Safer Crypto Trading: A Guide to Identify and Avoid Scams

The Scam Scale Today

Types of Cryptocurrency Scams Explained

Pig butchering scams

Romance scams

Remittance scams

Phishing scams

• Unrealistic offers or deals. Be cautious of emails promoting offers that seem too good to be true. For instance, claims of winning lotteries or receiving extravagant prizes may be designed to prompt you to click links or provide sensitive personal information.
• Unknown or unfamiliar senders. Phishing emails can sometimes appear to come from someone you know, but if anything seems suspicious or out of the ordinary, proceed with caution. Hover over the sender’s email address to verify it matches the expected address. When in doubt, contact the organization directly by phone rather than replying to the email. Avoid sharing personal information via email. (Refer to the attached example of an unusual sender’s email address.)
• Suspicious hyperlinks and attachments. Exercise caution when receiving links or attachments from unknown sources. Never open these unless you are confident they are from a trusted sender. Instead of clicking links, consider typing out the URL manually to ensure its authenticity.
• Misleading web addresses. Phishing websites often use web addresses that resemble legitimate sites but contain subtle misspellings, such as replacing an "l" with a "1" or other similar characters.
• Unexpected pop-up windows. Be cautious of websites that immediately display pop-ups, especially those requesting login credentials. Protect your accounts by enabling two-factor authentication, using browsers with built-in anti-phishing features, and keeping your system security measures up to date.

Crypto project scams

• Imitation/fake projects: Some scams involve projects imitating well-known cryptocurrencies, like the Bitcoin Gold scam. They may appear genuine, but their sole purpose is to deceive you and capture your funds. Always verify the project's authenticity before committing your funds.
• Projects lacking practical utility or making unrealistic promises: For example, the BitConnect case serves as a reminder that some initiatives may make exaggerated claims and lack a well-defined use case. Exercise caution when evaluating schemes that appear overly optimistic.
• Pump-and-dump schemes: Groups like the 'Big Pump Signal' Telegram group artificially inflate a coin's value, only to dump it later, leaving unsuspecting traders in the dust. Steer clear of such schemes and avoid the hype. And remember: always do your own research.

Exchange and wallet scams

• Fraudulent exchanges: Unscrupulous individuals might set up fake exchanges to lure users. Stick to well-known, reputable exchanges that transparently communicate their Proof of Reserves, such as CoinCatch, to protect your assets.
• Fake wallet apps and services: MyBigCoin is one example of a fake service with empty promises designed to steal user funds. Always research wallet providers and look for trustworthy recommendations.
• Initial Coin Offering (ICO) scams: ICOs can be an exciting and rewarding opportunity, as with any new project in crypto, but they also carry big risks. Be mindful of the pitfalls associated with them and make sure you do your due diligence on what these ICOs are promising. Scams like PlexCoin and Centra Tech are prime examples of ICOs gone wrong. Look for transparent information about the team, realistic goals, and a well-written white paper.

Ways to Avoid Getting Scammed

Secure or self-custody your digital assets

• Use reputable wallets and exchanges: Trustlessness is crucial in the crypto world. Stick to well-established wallets and exchanges with strong security measures in place that transparently communicate their Proof of Reserves or open-source their security models.
• Enable two-factor authentication: Add an extra layer of security to your accounts (including everything from social to email) by enabling two-factor authentication (2FA). It's a small step that can make a massive difference.

Research projects thoroughly

• Check team credentials and project history: Investigate the background of the project's team members and their past accomplishments. A solid team is the backbone of any successful project.
• Examine the project's white paper: A white paper is like a project's blueprint. Make sure it's well-written, comprehensive, and outlines a clear vision and plan. If it doesn't make sense or sounds too good to be true, it might be a scam.
• Analyze tokenomics and use cases: Dive deep into the project's tokenomics and use case. A strong project should have a practical purpose and a clear plan for token distribution. If a token distribution is extremely concentrated among founding members or doesn't have a clear lockup plan, this may be a sign of a pump-and-dump scheme.

Be cautious with communication

• Verify the source of emails and messages: Scammers often pose as official representatives from big companies, such as the CEO of OKX. Verify the sender's authenticity before engaging or sharing any sensitive information, and always reach out to the customer support team if you receive any phishing attempts.
• Avoid sharing sensitive information online: Keep your private keys and seed phrases to yourself, and try and store your passwords offline. Treat them like your most valuable secrets.
• Be skeptical: Many of today's fraud tactics involve emotional manipulation. Be cautious and skeptical of any unsolicited contact you receive from strangers through social media or messaging apps, and always question the individual's motives.

Monitor your assets

• Keep track of your assets: Regularly review your portfolio and stay informed about the projects you're involved in. Better yet, take your crypto off exchanges and into a self-custody wallet for higher security.
• Stay informed about the crypto market: The crypto landscape evolves rapidly. Keep yourself updated on the latest news and developments to make informed decisions. We recommend following reputable news sources and leading social media accounts in crypto space.

Educate Yourself:

• The U.S. Federal Trade Commision's consumer advice on cryptocurrency and scams.
• Cyber security experts Kaspersky provides dedicated crypto safety guidance on its blog.
• The Cryptocurrency Compliance Cooperative provides an avenue to report a cryptocurrency scam. The incident will be taken forward by law enforcement and blockchain investigators.
• Educational platforms like Coursera and Udemy offer insightful courses on crypto security, self-custody, and identifying scams.

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