Let’s be clear upfront. This is not a complete catalogue of possible scams. Rather, this article outlines the common objectives of most crypto scams and identifies patterns of behaviour.
Just because someone’s behaviour doesn’t fit perfectly into any of the below doesn’t mean it isn’t a scam.
This article is designed to be read in conjunction with our other crypto security articles:
Crypto Wallets: Hot vs cold, custodial vs non-custodial
Crypto security: How to keep your crypto safe
Crypto security: Is crypto safe?
Ways your funds can be stolen:
Let’s start by examining the ways in which your funds can be stolen in crypto; this is assuming you are using your own #non-custodial wallet#.
Almost every scam listed below will be attempting to accomplish one of these goals:
- Accessing your #private key#. (Or obtain your #seed phrase# so that they can generate your private key.)
- Convincing you to sign a transaction, with your private key, that gives them access to your funds.
- Accessing your private device and either knowing your wallet password or accessing it whilst you’re already logged in.
That’s basically it.
Now, there are possibly hundreds of ways in which people try to accomplish these goals, and some of them look very very different. Here are some of them. A few have specialised tips; the ones that don’t are covered by the tips in the next lesson.
Phishing Scams:
This is a very broad category of scam in which the scammer looks to trick you into behaving in a way that leaves you vulnerable. There are possibly hundreds of ways in which they might do so, but here are some of the most common:
Posing as a real project/person:
Check the twitter of any crypto “influencer” and you’ll see this. Accounts with the same profile picture and handle, but slightly different user name, posting links to a project that “just launched”. Alternatively they might do so via direct message or on another app.
Tip to avoid: Always be very dubious of any links sent to you via messages. On twitter if you are unsure of an account then check the profile; are they followed by other people you trust? If in doubt, assume it’s a scam.
Fake project websites are another common one; these often look exactly like the real thing and are set up to catch people who mistype the url or stumble across the fake via a google search. Sometimes they’ll even pay for google ads to try to catch you.
Tip to avoid: Always access a project’s site via their twitter account. Verify the twitter account using the steps above.
Posing as “customer support”
This is very common in crypto chats on Telegram or Discord. You’ll ask a question in a project chat and instantly receive a direct message (DM) from someone claiming to be on the project team; this is ALWAYS a scam.
Tip to avoid: Basically, just ignore unsolicited DMs about crypto. No one legitimate will be offended by this because they all know how often DM = scam.
Pig butchering scam
This is a little more sophisticated; it involves someone building a relationship with you over a long time. Sometimes they will pose as an attractive woman, sometimes as someone who wants to be your “friend”, sometimes as a “developer” who wants to partner with you.
How they will “pull the trigger” varies. It could be a “new crypto service” they found that is making them “lots of money” (will drain your funds or steal deposited funds), or an “app” they’ve made (malware), or a “new token” they have insider information on.
Tip to avoid: Remember that just because someone is acting friendly doesn’t mean you can trust them. If you have spoken to someone for a few months online, that doesn’t mean you can trust them. Scammers play off greed; don’t let them.
Hacked social accounts:
This can be harder to spot: sometimes a genuine project’s social media will be hacked. The scammer, acting as them, will generally post a link or wallet address advertising some new opportunity.
Tip to avoid: It is exceedingly rare for projects to actually launch last minute time limited opportunities. If you see something happening imminently that involves connecting your wallet, downloading something, or sending money somewhere; check to see how far back they announced it.
The fake “airdrop”
Anyone who has been in crypto for a while will come across this. A mysterious token appears in your wallet. You can’t exchange it in the usual places but, oh look, they’ve included a website address where you can! This is 100% of the time a scam.
Tip to avoid: Real airdrops do exist, but if you cannot trade the token on a reputable DEX then just ignore it entirely; don’t even go to the website.
Rugpull Scams:
These scams all revolve around tokens; they are different from the others in that they involve convincing you to buy an asset, and then that asset not being as it seems. These take a few forms:
- “Classic” rug pool. The scammer creates a token, builds it, then pulls all the #liquidity# (see the Crypto as an Investment course for more).
- Fake “pre-sale”. The scammer advertises that they are launching a token and sells it before the launch with the promise of big profit. Often the end game for one of the phishing scams above.
- DeFi exit scam. A project poses as a legitimate #DeFi# project (see decentralization course) and incentives people to deposit funds. They then take all the funds at once.
Tip to avoid: Check out our article on evaluating tokens/projects.
CEX scams:
Centralized exchanges have been the centre of scams before; either through malicious action or poor security. These have drawn the attention of law enforcement so should hopefully reduce but: make sure you look in to any #CEX# you use. How big a company are they? What assurances do they offer around the handling of your funds? Have they been audited?
Tip to avoid: If you’re storing large amounts of crypto, use a non-custodial wallet if you feel able.
Conclusion
The world of crypto scams can be intimidating, and honestly being a little paranoid is probably the way to go.
Definitely keep in mind the limited ways in which someone can access your funds, mentioned at the top of the article. Having a solid understanding of these will put you in a great position to protect your crypto.
Make sure to check out our other crypto security articles for more tips on making sure you don’t become a victim:
Crypto Wallets: Hot vs cold, custodial vs non-custodial
Crypto security: How to keep your crypto safe
Crypto security: Is crypto safe?
