Before investing in cryptocurrencies or crypto-related products, be aware that these investments carry high risks and can sometimes be fronts for scams.
Crypto is not like a bank account, it has no government deposit insurance (like FDIC), and if you get scammed, there is no automatic way to reverse the transaction or get your money back.
Common Crypto Scams
- Fake Apps and Digital Wallets: Scammers build bogus apps and websites that look like real crypto wallets. When you log in, they steal your passwords and private keys so they can drain all your money.
- Romance Scams and "Pig Butchering": Scammers meet you on dating apps or social media, build trust over time, and trick you into using a fake trading platform. The website shows fake profits, but when you try to cash out, they block your account or demand more money for made-up "taxes."
- Pump-and-Dump Schemes: A group promotes a useless coin online to drive up the price. Once everyday investors buy in, the scammers sell all their coins at the peak, causing the price to crash and leaving you with worthless crypto.
- Fake Coin Sales (ICOs): Scammers create fake websites offering early access to a new cryptocurrency, promising huge future value. They take your money and disappear before launching anything.
- Phishing & Scam Messages: Fake emails, texts, or social media messages that trick you into clicking bad links or revealing your secret passwords and seed phrases.
- Hacking and Poisoned Addresses: Malware can infect your computer to steal your account access. Scammers also send tiny amounts of crypto to your history using addresses that look almost identical to yours, hoping you'll copy-paste the wrong address by mistake.
- Fake "Asset and Fund Recovery" Services: If you've already lost money, scammers might contact you pretending to be official investigators or legal experts who guarantee they can get your money back, if you pay them a fee upfront.
Warning Signs: How to Spot a Scam
Walk away if an investment opportunity involves any of these warning signs:
- Guaranteed profits: Anyone promising risk-free returns or fixed payouts (like "1% profit every day").
- Surprise messages: Strangers DMing you on Telegram, WhatsApp, Discord, or Instagram offering financial advice or secret investment deals.
- Fees to withdraw your own cash: Platforms demanding extra money for "clearance fees" or "taxes" before you can take out your funds.
- Odd payment requests: Demands to buy crypto using Bitcoin ATMs, bank wire transfers to foreign accounts, or gift cards.
Before Investing or Sending Crypto
- Don’t put in more money than you can afford to lose. Crypto assets are not protected by deposit insurance or error resolution rights.
- Beware of virtual pyramid and Ponzi schemes. Watch out for scammers or get-rich-quick schemes.
- Remain vigilant. Change passwords often and store them safely. Consider “cold storage” such as a hardware wallet for your assets, and always make sure you’re on a secure internet connection.
- Do your own research and stick to the fundamentals. Beware of assets tied solely to speculation.
What to Do If You've Been Scammed
If you suspect you've been targeted by a scam, stop sending money immediately and take these steps right away:
- Protect your remaining accounts: Disconnect your wallet from all websites and revoke active token approvals.
- Report the scam to local and state authorities: In Washington state, file a complaint with the Washington State Department of Financial Institutions (DFI). Also contact your local police to file a report.
- Report to federal agencies: Submit an online report to the FBI's Internet Crime Complaint Center at ic3.gov and the Federal Trade Commission (FTC) at reportfraud.ftc.gov.
- Notify crypto exchanges: If you transferred money through an exchange, contact their fraud support team right away.