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Addressing patterns of cryptocurrency fraud

Sometimes, scammers will work in collaboration to build hype around a certain new coin – they might use email marketing or social media.

The world of cryptocurrency. — © Digital Journal
The world of cryptocurrency. — © Digital Journal

Over the last few years, public interest in cryptocurrency has grown. There are an estimated 420 million Internet users who hold some cryptocurrency, based all around the world. Asia constitutes the vast majority of crypto owners, with an estimated 260 million people holding some currency. However, ownership of cryptocurrency is a worldwide phenomenon, with many millions of owners across all continents. This is despite fluctuations in value and with many currencies not being recognised by established banks or governments.

As crypto has continued to grow in stature, however, there’s been an increase in the number of scam artists. The commercial and asset finance company, Anglo Scottish Asset Finance, has provided Digital Journal with some of the most common cryptocurrency scams.

Fraudulent Coins / Tokens

Some forms of crypto scams involve scammers posing as established companies and offering fraudulent coins or tokens. As growing numbers of companies enter the crypto space, scammers send out emails posing as a respected company and stating that they’re entering the crypto world with their own form of coins or tokens.

There have been cases of scammers creating social media websites, adverts and even entire websites to back up their fraudulent activity. Once you get your hands on one of these ‘tokens,’ the scammer can gain access to your wallet and drain your balance.

Always be sure to do your own research – if an established company has issued their own coin, you’ll be able to corroborate this information on news sites.

Pump and Dump Schemes

Sometimes, scammers will work in collaboration to build hype around a certain new coin – they might use email marketing or social media to promote the currency. Traders are drawn to invest in droves thanks to the excitement that’s been built up.

Once the new investors have driven the value of the currency up, the scammers quickly sell theirs, maximising the value of their sale and leaving value of the currency to plummet. The new investors are quickly left with nothing of value.


Under the new rules, companies promoting crypto products or services in Britain must from October give a clear warning that customers could lose money in "high risk" investments
Under the new rules, companies promoting crypto products or services in Britain must from October give a clear warning that customers could lose money in “high risk” investments – Copyright AFP/File Justin TALLIS

Another common crypto scam is phishing, where crypto scammers target the private keys you use to access your wallet. Scammers will pose as a trusted partner or offer an investment opportunity before directing you to a website which instructs you to input your private key information.

Once they have access to your wallet, they’ll drain your balance. Never give out your private key unless you’re completely confident of who you’re giving it to and why.


Some scammers will pose as somebody you meet online – it could be a dating website or something platonic like a social media site. Often these people are prepared to play ‘the long game’ and gain your trust over weeks or even months of communicating.

Then, they’ll start to ask for money, or will present you with an investment opportunity out of the blue. As soon as you’ve sent the money, they’ll disappear.

There are some common elements which tend to appear across various scams, making them easier to spot. Here are some of the most common hallmarks of crypto scams.

Big promises

Hong Kong launches a new crypto regulatory framework on Thursday in a bid to set itself up as a digital asset hub
Hong Kong launches a new crypto regulatory framework in a bid to set itself up as a digital asset hub – Copyright AFP Peter PARKS

Typically, scammers make extortionate promises designed to entice people in – offering guaranteed profits or return on investment. Because cryptocurrencies’ value fluctuates, profit can never be guaranteed.

Scammers might use the offer of free money or talk about fake ‘case studies’ where people have made millions. Whilst crypto investments have the potential to earn you big money, there’s no certainty involved.

Watch the whitepapers

When a company issues a new coin, the initial coin offering will always be accompanied by a lengthy whitepaper. The piece will explain the rationale behind the coin issuing, how the currency has been designed, and how it will work.

The whitepaper is one of the most crucial aspects of the initial coin offering, and is a reliable resource which is difficult for scammers to replicate. If somebody is offering you the opportunity to invest in the new coin, pay close attention to the whitepaper – spelling errors or a general lack of professionalism could expose the scam.

Cold calling

Some scammers will contact you directly out of the blue with investment opportunities or false promises. In this event, be extra vigilant to ensure the safety of your money. These people may fabricate a time-sensitive event to try and push you to make a rash decision – they may quote a short investment window to put pressure on you.

This isn’t to say the value of cryptocurrencies don’t change quickly. In fact, making a well-timed investment or selling up at the exact right moment could ensure you maximise your profits. However, if you’re unsure about the validity of what you’re being told, then take the time to do your own research before actioning anything.

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Written By

Dr. Tim Sandle is Digital Journal's Editor-at-Large for science news. Tim specializes in science, technology, environmental, business, and health journalism. He is additionally a practising microbiologist; and an author. He is also interested in history, politics and current affairs.

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