the project's website and social media accounts, effectively disappearing with the funds—a maneuver known as a "rug pull."

This left investors with worthless NFTs and no recourse. Luckily, in March 2022, U.S. law enforcement arrested and charged the alleged perpetrators, Ethan Nguyen and Andre Llacuna, with conspiracy to commit wire fraud and conspiracy to commit money laundering

In December 2024, internet personality Haliey Welch, known as the "Hawk Tuah Girl," launched a meme coin called $HAWK on the Solana blockchain. The token's value surged to a market capitalization of nearly $500 million shortly after its release.

However, within hours, the market cap plummeted by over 90%, leading to significant financial losses for investors. This rapid decline prompted allegations of a "pump-and-dump" scheme, where the token's value was artificially inflated before being sold off by insiders, leaving other investors with devalued assets.

Critics, including crypto journalist Coffeezilla, accused Welch and her team of insider trading and orchestrating a rug pull scam. Welch and her team denied these allegations, attributing the crash to external factors.

How to Avoid It

• Avoid FOMO: Don’t rush into buying NFTs and meme crypto coins because of hype. Take your time to research the project and its team.
• Use Reputable Marketplaces: Stick to well-known platforms like OpenSea or Magic Eden, which have better fraud detection systems.
• Verify Developer Identities: Ensure the project's creators are transparent and reputable. Anonymous teams can be a red flag.
• Assess Project Transparency: Legitimate crypto projects provide clear information about their goals, development roadmap, and team members.
• Active Communication: Authentic projects maintain active communication channels with their community. Be cautious if official channels suddenly go silent or are deleted.

9. Romance & “Pig Butchering” Cryptocurrency Scams

How It Works

A pig butchering scam is a sophisticated psychological manipulation where scammers "fatten up" victims both emotionally and financially over weeks or months before leading them to financial slaughter. It usually unfolds like this:

1. Initial Connection: A seemingly friendly individual contacts the victim through a dating app, social platform, or "wrong number" texts. They strike up conversations about everyday interests, such as pets, travel, future plans, or career goals.
2. Emotional Bonding: Cryptocurrency scammers build trust by texting constantly, sharing personal details, and pretending to care deeply. They aim to become the partner or confidant the victim always hoped for.
3. Crypto “Success Story”: After establishing rapport, the scammer casually brings up an “investment strategy” that made them wealthy, usually involving cryptocurrency. They promise quick gains and offer to help the victim join in. Once the victim is hooked, the scammer directs them to a professional-looking but entirely fake trading platform.
4. Small Wins, Bigger Deposits: Victims start with small amounts, see fake “profits,” and feel reassured. Emboldened by these initial gains, they deposit larger sums.
5. Withdrawal “Issues”: When the victim tries to cash out, the scammer or platform demands extra fees, taxes, or “proof of liquidity.” The victim, now convinced of the platform’s legitimacy, often takes out loans or drains savings to pay these additional costs.
6. Vanishing Act: Once no more money can be extracted, the scammer disappears, leaving the victim with crushing debt and no recourse to recover the funds.

Real Example

In December 2024, a Toronto resident reported losing over $355,000 in a romance cryptocurrency fraud. The victim began communicating online with an individual named "Moshe Theodor McNigh" on Facebook in June 2021. Over time, the fraudster built a relationship with the victim and convinced them to invest in Bitcoin through a fraudulent platform. Following an extensive investigation involving the Toronto Police Service, the Ontario Provincial Police, the Royal Canadian Mounted Police, and Nigerian officials, a suspect was arrested in Nigeria. Authorities successfully recovered and returned $225,000 of the stolen funds to the victim.

How to Avoid

1. Verify Identities: Request a video chat early on or check social media profiles and references. Scammers often avoid direct face-to-face calls or have inconsistencies in their stories.
2. Never Pay “Extra Fees” to Withdraw: If a platform demands taxes or additional deposits just to release your funds, it’s almost certainly a scam. Legitimate exchanges handle transaction fees transparently and never require arbitrary “tax” payments for withdrawals.
3. Separate Emotions from Money: Emotional manipulation is the key to pig butchering. Discuss major financial decisions with a trusted friend, financial advisor, or family member, especially if you feel pressured to invest quickly.

10. DeFi, High-Yield “Investment” Rackets and Ponzi Schemes

How It Works

The DeFi boom opened doors to countless protocols touting unrealistic yields—10%, 50%, or even 1,000% APY. Some are legitimate high-risk opportunities, but many are outright Ponzi schemes. They rely on new participant deposits to pay existing users, with no real underlying revenue. Eventually, the system collapses, or the project founders drain the liquidity. Here’s the usual playbook:

1. Glitzy Marketing: Crypto scammers develop polished websites, produce flashy social media ads, and promise spectacular returns (50%, 1,000%, or more). Their professional-looking platforms feature complex tokenomics and boast about using “advanced trading algorithms” or “arbitrage strategies” to lure in unsuspecting victims. Their marketing emphasizes "limited time" offers to create FOMO.
2. The Execution:
   • Initial investors receive small returns to build confidence
   • The project gains legitimacy through paid "audits" and influencer promotions
   • Early investors become unofficial promoters, bringing in more victims
   • Smart contracts contain hidden mechanisms allowing developers to restrict withdrawals
3. The Collapse:
   • Once enough funds are collected, withdrawals suddenly "fail."
   • The website goes offline or shows "maintenance" messages
   • Team members disappear from social media
   • Smart contract controls are activated to lock user funds permanently

Real Example

Forsage was a decentralized finance (DeFi) platform launched in January 2020, operating primarily on the Ethereum blockchain. It was marketed as a smart contract-based investment platform, promising substantial returns to investors through a matrix-based referral system (a structured network where participants earn by recruiting others into predefined slots). However, authorities later identified it as a pyramid and Ponzi scheme that defrauded investors worldwide.

Forsage utilized smart contracts to automate its operations, requiring participants to purchase slots in a matrix system. Investors earned commissions by recruiting new members, whose cryptocurrency investments funded payouts to earlier participants-a hallmark of pyramid schemes.

In August 2022, authorities charged 11 individuals, including the four founders of Forsage, for their roles in orchestrating and promoting the fraudulent scheme, which raised over $300 million from millions of investors worldwide.

Investigations revealed that over 80% of Forsage investors received fewer Ethereum (ETH) tokens than they had invested, with over 50% never receiving any payouts.

How to Avoid It

1. Scrutinize Returns: If a project promises outlandishly high yields with no clear explanation, be cautious. Genuine projects detail how yields are generated (e.g., lending fees, protocol revenue).
2. Check Audits and Transparency: Reputable DeFi protocols undergo security audits by recognized firms. Be wary if the project refuses to share contracts or only references a questionable “audit” from an unknown source.
3. Research the Team: Anonymous or vaguely identified developers can raise red flags. While some legitimate projects have anonymous founders, look for established track records or verifiable credentials.
4. Distribute Your Risk: Never pour all your funds into a single untested DeFi platform. Spread out your crypto among multiple trusted protocols, and avoid betting large sums on brand-new projects that lack community vetting.
5. Watch Token Lockups and Liquidity: Look for signs the project’s liquidity is locked or cannot be instantly withdrawn by the dev team. If a small group controls most tokens, the project is one move away from a “rug pull.”

11. The Fake Job Scam

How It Works

Scammers frequently target job seekers with deceptive cryptocurrency-related employment schemes. These positions often involve cryptocurrency trading, mining, investor recruitment, or helping convert cash to crypto. Here’s the typical flow:

1. Job Posting: The Crypto scammers post enticing job offers, frequently for remote positions, on various platforms, including social media and job boards. These listings may falsely associate with reputable companies to appear credible.
2. Upfront Fees: The key red flag is the requirement to pay upfront fees in cryptocurrency, supposedly for training, equipment, or administrative costs.
3. Fake Checks: Scammers send a fake check to the victim’s bank account as part of the initial job tasks. This check is fraudulent and will bounce.
4. Withdrawal Request: Victims are instructed to withdraw some of their money and use it to buy cryptocurrency for a “client.”
5. Funds Disappearance: Once victims send the cryptocurrency to the scammer’s address, the funds are irretrievable, and victims are left to repay the financial institution for the bounced check.

Real Example

A Toronto man reported losing a substantial amount of money after falling victim to a cryptocurrency job scam. He was lured by a fake job offer that required him to perform tasks involving cryptocurrency transactions, ultimately leading to financial ruin.

How to Avoid It

1. No Upfront Fees: Legitimate business never require you to pay fees to start working. Be wary of any position that asks for cryptocurrency payments.
2. Verify Job Offers: Research the company thoroughly. Check their official website, contact information, and read reviews from other employees.
3. Use Reputable Platforms: Apply for jobs through trusted and verified job sites. Be skeptical of unsolicited job offers received via email or social media.

12. Blackmail Scams

How It Works

Crypto scammers may send emails claiming to possess compromising information, such as passwords , browsing histories, financial information, photos, and videos obtained through data breaches. They threaten to expose this information unless a cryptocurrency payment is made. These cryptocurrency scams exploit the victim's fear of personal data exposure.

In most cases, however, the scammers have no information and rely solely on intimidation to extort money. This is a form of extortion and criminal activity.

How to Avoid It

1. Don’t Pay the Scammer: Paying doesn’t guarantee the scammer will hold back the material, and it encourages further extortion attempts.
2. Verify the Threat: Often, no compromising material exists. Be skeptical of unsolicited threats.
3. Protect Personal Information: Limit the amount of personal information shared online to reduce the risk of blackmail.
4. Report the Scam: Contact local law enforcement or cybercrime units to report the incident. In Canada, for instance, the Canadian Anti-Fraud Centre (CAFC) handles such reports.

Practical Ways to Protect Your Crypto Assets

Don’t Trust, Verify

Repeatedly, users advise a default stance: “Assume everything is a scam until proven otherwise.” So, always double-check domain names, look up references, and read official announcements. Real projects and exchanges usually have footprints online-blog posts, recognized social accounts, and discussions among established communities.

Stay Current on Crypto Scams

Follow reputable investigators like ZachXBT, an independent blockchain sleuth who uncovers numerous cryptocurrency scams and exposes how verified accounts and influencers collaborate with shady projects.

Utilize government resources such as the Canadian Anti-Fraud Centre (CAFC) for updates on prevalent scams and fraud prevention tips, the Competition Bureau Canada for information on deceptive marketing practices and scam alerts, and the Canadian Investment Regulatory Organization (CIRO) for publications and warnings related to investment frauds, including those involving cryptocurrencies.

Engage with community-driven alerts by participating in crypto forums and subreddits like r/CryptoCurrency, r/CryptoScams, and r/Scams, where you can receive firsthand accounts and warnings from other users.

Join security-focused Telegram and Discord channels where members report suspicious activities and share scam alerts in real time.

Additionally, subscribe to security newsletters from blockchain security firms like Chainalysis and Elliptic for in-depth analyses and proactive warnings about emerging threats.

Use Separate Wallets: Main vs. Burner

Simple

• Cold Wallet: Long-term holdings, never connected online
• Hot Wallet: Daily transactions, minimal balance
• Burner Wallet: Website interactions, temporary use

Keep most of one’s funds in cold storage and maintain only a small amount in a hot wallet for day-to-day activity or trading. If a user accidentally connects a hot wallet to a malicious website, at least the scammers won’t be able to drain the entire stash.

Use a burner wallet with minimal funds for risky interactions such as minting NFTs or interacting with new apps. If something goes wrong, only a small, isolated portion of funds is exposed.

Layering Security with Multi-Sig

For those managing larger funds, a multi-signature (multi-sig) wallet can add an extra layer of protection. Multi-sig requires multiple private keys to approve a transaction. A single compromised key is not enough. This approach is more advanced and might not be practical for everyday crypto users, but it’s a high-level strategy for those holding significant amounts or managing group funds.

Check Transaction Details and Revoke Permissions

Modern digital wallets may show what a smart contract transaction is about to do. Pause and read carefully. If it says “unlimited spending,” reconsider. Some wallets provide transaction simulations that reveal exactly which tokens the contract can access. Sites like Etherscan (Token Approvals) or similar tools for other chains can revoke past approvals. It’s wise to do a routine check to ensure no suspicious contracts have ongoing access.

Don’t Follow Random Group Invites

Random invites to Discord or WhatsApp groups are often orchestrated scam hives. If the group is overly positive and urges immediate investment, that’s a neon red flag.

Limit Interaction with Unknown Cryptocurrency projects

If it’s not clear who the team is, or if the whitepaper is shady, skip it. Resist chasing “free airdrops” unless there’s official confirmation.

Install Security Extensions

Certain browser extensions can block known phishing sites or show warnings.

Two-Factor Authentication:

Enable 2FA on any centralized exchanges. But remember that scammers can still trick users into revealing 2FA codes if the user is not cautious.

Keep Software Updated

Phishing can exploit outdated browsers or apps. Always stay updated.

Use Secure Devices

Avoid public computers or networks for cryptocurrency transactions.

Scam Recovery? Why It’s Usually Impossible

Crypto is far more unforgiving than traditional banking systems.

Unless the scammer makes a huge mistake or tries to launder massive amounts through regulated exchanges, clawing funds back is difficult. The decentralized nature of blockchains means there’s no institution to call for a chargeback.

Some criminals pose as “recovery experts,” contacting victims after they post about losing funds. They promise to retrieve stolen crypto for a fee. These are almost always more scams. The best move is to:

• Cease communicating with the scammer.
• Transfer remaining assets to secure cold digital wallet.
• Disconnect the compromised wallet from all sites
• Gather all evidence (screenshots, addresses, chat logs).
• File reports with relevant authorities.
• Alert the crypto community.

Recovery Options

While most crypto scam losses are permanent, some avenues exist:

• Report to law enforcement. Even if they can’t recover the crypto, your report adds data for ongoing investigations.
• Contact chain analysis firms
• File insurance claims (if applicable)

Though the chance of recovering funds is small, reporting can help track these criminals and might prevent future crimes.

Bankruptcy or Debt Relief

In extreme cases like taking on crippling loans to invest, some users consider debt consolidation or even bankruptcy.

Staying Calm, Thinking Twice: Why Speed Kills

One piece of consistent advice across every example is to slow down. Most common cryptocurrency scams succeed by inciting a sense of urgency or excitement. Emotional impulses override rational thinking, so the remedy is to take time.

Another code to live by is Trust No One, Verify Everything. Even a close friend can accidentally forward a phishing link, and a well-known influencer can become compromised. Mistakes happen, and in crypto, each mistake can be permanent. If there’s ever a shred of doubt, it’s better to skip a potential “opportunity” than to risk losing tokens.

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