Common Crypto Scams and How to Avoid Them
2022 wasn’t only a difficult year because of low crypto prices.
While the crypto market faced a drastic downturn and entered into extreme bearish conditions, crypto scams were also on the rise.
According to Certik’s 2022 Web3 Security Report, 2022 saw a “record-breaking” number of hacks, scams, and collapses — only deepening the already-severe losses holders faced during the year-long bear market.
The report also named 2022 as the “worst year on record in terms of value lost”, citing a total of $3.17 billion in losses.
Unfortunately, scammers are rife in the crypto space and take advantage of its decentralisation to trick victims out of their money.
To help you protect your assets, we’re sharing some of the most popular scams in the crypto space, and how to keep yourself from falling victim to fraudsters.
Phishing scams have been around for a long time and are a popular method used by crypto scammers.
Put simply, a phishing scam involves sending bogus emails or text messages, pretending to be a reputable company or organisation. These messages include malicious links to a fake website, where the victim may be tricked into revealing their private keys or sending their crypto to the scammer’s wallet.
How to avoid: Never share your private keys with anyone. A legitimate crypto exchange or company will never ask you to share this information. Your private key is unique to you and your wallet, and if stolen, can be extremely difficult to recover.
If you receive an email or text asking you to share sensitive information, it is likely a scam.
Authorised Push Payment Scams (APP)
An authorised push payment scam (APP) occurs when the victim, either an individual or business, is tricked into sending money to a fraudster posing as a genuine payee.
APP scams typically operate by tricking someone into purchasing goods that don’t exist (“malicious payee”) or impersonating a bank to get the victim to transfer funds out of their bank and into the fraudster’s account (“malicious redirection”).
In some cases, the fraudster will convince the victim to open a crypto wallet (AKA a “safe account”) to transfer the funds there. The fraudster has complete control over the crypto wallet, and therefore the funds themselves, which are quickly sent to other crypto accounts.
This type of scam also increased in 2022, with UK Finance reporting a total loss of £609.8 million in the first half of the year.
How to avoid: The key point to remember here is that both banks and legitimate crypto platforms will never contact you to ask you to transfer money to another account or crypto wallet.
Often, APP scammers will pressure you to stay on the phone to complete the transfers. This is not common practice, and you must hang up the phone if the person on the other end is trying to push you to transfer your money.
Non-fungible tokens (NFTs) are becoming increasingly popular in the crypto space, and many are being introduced to crypto through them. While this has given crypto good exposure in the mainstream, it has also given fraudsters the opportunity to target both newcomers and pros in the space.
There are several types of NFT scams, but one of the most common is forgeries and fakes. The purpose of an NFT is that it’s completely non-fungible, unique, and cannot be traded equivalently. However, scammers will target potential victims by creating copycat versions of popular collections (think Bored Ape Club and CryptoPunks). Sometimes, scammers will even steal the original art and clone the entire project to mimic the original.
How to avoid: The OpenSea marketplace verifies an NFT or collection with a blue checkmark on the listing page. The listing will also show past ownership and sales of the NFT. An NFT that has appeared suddenly with no past transactions or on sale far below market rates is highly suspicious and is likely to be fake.
Social Media Scams
It’s true what they say — you shouldn’t believe everything you see on social media. In this case, falling for social media FOMO could cost you your crypto.
Whether through fake giveaways or false celebrity endorsements, social media has unfortunately become another channel for scammers to operate. Similar to a phishing scam, fraudsters will mimic a legitimate business through a fake social media account, promising an attractive prize if you enter. The fraudsters will then message the victim via DM, informing them that they’ve won the competition, and to click on the link to claim their prize. From there, the victim will be lured into sharing their personal information.
Another notorious social media scam is fake celebrity endorsements. The fraudsters will pose as a certain celebrity or public figure (e.g. Elon Musk), claiming to give away free Bitcoin and inviting people to send their crypto assets through a fraudulent website with the promise of doubling their investments.
How to avoid: Remember this term — if it’s too good to be true, it most likely is.
“Get rich quick” schemes on social media are simply a way for scammers to lure victims into handing over their assets through false promises.
A quick research of the celebrity’s official social media and trusted news sources will help you to determine the scam as well. If there’s no mention of such a giveaway, then it’s likely to be fake.
A crypto airdrop is a marketing practice, in which a crypto project will “drop” free tokens into a user’s wallet to promote their new project.
While this is considered to be a good way to build awareness of a project, scammers have also taken advantage of this method to phish information on users. Fraudsters will mint a fake token and drop it into a user’s wallet while showing them an attractive USD rate.
From there, the user will be lured to a fraudulent website, where they will connect their wallet in order to exchange or transact the token. However, the victim will either be exposed to high fees to approve the transaction or will have their funds wiped out of their wallet completely.
How to avoid: The truth is, when a new project has just launched, the value of their native token isn’t going to be very high — let alone thousands of dollars. If you’ve been airdropped with a new token that shows extraordinary rates, it is likely to be a scam.
Remember — stay safe!
The safety of our customers is extremely important to us. In order to protect yourself and your funds when using CL, please remember the following:
- CL will never ask you to share your card information or Ledger device details via email or SMS
- We will never call you and ask you to transfer funds to another account
- Any competitions run by CL will not require you to share your card or Ledger device information through email or SMS
- CL currently does not run crypto airdrops. Any airdrops ran under the CL name are not legitimate.
If you receive any suspicious emails, texts or phone calls that claim to be CL and ask for any of the above information, please report it immediately to our Support Team.
You can also find our official social media accounts here: