Common cryptocurrency scams to look out for in 2022

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  • The would-be promoters of cryptocurrency scams offer astronomical guaranteed returns, such as doubling your money in a week
  • In a rug pull scam, promoters will create or represent a “popular” new coin or token and present you with a chance to get in on it early
  • The fake exchange scam preys on unsuspecting people by posing as a place where people can buy cryptocurrency

The more things change, the more they stay the same. Cryptocurrency is the future of money. It brings many benefits such as decentralisation, immutability, extreme divisibility and those lovely open ledgers running on blockchain technology.

All this change has, however, failed to eliminate the scourge of scams that have plagued the fiat currency world for so long. Cryptocurrency is, of course, not to blame for these scams. However, scammers do take advantage of some of the features of cryptocurrency. Let’s look at some of the most popular types of cryptocurrency-related scams to understand them.

  • Many scams use traditional tactics applied to cryptocurrency
  • Signs you should look out for in cryptocurrency scams
  • Some scams combine more than one type of scam

Cryptocurrency Investment scams

These are very popular around Africa and take many different shapes and forms. They usually have a name that includes cryptocurrency or Bitcoin in them. The set-up is simply an offer to invest in cryptocurrency, perhaps through cryptocurrency mining.

Read: How bitcoin is advancing the human race

The would-be promoters offer astronomical guaranteed returns, such as doubling your money in a week. There is, of course, no investment at all; these people usually disappear as soon as you have deposited your initial investment. They usually use stolen pictures and false identities to pull this off.

Investment scams may go as far as using false celebrity and government endorsements to lure people into investing. You may have an investment that claims to be registered, and while in many cases a little digging would’ve revealed that these are false claims, sometimes it’s not that simple. One of the giveaways of an investment scam is how poorly they explain where the returns in the investment come from.

Cryptocurrency Rug pull scams

The rug pull is similar to the investment scam but goes a little further because it usually involves investment in a real cryptocurrency, or at least it seems like it. In a rug pull, promoters will create or represent a “popular” new coin or token and present you with a chance to get in on it early.

And if like many, you don’t want to miss out on the next Bitcoin, you’re in! These scams ride on popularity, so it may involve an element of promoting it, which many would be happy to do as this would increase interest. Eventually, the rug is pulled from under investors’ feet as the scammers make off with the funds invested.

The Squid coin rug pull happened when a coin based on the extremely popular Netflix show Squid Game popped up. It didn’t take long for investors to be duped. These scams usually feature a vesting period before which one can cash out of the investment.

Pig butchering scams

Pig butchering is a rather unflattering term for what is otherwise known as the romance scam. In this scam, users are duped by false identities on places like dating sites and social media. They prey on people in vulnerable situations and use these false identities to get close to people.

The pig reference comes from the act of ‘fattening” the victim by providing them with a feeling of closeness, acceptance, comfort, intimacy or whatever need the scammers have identified in them. The victim eventually is asked to send money, sometimes to help with genuine problems.

The scammer may disappear after extracting money or may play the long game extracting small amounts of money continuously. One feature of pig-butchering is that often victims are hit more than once.

Phishing scams

Phishing scams have also proved very popular in the cryptocurrency world. The term for an attack that attempts to steal money, identity or other sensitive information through a digital interface like a website. The websites may appear genuine to the untrained eye.

Phishing scams usually make contact through email and require you to take urgent action on something. The link contained in the communication takes you to a website that, in most cases, looks genuine but is designed to capture your details. In cryptocurrency, the detail they are after is the unique private key.

The people behind phishing scams work very hard to make their websites look legitimate, and it’s best to access any accounts you use directly rather than through links mailed to you.

Man in the middle scams

The man-in-the-middle attack is what happens when you take the concepts of a phishing scam but apply them in real-time. So what the scammers do is mimic the authentic website in real time while showing the victim a duplicate website to gain the victim’s private information.

Many of us are aware of the advice to avoid using services such as internet banking on public wifi networks. While internet banking usually uses two-factor authentication such as a password plus SMS code, you can see how a man-in-the-middle attack can get around this. The attack happens at the moment, and users may later find money has been transferred from their cryptocurrency wallets.

Social Media giveaway scams

The giveaway scam has been with us for just about as long as any other type of scam here. Whereas in the past they came in the form of winning competitions you’ve never entered, in the modern day you could win a prize as the 10000th visitor to a website.

Whether you’ve won the latest shiny smartphone or something equally appealing, you are required to pay a seemingly small postage fee to get your new shiny. Of course, there is no prize, just a total loss of the postage fee, which is seemingly small.

It takes different forms, but the payment is usually for something small like verifying your crypto wallet or joining some platform to confirm or boost your winnings.

Ponzi schemes

Charles Ponzi’s original scheme that earned the name is over 100 years old now, but we still see the same idea in cryptocurrency.

The original scheme used (snail) mail to lure people into investments that didn’t exist. By paying out existing investors with huge profits through money that was being paid in by new investors, the Ponzi scheme appears legitimate and builds trust.

However, there is no investment. Ponzi schemes carry on with perpetrators gradually taking money out of the scheme. Eventually, they fall apart as the demand for money surpasses what money is within the scheme. The key difference between Ponzi schemes and investment scams is that Ponzi schemes will pay out at first, making them seem credible.

Fake exchanges

The fake exchange scam preys on unsuspecting people by posing as a place where people can buy cryptocurrency. Exchanging their money for cryptocurrency as they would on any legitimate exchange. Victims, however, find out, often too late, that the exchange simply does not exist.

They are usually as elaborate as giveaways or phishing scams, which require convincing web pages to fool people. The exchanges may hide behind cold or off-chain transacting to give themselves time between stealing the money and the victim recognising the scheme.

In this scam, your money is gone the moment you process the transaction. Beware of cases where someone requires payment in a specific currency but insists that you pay for that cryptocurrency on a specific platform, particularly when they provide the link to it.

Pay-to-work/earn scams

During the height of the coronavirus pandemic taking over the world in 2020, many people lost their jobs and sources of income. People were sold the dream of working online or remotely, sometimes doing very little work.

Working and earning online is not a scam, of course. The trick with these scams is luring people by offering a job opportunity that a candidate must pay to access. This may be in the form of training fees, registration fees, membership fees, initial inventory, tools and other things needed to do the job.

However, there is no job, and as you have surmised, the fees you pay upfront are gone. Similar to the giveaway, they use a seemingly small fee that pails in comparison to the reward.

The reality – combo scams

These scams are easy to see in isolation and when laid out so clearly. In real life, they are much more complicated to spot. This is because they are often used in combination and inventive ways. For example, a combination of the fake exchange and pay-to-earn scheme, where for some reason, the fee for training is only accepted through a cryptocurrency that can only be acquired on a certain exchange.

Pig butchering can be combined with pay-to-work by luring job candidates and extracting fees from them. Victims ride on the euphoria they feel after being accepted for a job that looks appealing. How about combining a rug pull with a fake exchange? That can work too. We must realise that these scams may be combined and not appear in the simple forms discussed here.

These scams did not start with cryptocurrency; as you can see, many don’t even use cryptocurrency in their workings. However, they will use cryptocurrency as a name as a hot topic. Acquaint yourself with these scams and how they may be used in combination. This helps avoid adding to the billions they have already succumbed to the scams worldwide.

Read: Africa: The urgent need for regulations to protect crypto investors from fraud and scams


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Kudzai G Changunda
Kudzai G Changunda
Finance guy with a considerable interest in the adoption of web 3.0 technologies in the financial landscape. Both technology and regulation focused but, of course, people first.