The Most Common Types Of Cryptocurrency Scams in 2020

Millions of crypto investors have been scammed out of massive sums since the inception of cryptocurrencies. According to Reuters, in 2018, losses from cryptocurrency-related crimes amounted to $1.7 billion. At Coinberry, we have strived to provide our members the safest and most secure cryptocurrency trading experience. In this article, we will cover cryptocurrency scams you need to pay attention to the most and how to avoid them.


Crypto Scam 1: Fake Crypto Exchanges

The most common form of scam that you will come across is fake exchanges. These exchanges sprang up overnight and started bragging about their new features, low fees, and enticing promotions.  

One needs to be very careful with such exchanges because once you trust them and deposit your coins or cash there, you have no way to get it back. To avoid this, you should stick with well-known cryptocurrency exchanges that comply with FINTRAC and other related government regulations such as Coinberry.

Crypto Scam 2: Fraudulent ICOs

The second most common way to pull off a scam by fabricating a fake ICO, creating marketing hype and persuading people to buy. 

Doing a thorough analysis before investing in an ICOs is vital. Usual signs of fraudulent ICOs are as follows: 

  • Anonymous team 
  • No clear roadmap
  • Copied or fake whitepaper
  • Unusual hurry in execution
  • Fast ROI claims 
  • Mismatch of written words on the website

Crypto Scam 3: Fraudulent Wallets

In an environment like the current cryptocurrency market, potential investors should be very careful to research what they’re putting their money into. With the rise of cryptocurrencies, many fraudulent android wallets have also been launched on Google Play Store. 

Google is making efforts to root these posers and keep their platform more secure but they are not fully able to identify all these fraudulent apps. Avoid using unknown wallets that haven’t existed for long and are mostly shady. We recommend using only well-known wallets in the market. 

Crypto Scam 4: Ponzi Schemes

This scam is the easiest to spot but many people still fall for it. 

Investors are promised high returns and, at first, it appears to be successful and profitable. This attracts new investors to the system. The money from the new investors is then used to pay off the original investors and the cycle continues. This scam works on the model of scamming the one who enters the system later. Does it promise regular returns that exceed average market returns? It’s a Ponzi. 

Crypto Scam 5: Phishing Scams

Phishing scams are one of the trickiest types of crypto scams. 

Scammers send malicious emails to thousands of people with a great offer in the email that makes people believe that they win some money. They use psychological manipulation to make you believe that the site is legitimate. Naturally, this page looks exactly like a legitimate crypto-trading service. Once you enter your username and password, they get access to your information and steal your money. In order to make sure the website is legitimate, check out the domain name very carefully. There is no way that they can use exactly the same domain name as your original website. 

Crypto Scam 6: Pump & Dump Groups

Pump and Dump scams are actually one of the oldest scams in the world. In fact, economic analysts argued that this type of fraud goes all the way back to the early 18th century. 

It’s a plot aimed at inflating specific cryptocurrency prices in a bid to buy low and sell high. The scammers usually congregate over Facebook Messenger, Telegram or Slack. On average, such a group would total some 100,000 members. This scam works when the scammers dump their wrongfully acquired coins, the prices will plummet, leading to investors losing their money fast. 

Crypto Scam 7: Crypto-Giveaways

Scammers use many different methods to scam people. One of the methods they use is offering free giveaways of bitcoin or other cryptocurrencies in exchange for sending a small amount to register to their crypto exchange store, or by providing some personal information. Don’t fall for these scams as there is no way that they will give you free giveaways without them getting something bigger in return.

Crypto Scam 8: Unrealistic Returns Bait

One of the scams that people usually fall into is Unrealistic Returns Bait. Companies offering you guaranteed high profits by trading on their platform or just simply signing up. These companies use fake reviews on different review sites to create trust. We recommend doing thorough research before you sign up for any platform. First, check out that site’s reviews on different review platforms and read the top Reddit comments. Secondly, check out their website carefully to see if there are any inaccuracies or unrealistic return claims made by the company.

Crypto Scam 9: Scammers Posing As Canada Revenue Agency (CRA) Employees

Arrests were made recently by the RCMP as part of their larger investigation into the CRA telephone scam, called “Project Octavia”. These are callers who pretend to be CRA, RCMP or other federal agents and intimidate victims into paying fines, and/or taxes. The reported losses are more than $30 million from such scams. In addition, CRA has put together resources on so you don’t fall for it. 

Bottom Line

Scammers are clever and take advantage of the cryptocurrency market’s flexibility. We covered the most common scams in this article. For extra layer of protection on your Coinberry account, we recommend turning on Two Factor Authentication (2FA)