Cryptocurrency scams: typologies, how to protect yourself, and what to do if you fall victim

Jennifer González    21 September, 2022
Photo: Kanchanara / Unsplash

On 31 October 2008, the first cryptocurrency, Bitcoin, was born. A few months later the first transaction was made, the Bitcoin had a value of 0.00076$. Since then and until today, a world has been created around cryptocurrencies, mining and blockchain. Bitcoin reached an all-time high of $66,000 in October 2021.

In 2015 it is known that there were 562 different cryptocurrencies, reaching more than 20,000 in 2022, although not all of them have a long run as their value has dropped to zero and they are considered “dead”.

What are cryptocurrencies and what are their uses?

A cryptocurrency is a digital medium of exchange that uses cryptographic methods to secure financial transactions. As Xataka explains, it is a decentralised alternative called “DEFI” (decentralized finance), i.e. they are not controlled by a state or a bank. They can be used for investment, savings or to buy different assets such as real estate, travel or technology.

However, this type of digital asset is also being used by cybercriminals to commit various criminal acts such as the sale of weapons, drugs and other services that are not legal, such as the financing of terrorism. But there is also an increase in the number of different scams that are being committed by cybercriminals.

“You don’t get scammed by technology, you get scammed by people”

Robot T.24

Typology of cryptocurrency cyber-scams

Every day there are more and more ways in which cybercriminals are taking advantage of the popularity of cryptocurrencies to commit scams. Several of them have been identified in recent times. We will focus on the ones that I have considered most relevant:

1. Ponzi system or pyramid scheme

It is perhaps one of the oldest as it is a scam carried out by Charles Ponzi in 1920. However, we now move it to cyberspace. What this system does is that old members have to attract as many new members as possible to invest, this is how they ensure the profits of the previous members.

There comes a time when the last members to enter cannot attract more people to invest and therefore these are the ones who will lose everything they have invested.

2. “Celebrities who are investing”

In this case, it consists of creating real-looking websites, mainly news websites where celebrities or influential people claim that they are investing in cryptocurrencies to attract the attention of future victims.

Within this website there is usually either a section where you are asked for your personal details or a link that takes you to another website which apparently is an investment platform like the one in the image below, in one of the investigations I have been carrying out.

3. Pump and Dump

This type of scam consists of a group of people agreeing to buy a cryptocurrency of little value all at once, which causes the price of the coin to increase.

The next phase is to carry out marketing strategies to make the coin visible. When they have managed to attract people to invest in that particular cryptocurrency, the group of people who had agreed and when they believe they have already made a profit, they sell their share and therefore the price falls drastically.

As the price rise has been created by them, it will probably never rise again.

The scam consists of making people believe that the person who is going to be part of this manipulation, so they summon the victims through social networks at a specific time and day to buy all at once the chosen cryptocurrency, however, the cybercriminals at that time when they are selling the currency so the price is down.

Image: Pum and Dump graph –
Image: Pum and Dump graph –

How to avoid becoming a victim of a cyber-scam and what to do if you become one

Cryptocurrencies do not have a unified regulation and as they are transnational, it is very difficult to prosecute them, so only a small percentage can end up in court.

As long as there is no specific regulation at a global level, the first filter is prevention to avoid becoming victims of this type of scams, here are some tips that can be of great use:

  • The first and most important, in my opinion, is that if you want to invest, you should either get trained in this world or get advice from experts in the field.
  • If you still decide to invest without being trained or seeking expert advice, before investing you should research what cryptocurrency you are going to deposit your money in, whether or not it has a technical document, who has created the currency or who is behind it, how it operates in the market, as well as it is essential to read real opinions and testimonials.
  • Be wary of assured returns, the world of cryptocurrencies is known for its high volatility and can go up and down.
  • Be wary when you see websites where famous people claim to have made a lot of money with investments.
  • If you end up on a platform to invest, a possible way to check whether or not it is legitimate is to copy the URL of the platform in question on the is the largest database on cyber scams. Here they tell you when it was created and the number of visitors the platform receives, if there are few visitors and it is a recent creation, be wary of it.
  • This website reports all the scams that may be being committed in this case with Bitcoin,

Bitcoinabuse is a public database of bitcoin addresses that have been used in illegal ways. People can report addresses of which they have been victims.

To show an example we click on one of them and the website will show us something like the following image:

You can click on the link that takes you to another website in this case and there it tells you the sado that this address has received, as well as what has been transferred and the tracking of all transactions.

If you end up being a victim of a cyber-scam with cryptocurrencies, you can turn to two associations that can advise you on this issue, the International Association of Victims of Cyber-scams and Cryptocurrencies or the Association Affected by Cryptocurrencies.

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