How not to get scammed. General rules to follow:

  1. If It sounds too good to be true, it probably is.
  2. Don’t click on sketchy ass links.

Twitter Giveaway Scam.


Perfect example of rule #1. This scam is particularly popular on Twitter, but can be done on any social media site. It involves posing as an account of authority, stating that you’re doing a cryptocurrency giveaway (typically ETH). Just send Ethereum to their address and they’ll give you more in return!

If you’re naive enough to fall for this scam you’ll quickly realize you’re never going to get your cryptocurrency again.

fake vitalik buterin ethereum giveaway

fake elon musk bitcoin giveaway

fake elon musk ethereum giveaway

This is eerily similar to another scam I’ve seen in the past…. 🤔

runescape doubling money

How to avoid this scam.

If someone claims to be giving away an exorbitant amount of money, it’s 99.99% likely false. Don’t send your crypto to someone in the hopes they’ll send you even more back. That’s just wishful thinking.

Ponzi Schemes


A Ponzi scheme is a fraudulent operation that promises high investment return at little to no risk. The operation takes money from new investors in order to pay for the gains promised to the old investors.

pyramid scheme example

Ponzi schemes are a form of pyramid scheme because there’s a small minority of individuals at the top making all the money. The majority of individuals at the bottom of the pyramid make no profit at all.

Ponzi schemes are extremely popular in the cryptocurrency space because of the hype surrounding cryptocurrencies. A fraudster can also remain relatively anonymous, unknown to the public.

Examples

Ponzi scheme ads can appear anywhere. Even trusted sites.

bitconnect ad

Facebook is a hotbed for Ponzi scheme ads.

facebook cryptics tech ad

Often times online Ponzi schemes will use referral programs to keep money flowing into the system. Referral programs incentivize individuals to get their friends/family in on the scheme. A constant flow of sign-ups is the only way a Ponzi can be sustained.

scam referral program

Just because a website has good web design doesn’t mean it’s not a scam. Look for tell-tale Ponzi scheme characteristics.

bithaul scam

A lot of these websites have fancy investment options nefariously created to look as captivating as possible. This is simply bait. Don’t fall for it.

ponzi scheme investment plans

Fake testimonials are very common in Ponzi-esqe schemes.

How to identify a cryptocurrency Ponzi scheme.

Ponzi schemes have a number of certain characteristics.

  • Fabricated white paper (see example)
  • No real product
    If there is a product it’s marketed vaguely as some sort of system or method used to increase your investment (E.G: trading bot).
  • Guarantee a high return on your investment with little to no risk.
    Earn 20% profit per day.
  • High referral bonus for inviting friends/ family.
    Referral bonus’ are used to incentives sign ups. Having a constant flow of new members victims is the only way the scheme can sustain itself.
  • Playing on your emotions in order to to get you to invest.
    Sick and tired of not being able to pay rent? This investment will change your life for the better!
  • Secretive and/or complex investment strategies
    Our advanced trading bot uses a machine learning algorithm to determine the best times to buy and sell giving you more profit at the end of the day!

I wouldn’t trust anybody who guarantees investment gains, that’s really the tell-tale sign of a Ponzi scheme or any sort scam for that matter.

Cloud Mining


I’m going to briefly touch on cloud mining. I’ve never used any cloud mining service nor do I ever plan to. I’m sure there’s some out there that are legit, however, even then I’d be hesitant to invest due to the reason that your ROI is only going to decrease with time as mining difficulty increases (speaking specifically of bitcoin).

A lot of crypto noobs fall for cloud mining scams because they’re easy targets. They don’t understand how bitcoin mining works, many of them are still fixated on hype surrounding mining back in earlier days when it was possible earn a few bitcoins with a rig set up in your room.  Noobs still think it’s that easy and cloud mining companies prey on that ignorance.

Stay away from cloud mining services.

Fraudulent ICOs


These scams can fall into the category of Ponzi Scheme and probably affect the most amount people as they often appear to be legitimate.

Example

This is NVO a ICO scam that was able to get away with 3,000 BTC. The team was of course fabricated and they used multiple fake aliases to lie to investors. Their webpage is still up if you you’d like to see it live. I’ve got a screen cap below in case they decide to take it down.

Notice how beautiful the web design is. If I didn’t know any better I’d for sure think this is a legitimate project. The project even had real fans creating YouTube videos showcasing the beta wallet.

nvo ico scam web page

How to identify a fraudulent ICO

The SEC put out a fake ICO site to educate investors on what to look for. I highly recommend checking it out. It can be difficult to determine the authenticity of an ICO which is why scam artists tend to gravitate towards them. Here’s some common characteristics although, these scams are constantly evolving and come in many different forms.

  • Fabricated white paper (see example)
  • Fabricated and/or vague product
    E.G: We want to eliminate the need for WiFi across the globe!
  • Fabricated team members.
    Often times you’ll find there’s no team at all. If there is a team, it’s possible they could be fake. Google team member names to make sure they’re real people. Fraudsters will often go out of their way to create fake LinkedIn profiles.
  • Website looks like a sales page.
    If the website looks to be sales page rather than a description of the project that’s definitely a red flag.
  • Running advertisements
    Any ICO that’s running advertisements is a red flag to me. Legitimate ICOs are typically done organically where word is spread through the community instead of through eye-catching advertisements.
  • Claims of guaranteed investment returns

 

Phishing Scams


Phishing is the act of posing as an authority in order to steal information from someone.

Phishing scams are very popular within the crypto space and I fully expect them to increase in popularity. Common types of cryptocurrency phishing include:

  • Email Phishing
  • Fake Wallets
  • Ad Phishing

Email Phishing

Email phishing is probably the most popular type of phishing scheme. The fraudster will impersonate an entity of authority and send out fraudulent emails in an attempt to get you to either download an infected attachment or redirect you to their compromised website.

Be careful of these scams as some of these e-mails look extremely convincing. It just takes one successful attempt for your information to be stolen.

 

Here is an example where a fraudster attempts to pose as MyEthereumWallet. Notice the accented ŕ in the URL.

myether wallet phishing

This example is with PayPal but the same methodology can be used for cryptocurrency phishing.

phishing example

How to avoid email phishing

  • Always check the sender address and make sure it is legitimate.
  • DO NOT click on links within emails.
    Instead, type the domain into the address bar yourself.
  • If you absolutely must click the link, hover over it to insure it’s bringing you to the correct URL.
  • Use email inbox rules to filter trusted senders.
    This works especially well for sites like Coinbase and Binance which are regularly sending out emails.

Fake Wallets

Fake wallets are compromised apps that allows people to deposit their cryptocurrency. You might even be able to withdrawal your crypto for some time. Eventually, when the fraudster feels they’ve gotten enough people to deposit funds, they’ll disable withdraws and send the money to their own personal wallet.

bitcoin private wallet scam

freewallet phishing scam

How to avoid this scam.

It goes to show how important research is. If you ever find yourself questioning the authenticity of wallet, I recommending consulting community forums for guidance. Don’t be afraid to ask questions if you’re unsure of something, it could safe you your money.

If you’re downloading a wallet of a specific cryptocurrency, go to its official website and download it from there.

Ad Phishing

Ad phishing is typically done through Google Adwords is is probably the reason why Google banned cryptocurrency ads last year. An ad phisher will create a look-a-like website with a similar domain and purchase advertisements targeting keywords of the site they are impersonating.

Notice the fake Bittrex has .ltd at the end. Just because the names match DOES NOT mean they are they same.

bittrex-phishing-site

shapeshift phishing site

Can you spot the fake?

If you guessed the second ad you’re correct. If you’re wondering how the URLs can be the same, they’re not. Notice how the α looks different. That’s because it’s an alpha character.

How to Avoid This Scam

Do yourself a favor and download an Ad Blocker. If you don’t already have one, I recommend uBlock Origin. Also, bookmark all the crypto sites you visit. This will prevent accidentally misspelling the domain and landing on a phishing site. Always double check crypto site URLs to ensure they are legitimate. It pays to be superstitious.

Don’t Become a Victim


Educate yourself and learn how to spot scams. Internet fraudsters prey on your ignorance. By educating yourself you not only help to secure your crypto but everybody’s cryptocurrency. These scams wouldn’t be around if they didn’t work. If we don’t allow them to work, they’ll slowly but surly evaporate away.

Thanks for reading! I hope you learned something new.