What is a scam in cryptocurrency: popular types of fraud

Crypto scam refers to any form of deception aimed at stealing digital assets through false promises, fake projects, or technical tricks. Scammers constantly adapt their tactics, aligning with trends, whether it’s hype around a new blockchain, the launch of a promising token, or a high-profile ICO. The high demand for earning in cryptocurrency creates fertile ground for scams – in the absence of regulation and complete transaction anonymity. Victims can lose money in a matter of minutes – with no possibility of recourse or refund. Crypto scams target both individual investors and entire startups, fund pools, and even exchanges.

Why Cryptocurrency Fraud Thrives

Blockchain provides transparency but not protection. Anonymous wallets, lack of mandatory verification, instant transfers, and decentralization create an environment where fraudsters exploit trust as their main resource. Any token launch or new protocol with high demand and low supply creates favorable conditions for cryptocurrency scams.

New projects often do not undergo legal scrutiny. Many investors send money without a real risk analysis – solely based on emotions and promises. There is no customer support, insurance, or government regulation. Crypto scams turn even advanced traders into vulnerable participants – especially when participating in presales, DeFi launches, or NFT initiatives.

Main Types of Cryptocurrency Scams: Detailed Analysis

Crypto scams can take dozens of forms. Below are the main schemes most commonly used by fraudsters.

1. Pseudo-ICO

Creators do not develop a real project but only set up a website, publish a whitepaper, and raise investments for a “future token.” After receiving funds, they disappear with investors’ wallets. A prominent example is Plexcoin: the founders raised $15 million and vanished.

2. Phishing Attacks

Fake wallet websites, exchanges, or NFT platforms mimic the appearance of originals. Users enter private keys or seed phrases, after which scammers instantly withdraw all tokens. Cryptocurrency scams often masquerade as customer support, verification, or airdrops.

3. Pump & Dump

Participants artificially create demand for a token: buy assets, generate fake news, use influencers. Once the price rises, organizers sell coins, crashing the market. Other investors are left with significantly devalued assets.

4. Liquidity Drain Scam Projects

Projects in DeFi launch a token, create a pool on a DEX, promise high returns. After reaching a critical liquidity volume, developers withdraw all funds, leaving investors with worthless tokens. The same scheme is found in play-to-earn games.

5. Financial Pyramids

Pseudo-funds promising up to 30% monthly profits use new inflows to pay previous participants. The model collapses when new inflows decrease. An example is BitConnect: over $2.6 billion was lost.

Who and How Cryptocurrency Scams Threaten: Real Investment Risks

Cryptocurrency scams threaten not only newcomers. Even experienced traders, venture funds, and startups fall victim. Investments in cryptocurrency without legal expertise, technical audits, and team reputation checks are particularly risky. Risks increase during market euphoria – with Bitcoin’s rise or hype around new blockchains.

The biggest losses are recorded among participants who invest in startups without MVP, whitepaper, or legal registration. The average loss per participant in a scam ICO in 2023 was $12,000, according to estimates based on open blockchain data.

How to Avoid Crypto Scams: Protection Methodology

Before investing, a comprehensive project check is necessary. A step-by-step approach that reduces the likelihood of losses:

1. Check the website: presence of HTTPS, text errors, spoofed domains.

2. Study the whitepaper: specificity, logic, technical details.

3. Check the team: LinkedIn, Twitter, GitHub, interviews, history.

4. Analyze smart contracts: audit from Certik, Hacken, PeckShield.

5. Check tokenomics: team’s share, issuance, lock-ups.

6. Study activity: community, Telegram, Discord, news frequency.

7. Exclude guarantees: 100% profits, fixed incomes – red flags.

8. Use cold wallets: Ledger, Trezor – for storage.

9. Participate through reputable platforms: Binance Launchpad, CoinList.

10. Monitor reactions: discussions on Reddit, BitcoinTalk, Dune.

    

Why Crypto Scams Persist: Psychological and Market Triggers

Hype, desire to get rich quick, FOMO – key factors that make cryptocurrency fraud widespread. Fraudsters often use success visualization, fake numbers, and counterfeit interviews with “experts.” Crypto scams intensify with growing interest in new formats – ICOs, IEOs, NFTs, DAOs. The launch of any new technology is accompanied by a wave of scams exploiting knowledge gaps. Projects that combine exchange, wallet, and investment platform functions pose a particular danger. These hybrids create the illusion of legitimacy but operate as pyramids or drain programs.

Conclusion

Crypto scams are a systemic issue but not a verdict. Deception thrives where critical thinking is lost, and anonymity replaces accountability. Investments require analysis, attention, and technical preparation. With due caution, information protection, and risk diversification, digital assets can generate income while avoiding scams.