What are the types of crypto scams and how to avoid them?
As a lawyer specializing in blockchain technology, I very often come across various inquiries from clients regarding crypto fraud. These are online crimes that most legal entities fall into due to ignorance, naivety, or based on a get-rich-quick motive and/or misunderstanding of an investment in blockchain tools. Knowing the psychology of their victims, criminals with fraudulent goals always find new ways to steal your money by tricking you into "cryptocurrency deals". To protect yourself from this type of fraud, you need to be well-informed about the main mechanisms by which crypto fraud is carried out and carefully research the other side of the "deal" - here's how:
1. Usually, crypto transactions are carried out between two blockchain wallets - yours and the other party's by exchanging the so-called "public keys", i.e. the passwords of the two wallets, which lead to their individualization by third parties. Never share your crypto wallet private key with anyone , it should be kept by you and only you. No legitimate crypto business will want you to transfer fiat (real) money to a bank account to "turn" it into crypto and invest the crypto for "interest" - that's a scam. Investing in crypto interest is called "stake", but there is no exchange of real money in this process. The transaction is always entered into with a specific crypto or by purchasing tokens of a given project. This is usually the cryptocurrency of the project that offers you a "steak" (freezing your investment to earn interest through so-called DeFi protocols). You buy this cryptocurrency/token through a given exchange (crypto exchange) and only then invest it in a given project. If things don't work as described - stop, immediately contact a blockchain lawyer and the prosecutor's office, "Computer Crimes" sector at the GDBOP and/or Interpol. You are being scammed!
2 . Only scammers demand immediate payment in cryptocurrency. No legitimate business will ask you to send cryptocurrency in advance - neither to buy anything nor to protect your money. This is always a scam. From this point of view, only scammers will guarantee "quick profits or big profits" . Don't trust people/"businesses" who promise you that you can make quick and easy money in the crypto markets. Yes, in principle, this is possible, but only if you know a certain segment of the market and observe it long-term, you know how it works technologically and what result the specific project would lead to. Everything else is a lie and a form of fraud. If you have become part of this lie, stop immediately - contact a blockchain lawyer, the prosecutor's office, the Computer Crimes Department of the GDBOP and/or Interpol. You are being scammed!
3. Never mix online dating with investment advice. If you meet someone on a dating site or app, if they contact you via social media and want to "show you how to invest in cryptocurrencies" or ask you to send them cryptocurrencies, it's a scam. Very often victims of this type of fraud are men who are contacted by beautiful women (this is how they look in their profile photos, which are usually fake). The woman starts explaining how she wants to meet you, go out to dinner someday when you meet, and the next moment she asks you if you want to teach you how to invest in crypto. She shows you how the "exchange" she works in works and explains that "you will make money very quickly" that she will help you earn. This is how the fake woman tricks you and steals your money through a false "exchange". The moment you want them back, she tells you that you have to pay an additional fee to get them back because "your investment has already accrued interest" and the scam gets even bigger. If you find yourself in this scenario - stop any actions, immediately contact a blockchain lawyer, the prosecutor's office, the "Computer Crimes" sector at the GDBOP and/or Interpol. You are being scammed!
4. Recognizing Cryptocurrency Scams. Scammers use some tried-and-tested scam tactics, always demanding payment in cryptocurrency. Investment scams are one of the main ways scammers trick you into buying cryptocurrency and sending it to the scammers' project. But among other tactics, scammers pose as investment firms, government agencies, and even try to become your "life partner" in the intimate sense of the word. In these cases, stop "investing" and immediately contact a blockchain lawyer, the prosecutor's office, the "Computer Crimes" sector at the GDBOP and/or Interpol. You are being scammed!
4.1. Investment fraud. Investment scams often promise that you can "make a lot of money" with "zero risk", starting on social media, apps or online dating sites. Of course, these scams can also start with an unexpected text (for example, a message on messenger), email or call. And in investment scams, cryptocurrency takes center stage in two ways: it can be presented as an "investment" and/or as "payment for a service." Here are some common investment scams and how to spot them.
4.2. In most cases, an "investment manager" contacts you out of the blue. It promises to increase your money - but only if you buy cryptocurrency and transfer it to an online account. The investment website they refer you to looks genuine but is actually fake and so are the promises made on it. If you go into your "investment account", you won't be able to withdraw your money at all, or you will be able to, but "only if you pay high fees". So the fraud is doubled and you suffer a double loss. In these cases, stop - immediately contact a blockchain lawyer, the prosecutor's office, the "Computer Crimes" sector at the GDBOP and/or Interpol. You are being scammed!
4.3. Sometimes the scammer also pretends to be a famous person, a beautiful model, a very handsome gentleman (when the woman is the victim), etc., who can multiply any cryptocurrency you send him. But celebrities and super beautiful people don't "accidentally" connect with you through social media. These are scammers. Therefore, if you click on an unexpected link sent to you or send cryptocurrency to a QR code on the so-called "celebrity" or "beautiful person", that money will go straight to the scammer and be gone forever. "Beautiful" scams guarantee that you will win money or promise big profits with "guaranteed returns". You should be aware that the crypto industry is very dynamic and no one can make such guarantees, much less in a short time. In general, there is nothing "low-risk" about investing in cryptocurrencies unless you know a position or project very well, and again there is no guarantee in the context described. So if a company or person promises you that you will make "big money right away" from a blockchain business, it is a scam. It's a lie even if they show you endorsements from celebrities or testimonials from happy investors - such profiles are easily faked. Very often in such "investments" scammers also promise you "free money" or "cryptocurrency", but the promises of "free money" are always fake. In the described cases of contacts with "famous and beautiful persons" - stop and immediately refer a blockchain lawyer, the prosecutor's office, the "Computer crimes" sector to the GDBOP and/or Interpol. You are being scammed!
4.4. We're back to the already mentioned online "love/friend interest" where someone asks you to send money or cryptocurrency to help you invest. This is a scam. If someone you met a few minutes ago asks you for money or offers you "investment advice", know - this is a scam! These tips are not given online, especially unsolicited, they are very usually aimed at a narrowly specialized, professional audience or an audience of crypto enthusiasts who, while non-professionals, have an idea of what's going on and how on a technological level. At least they heard! That's why "advice" and "offering" someone to help you invest in crypto is nothing but a scam. If you send cryptocurrency or any money (into a bank account) to this "financial advisor", it will disappear and usually you won't get it back. In cases of "initiated online friendships and intimate relationships of an investment nature", stop and immediately refer a blockchain lawyer, the prosecutor's office, the Computer Crimes Sector to the GDBOP and/or Interpol. You are being scammed!
4.5. In investment scams, scammers also make incomprehensible claims about "investment in crypto", without details or explanations about the technology of the project and the ways of acquiring investment. The interaction between two crypto wallets is a complicated thing, even for people who do it every day, so the lack of explanation of how to buy and how to invest on a technological level is dubious and usually hides a scam. I say this as someone who has been involved as a consultant in multiple crypto projects and who owns several different crypto wallets, buys and trades pres crypto exchanges and invests in third party projects. No matter what the investment, understand how it works and ask questions about where your money is going. Asking questions is not even necessary in most cases - the explanations on the site in question are so detailed that you should be able to do it yourself. If there is no such explanation, super detailed, chances are high that the project you are investing in is a scam. Most brokers also have a chat where, if you're having trouble, they walk you through step-by-step how to buy a part of a position. What I am saying is that honest investment managers or consultants want and will share this detailed technological, legal and financial information and back it up with details. Before investing in a crypto project or cryptocurrency, search the Internet for the name of the company or person and the name of the cryptocurrency, as well as on sites that are crypto scams. See what others are saying and read more about other common investment scams.
5. Fraudsters and embezzlers property of companies, institutions and workplaces. In a business, institution or workplace impersonation scam, the scammer impersonates someone you trust to convince you to send them money in order to "buy and send cryptocurrency." In these cases, fraudsters pose as well-known companies, your bank or offer you a job. What's special and suspicious here is that in this scenario, the scammer will text you, call you, send you emails or social media messages - or maybe put a pop-up alert on your computer. Very often with this type of fraud, the criminal will tell you that there is fraud in your account or that your money is at risk - and to fix it, you need to buy cryptocurrency and send it to them. But this is a scam. If you click on a link in a message (email), answer a call or call the number in the pop-up window on your screen, you will be connected to a scammer. From there, the entire criminal "crypto" scheme will be applied to you with all the patterns explained so far. In these cases, stop - immediately contact a blockchain lawyer, the prosecutor's office, the "Computer Crimes" sector at the GDBOP and/or Interpol. You are being scammed!
5.1. Scammers also pose as new or established businesses that offer fraudulent cryptocurrencies or tokens. They will tell you that the company is currently entering the cryptocurrency world by issuing its own coin or token. To pull off the scam, crypto scammers can create social media ads, news articles, or a fancy website to back it all up with something "powdered" and trick you into buying the "cheap investment." In most cases, these cryptocurrencies and tokens turn out to be a scam that ends up stealing money from the people who buy them. You should know one thing - in every legal crypto project there is a software mechanism in which you can get your money back - the software does it automatically as long as you give it a shout. No one needs to authorize it - just the two wallets (yours) and the project's are connected and you get your money back. This is why you should research online to find out if a company has issued a coin or token through an ICO or STO. If this is true, it will be widely reported publicly, including in the established blockchain media. In these cases, you will be able to buy the crypto in question through an exchange by interacting with the wallet and the so-called "smart contract" of the project itself. If this is not the case, you are being scammed. In these cases, stop - immediately contact a blockchain lawyer, the prosecutor's office, the "Computer Crimes" sector at the Bulgarian Police and/or Interpol. You are being scammed!
5.2. There are scammers who impersonate government agencies, law enforcement agencies , banks, social services, electric distribution companies, or utility companies. They may say that you have a legal problem, that you owe money, or that your accounts or benefits have been frozen and are 'under investigation'. They tell you to solve the problem or protect your money by buying cryptocurrency. They usually send you a crypto wallet address that they give you - for "safe keeping". Some scammers even remain on the contact phone while directing you to a cryptocurrency exchange and giving you step-by-step instructions on how to get the money in and convert it to cryptocurrency. You can be directed to send the cryptocurrency by scanning a QR code they give you, which sends the payment straight to their blockchain wallet. Your payment is then gone forever – you've been defrauded and a victim of a crime. In these cases, stop - immediately contact a blockchain lawyer, the prosecutor's office, the "Computer Crimes" sector at the Bulgarian Police and/or Interpol. You are being scammed!
5.3. Sometimes scammers also advertise fake jobs on job sites. They send you unsolicited cryptocurrency-related job offers, such as recruiting investors, selling or mining cryptocurrency, or helping convert fiat (real) money to cryptocurrency. But these so-called "jobs" only start functioning if you pay a fee in cryptocurrency, which is always a scam, at any point. As the first task in your "job", these scammers send you an online check to deposit into your bank account. This check, as you understand, will be fake. They will tell you to withdraw some of that money, buy cryptocurrency for a fictitious "client" and send it to a crypto account they give you. But if you do, the money will disappear and you will have to pay it back to your bank. To avoid those impersonating businessmen, government officials and individuals, or bogus employers, know that:
- No legitimate business or government body will ever send you an email, SMS or message on social media to ask you for money, and they will definitely not ask you to buy or pay with cryptocurrency;
- Never click on a link from an unexpected text, email or social media message, even if it appears to come from a company you know;
- Do not pay anyone who contacts you out of the blue demanding payment with cryptocurrency;
- Never pay a fee to get a job. If someone asks you to pay upfront for a job or tells you that you have to buy cryptocurrency as part of your job, it's a scam.
6. Crypto and extortion scams.
In these scenarios, scammers send email or mail to your home claiming to have embarrassing or compromising photos, videos, or personal information about you. They then threaten to publish it if you don't pay them in cryptocurrency. Don't do it. This is extortion and an attempted criminal act. Immediately contact a blockchain lawyer, the prosecutor's office, the Computer Crime Section of the Bulgarian Police - GDBOP and/or Interpol. You are being scammed!
7. Can you sue a crypto scammer?
Yes, you can sue a crypto scammer as long as you properly individualize them as a person or company. In fact, there have been a number of successful criminal and civil court cases against crypto fraudsters in recent years, as long as they can be detected and located physically as an address. If you are successful in this part of the task, civil or criminal proceedings may be initiated and you may be able to recover the amounts that you have been harmed by the crypto scammer, as well as receive compensation for the losses you have suffered in the form of pecuniary and non-pecuniary damages.
8. Can you recover the crypto assets you were defrauded of?
It is fair to note that it is possible to recover the value (in fiat or crypto) you were defrauded of, but it is not always easy. Our practice as blockchain lawyers in the blockchain industry suggests that efforts to recover "your investment" will depend on a number of factors, including the type of fraud, the amount of funds lost in crypto or cash, and the grit and determination you have. to deal with the situation. When you trust an attorney and/or the police and the prosecutor's office, you should trust them and not think that "this is another scam". If you approach the case with such an attitude, it is better not to seek protection at all. One of the first steps you should take to recover your "investment" is to file a report through a professional attorney with the police (Computer Crime Section of the Bulgarian Police - GDBOP), the Prosecutor's Office and/or Interpol, and hire an attorney, who specializes in legislation concerning the blockchain industry, to recommend and carry out the most adequate actions for your protection.
9. "IUSAUTHOR" is a law firm that has been working for more than 10 years with a focus on litigation in the blockchain industry, including online crimes on the subject. If you find out that you have been scammed, if you have a problem with crypto scammers and feel that you are becoming part of their criminal scheme - write and/or call us and explain your problem. We will help you contact the competent authorities to deal with your problem and seek your rights.
Author: Atanas Kostov - blockchain attorney
Contact regarding resolution and investigation of crypto fraud cases: This email address is being protected from spambots. You need JavaScript enabled to view it. , tel:0888915215.