Crypto Scams 2026: How To Avoid Scams

The bright new world of cryptocurrency is full of opportunities, excitement, and, unfortunately, fraud.According to the FTC, crypto scams have caused over $1 billion dollars in reported losses just since 2021. The average amount lost is $2,600, and people in their 30s are the most susceptible.

What Are Crypto Scams?

Crypto scams come in all shapes and sizes, and they prey on unwitting investors who believe they are making legitimate investments. Basically, a crypto scam aims to trick you into giving your money or crypto to a bad guy (or gal.) And, there's a major chance that you won't get it back.

Below we take a look at the most common types of crypto scams and how to avoid them.

Types Of Crypto Scams

1. Investment Schemes

According to the FTC, the most common cryptocurrency scam is an investment scheme. These are advertised as “investment opportunities” that promise big returns in exchange for little to no effort. To get started, you usually have to send some amount of crypto as an initial “investment.” Of course, this crypto usually disappears, never to be seen again.

Red Flags To Look Out For

• Promises of large returns with little or no upfront risk: Every real investment involves risk — the higher the reward, the higher the risk — so beware of “riskless” investments.
• No required investor qualifications: To take place in legitimate private investments in countries such as the US, you must be an accredited investor. Be careful of private investments that advertise no experience required.
• Little to no information: If it’s difficult to find out more information about an investment, that’s a bad sign. If it’s legitimate, it should have a website, stakeholders, and even reviews and testimonials from previous investors.

Example: One of the most high-profile cases of crypto fraud was the “OneCoin” pyramid scheme which defrauded investors to the tune of over $4 billion dollars. One of the co-founders of OneCoin has since plead guilty to the fraud, while the former face of the project, Ruja Ignatova, is the only woman on the FBI’s most wanted list.

2. Social Engineering

“Social Engineering” refers to any scam that relies on tricking people through psychological manipulation into sending money or disclosing information. The most common social engineering scam is the so-called “romance scam,” where an alluring online romantic interest will trick their victims into sending them crypto. In the end, of course, the romantic interest turns out to be a scammer.

Red Flags To Look Out For

• New love interests wanting money from you:As the old adage goes — don’t mix love and business. If an online romantic interest is asking you to send or invest crypto, there is a good chance you are about to be scammed.
• They say they can’t meet up in person: If someone who is getting close to you, romantically or otherwise, wants you to send them money, but they won’t meet up in person because they are traveling/on a ship/in the military, etc. you should be very careful.
• Direct payment methods:Scammers want you to send them money in a way that makes it hard for you to get it back. They will normally ask for money through a direct wire transfer or through gift cards rather than through protected payment methods like PayPal.

Example: Social Engineering and romance scams normally happen on smaller scales than investment schemes. According to a 2022 news article on NBC, one man lost close to $300,000 by sending cryptocurrencies to a supposed love interest, which is unfortunately typical of these types of fraud.

3. Phishing

A “phishing” (pronounced “fishing”) scam is where a fraudulent website is carefully crafted to impersonate a well-known and legitimate company in order to steal your money and info. Phishing attacks often come in the form of password reset emails, security alerts, or unauthorized purchase notifications from websites like Coinbase and Microsoft. When you click the link, you’re taken to a website thatlooks like Coinbase or Microsoft but is actually a fake.

Red Flags To Look Out For

• Fake URLs and email addresses: Well-crafted phishing campaigns can be hard to spot, but one tactic that never fails is to check the URLs and email addresses very carefully for extra letters or misspellings. If a website is sending you to “coinnbase.com” instead of “coinbase.com,” you can bet it’s a phishing scam.
• Asks for payment information:If you receive an email asking you to update your billing information for a service, or telling you that your payments are on hold, be careful — it may be scammers trying to get your payment information.

Example: The popular blockchain video game Axie Infinity was hacked for $625 million dollars after one of its employees was tricked into giving scammers access to the company’s computers. The scammers contacted this senior engineer with a prestigious job offer which turned out to be a malicious file that, when opened, infiltrated the company’s systems.

4. Rug Pulls

A “rug pull” scam is one of the most common types of crypto scams. Just like the visual metaphor, a “rug pull” happens when the creators of a cryptocurrency token or project “pull the rug” out from under their investors and make off with the money. A small portion of the countless new cryptocurrencies that pop up every day are even programmed to automatically “rug pull” their investors after some time.

Red Flags To Look Out For

• Tokens are not verified:Most crypto exchanges and crypto tracking websites will have a verification process that they use to make sure tokens are verified. Be very careful of trading non-verified tokens, as they may be scams.
• Hyped up, unimaginative project:Most rug pull scams are modeled after successful projects — such as Bored Ape Yacht Club NFTs or Doge-themed cryptocurrencies — so be careful any time you’re trading new tokens that are very similar to existing collections.
• Unaudited contracts:On the more technical side — any time a crypto project is not audited, you should be suspicious. Code audits are independent reviews from reputable companies that ensure the code of a cryptocurrency does not include any malicious programming or potential vulnerabilities.

Example: In late 2021, a new cryptocurrency called Squid Game (inspired by, but not affiliated with, the popular Netflix series) took over headlines before spectacularly crashing in a rug pull when its developers suddenly abandoned the project. The coin was worth $2,861 at its peak when, out of nowhere, the developers drained $3.36 million dollars out of the project and disappeared. Within minutes, the coin crashed to almost nothing, leaving its investors with huge losses.

How To Report Crypto Scams

If you’re the victim of a cryptocurrency scam, you may not always be able to get your money back, however, you can help stop the scammers in their tracks by reporting scams to government authorities.

• Report a scam to the SEC: The Securities and Exchange Commission regulates many types of financial investments, including cryptocurrencies. Report investment schemes, Ponzi schemes, false claims, and other types of financial crimes to the SEC here.
• Report fraud to the FTC: The Federal Trade Commission has a number of programs in place to protect consumers from bad actors. You can report any form of cryptocurrency fraud to the FTC here.

How To Avoid Crypto Scams

Crypto scams come in all shapes and sizes, but there are a few things you can keep in mind that will help you steer clear of dangerous projects:

• Stay away from anything that sounds too good to be true (make money quick, invest with no risk, claim free rewards, etc.)
• Ask other investors if the project is legitimate
• Stick to buying verified cryptocurrencies and NFT collections
• Be careful when opening unsolicited DMs
• Never click links you don’t recognize
• Check a crypto scam database like CryptoScamDB if you’re unsure about a project

Can You Get Your Money Back?

Scammers will very rarely give you your money back on their own. In the cases where people have gotten their money back, the criminals have usually been detained or charged by authorities and forced to return the stolen funds.

If you’ve lost money in a crypto scam, your best bet for getting it back is to report the scam to the SEC or the FTC.

To Sum It Up

Crypto scams are all over the place these days. You can avoid most of them, however, by staying away from anything that sounds too good to be true, not opening unknown links, and sticking to verified investments.

Frequently Asked Questions