TLDR: Crypto scammers have three main tricks: They either vanish with everyone’s money after starting fake projects (“rug pulls”), pretend to fall in love with you on dating apps before asking for crypto, or act super friendly while slowly convincing you to invest more and more until - poof! - they disappear with everything. Since crypto transactions can’t be reversed and scammers can hide easily, your best defense is simple: Never share your private keys, ignore random crypto “opportunities,” and stick to well-known cryptocurrencies. If someone’s pushing you to invest quickly, they’re probably trying to scam you.

Crypto Scams and Hacks

The crypto market has grown from a niche experiment to a trillion-dollar asset class in just over a decade. This rapid growth has created enormous opportunities - and serious risks. According to Chainalysis, cryptocurrency scammers stole approximately $7.8 billion from victims worldwide in 2023, showing that criminal activity is growing and evolving alongside the crypto market.

What makes crypto scams particularly insidious is that they don’t just target new investors. Experienced traders, technologists, and financially savvy individuals are also falling victim to these sophisticated cryptocurrency scams. The combination of technical complexity, psychological manipulation, and the irreversible nature of blockchain transactions creates a unique environment for scammers to thrive.

This article covers everything you need to know about cryptocurrency scams and hacks—from recognizing common schemes to implementing robust security measures and understanding what to do if you become a victim.

The Biggest Crypto Scams You Need to Know About

The “Rug Pull” - When Your Investment Goes Poof!

Imagine buying into the next big crypto coin, only to wake up and find the people running it have vanished - along with everyone’s money. That’s a rug pull. The warning signs? You can’t sell your coins, and the team keeps making weird excuses about it.

The Romance Scam - Love Shouldn’t Cost Crypto

Dating apps are full of fake profiles these days. These scammers take their time, sometimes chatting for months before they start talking about crypto. Then comes the sob story and the request to “help” with some digital cash. Spoiler alert: you’ll never see that money (or your online crush) again.

The “Pig Butchering” Scam (Yes, that’s really what it’s called)

This one’s nasty. Scammers find people new to crypto and act super friendly and helpful. They show off their “amazing investment returns” and convince people to invest more and more money. Then one day - poof! They’re gone, along with all your cash.

Why Crypto Scams Work So Well

Here’s the thing about crypto that makes it perfect for scammers:

Once you send crypto, it’s gone forever - no take-backs Nobody’s really in charge, so there’s often no one to complain to.

Scammers can hide behind fake names and addresses

How to Keep Your Crypto Safe

Want to invest in crypto without getting scammed? Here’s what smart investors do:

The “Not Your Keys, Not Your Coins” Rule Keep your private keys (think of them as your crypto passwords) super safe. Never, ever share them with anyone. Not your crypto buddy, not your online girlfriend, not even someone claiming to be from crypto customer service.
The “If It Sounds Too Good to Be True” Rule Anyone promising you’ll get rich quick with crypto is probably trying to make themselves rich - with your money. Real crypto investing is boring and takes time.
The “Trust No One” Rule Got a random message about a hot new crypto deal? Delete it. Someone you don’t know sliding into your DMs about crypto? Block them. A celebrity promoting a coin you’ve never heard of? It’s probably a scam.

The Bottom Line

Crypto might be the future of money, but right now it’s also a playground for scammers. Before you invest:

Do your homework
Only invest what you can afford to lose
Stick with well-known cryptocurrencies
Never share your private keys
If someone’s pressuring you to invest, walk away

Remember: The crypto world is like the Wild West right now. There are no sheriff’s deputies to call if someone steals your digital gold. Your best protection is to be smart and careful from the start. Stay safe out there, crypto cowboys.

Crypto Scams and Hacks

The cryptocurrency market has grown from a niche technological experiment to a trillion-dollar asset class in just over a decade. This rapid growth has created enormous opportunities—and equally significant risks. According to Chainalysis, cryptocurrency scammers stole approximately $7.8 billion from victims worldwide in 2023, showing that even as the market matures, criminal activity continues to flourish.

What makes these scams particularly insidious is that they don’t just target the uninformed. Even experienced investors, technologists, and financially savvy individuals fall victim to sophisticated cryptocurrency scams. The combination of technical complexity, psychological manipulation, and the irreversible nature of blockchain transactions creates a perfect environment for scammers to operate.

Common Crypto Scams: Red Flags and Prevention

Investment Scams

Rug Pulls

A “rug pull” occurs when cryptocurrency developers abandon a project and run away with investors’ funds. The name comes from the expression “pulling the rug out from under someone.”

How it works: Typically, developers create a token and list it on a decentralized exchange, pair it with a major cryptocurrency like Ethereum, and create a liquidity pool. They promote the project aggressively, often through social media and influencer marketing. Once enough investors have bought in and the price has risen, the developers suddenly withdraw all the liquidity from the trading pool, convert it to other cryptocurrencies, and disappear—causing the token’s value to crash to zero.

Warning signs:

Anonymous development team with no verifiable history
Locked liquidity for a limited time period
Unusual token distribution with large percentages held by a few wallets
Excessive promises of returns with minimal technical development
Limited or plagiarized technical documentation

Notable examples: The 2021 Squid Game token, inspired by the Netflix show, rose 86,000% before collapsing to zero when developers cashed out $3.38 million. AnubisDAO, which raised $60 million before disappearing completely within 24 hours of its launch.

Prevention:

Research the development team thoroughly, including their previous projects
Check if the smart contract code has been audited by reputable firms
Verify token economics and distribution patterns
Be suspicious of projects with excessive hype but limited technical substance

Pump and Dump Schemes

While pump and dumps have existed in traditional markets for decades, they’re particularly prevalent in cryptocurrency due to lower regulation and higher volatility.

How it works: Organizers (often operating in private messaging groups) coordinate to purchase large amounts of a low-cap cryptocurrency simultaneously, artificially inflating the price. They generate excitement through social media, influencer endorsements, and false news. When unsuspecting investors buy in at the inflated price, the original buyers sell their holdings at a profit, causing the price to collapse.

Warning signs:

Sudden, dramatic price increases without substantive news
Coordinated social media campaigns hyping a previously unknown token
Celebrity endorsements of obscure cryptocurrencies
Promises of “guaranteed” returns or claims of inside information

Prevention:

Be skeptical of sudden price movements, especially for tokens with low market capitalization
Research thoroughly before investing based on social media recommendations
Be especially cautious of tokens promoted through unsolicited messages or groups
Analyze trading volume patterns for signs of manipulation

Romance Scams

Romance scams have been adapted to the cryptocurrency era with devastating effectiveness.

How it works: Scammers create fake profiles on dating apps or social media platforms and develop seemingly genuine romantic relationships with targets. After establishing trust over weeks or months, they introduce cryptocurrency investments into conversations, eventually persuading victims to invest in fraudulent schemes they control.

Warning signs:

Online romantic interest quickly turns conversations toward cryptocurrency investments
They claim extraordinary returns on their own investments
Reluctance or inability to video chat or meet in person
Pressure to move quickly on investment opportunities
Requests to download specific apps or create accounts on unfamiliar platforms

Prevention:

Never mix romantic relationships with financial advice
Verify the identity of online romantic interests through video calls and other means
Research any investment platforms they recommend independently
Be skeptical if the relationship seems to accelerate quickly after investment discussions begin

Pig Butchering Scams

“Pig butchering” (sha zhu pan in Chinese, where the scam originated) refers to the practice of “fattening up” victims before “slaughtering” them financially.

How it works: This sophisticated, long-term scam begins with scammers contacting victims through social media, dating apps, or seemingly wrong-number texts. They build trust over weeks or months without immediately asking for money. Eventually, they introduce the idea of a lucrative investment opportunity, often directing victims to professional-looking but fraudulent cryptocurrency investment platforms. The platforms show fake profits to encourage larger deposits. When victims try to withdraw funds, they’re told they must pay taxes or fees, or the website simply disappears.

Warning signs:

Random contacts that develop into friendly conversations
Displays of wealth and success through photos and stories
Investment sites that can’t be found through independent search
Pressure to continue investing after seeing initial “profits”
High-pressure tactics if you try to withdraw funds

Prevention:

Be suspicious of investment advice from recent acquaintances
Verify the legitimacy of investment platforms through independent research
Never send cryptocurrency to someone you haven’t met in person
Check platform URLs carefully for subtle misspellings or variations
Verify that trading platforms are registered with appropriate financial authorities

Phishing Attacks

Phishing attacks in cryptocurrency target your login credentials, private keys, or seed phrases.

How it works: Scammers create convincing fake versions of legitimate cryptocurrency websites, exchanges, or wallet interfaces. They direct victims to these sites through emails, social media messages, or search engine ads. When users enter their credentials or private keys, the information is captured. Some sophisticated phishing attacks also include malware that monitors clipboards for cryptocurrency addresses and replaces them with the attacker’s address when users attempt to copy and paste.

Warning signs:

Emails or messages claiming account issues requiring immediate attention
Slight variations in website URLs (like coinbase-login.com instead of coinbase.com)
Unusual formatting or grammatical errors in communications
Generic greetings rather than personalized ones
Special offers that seem too good to be true

Prevention:

Always type exchange and wallet URLs directly in your browser
Enable bookmarks for frequently used cryptocurrency services
Verify email sender addresses carefully
Use hardware wallets for significant holdings
Enable two-factor authentication on all cryptocurrency accounts
Install anti-phishing browser extensions that can detect fraudulent websites
Always double-check addresses when making transactions

Technical Exploits

Smart Contract Vulnerabilities

Smart contracts—self-executing code that runs on blockchains—can contain vulnerabilities that hackers exploit.

Common vulnerabilities:

Reentrancy attacks: Where a function can be interrupted before it completes and called again, potentially allowing multiple withdrawals
Flash loan attacks: Using uncollateralized loans to temporarily manipulate market prices
Integer overflow/underflow: Mathematical errors in code that can be exploited
Access control issues: Insufficient restrictions on who can execute certain functions
Oracle manipulation: Tampering with the data feeds that smart contracts rely on

Notable examples: The 2016 DAO hack ($60 million stolen through a reentrancy vulnerability), 2020 bZx protocol attacks (multiple flash loan exploits), and the 2022 Ronin Bridge hack ($600+ million through compromised private keys).

Prevention:

Favor projects with multiple professional security audits
Look for projects with bug bounty programs
Check if projects use time-locks and multi-signature controls for major changes
Be cautious with brand-new DeFi protocols without established security records
Consider tools like Etherscan’s contract verification to examine code directly

Exchange Hacks

Cryptocurrency exchanges remain prime targets for hackers due to the large amounts of assets they control.

How hackers gain access:

Exploiting software vulnerabilities in exchange code
Compromising employee accounts through social engineering
Attacking infrastructure vulnerabilities
Insider threats from employees with access

Major incidents: Mt. Gox (2014, $450 million), Coincheck (2018, $530 million), KuCoin (2020, $275 million), and Bitmart (2021, $200 million).

Prevention:

Use exchanges with strong security records and regular security audits
Limit amounts kept on exchanges to what’s needed for active trading
Research exchange insurance policies and segregated wallet practices
Verify exchanges’ cold storage practices and percentage of assets kept offline
Check for SOC 2 certifications and other security credentials

Wallet Security Issues

Even individual cryptocurrency wallets can be compromised through various attack vectors.

Common wallet vulnerabilities:

Malware targeting seed phrases stored on computers
Compromised wallet software from unofficial sources
Supply chain attacks on hardware wallets
Weak encryption or random number generation
Social engineering to extract seed phrases

Prevention:

Use hardware wallets for significant holdings
Download wallet software only from official sources
Keep seed phrases offline, preferably in multiple secure locations
Update wallet firmware and software regularly
Consider multi-signature wallets for large holdings
Never share screen when seed phrases or private keys might be visible

Why Crypto Is Particularly Vulnerable

Cryptocurrency’s unique attributes create specific security challenges:

Irreversible transactions: Unlike traditional banking, cryptocurrency transactions cannot be reversed once confirmed on the blockchain. This means no chargebacks or fraud protection after funds are sent.

Pseudonymous nature: While not fully anonymous, cryptocurrency transactions don’t require identity verification in the same way traditional financial systems do. This makes it easier for scammers to operate without revealing their true identities.

Regulatory gaps: The cryptocurrency space still operates with inconsistent regulation across jurisdictions, creating opportunities for scammers to exploit legal gray areas.

Cross-border complications: Cryptocurrency scams frequently operate across international boundaries, complicating law enforcement efforts and making recovery nearly impossible in many cases.

Technical complexity: The learning curve for understanding cryptocurrency security is steep, creating knowledge asymmetries that scammers exploit.

Comprehensive Security Measures

Personal Security Practices

Private key management: The fundamental rule of cryptocurrency security is maintaining control of your private keys. As the saying goes, “Not your keys, not your coins.” This means understanding the difference between custodial services (where a third party holds your keys) and non-custodial wallets (where you control the keys).

Strategies for secure key storage:

Write seed phrases on paper or stamp them into metal (not stored digitally)
Split phrases into multiple parts stored in different locations
Consider products like Cryptosteel or Billfodl for fire-resistant storage
Never store seed phrases in email, cloud storage, or password managers

Multi-signature wallets: These require multiple private keys to authorize transactions, reducing the risk from any single point of compromise. Typically configured as “m of n” signatures (e.g., 2 of 3 keys required), providing redundancy and security.

Cold storage principles: Keep the majority of cryptocurrency holdings in cold storage—wallets that have never been connected to the internet. Only maintain small amounts in “hot wallets” for active trading or transactions.

Technical Protection Tools

Hardware wallets vs. software wallets:

Hardware wallets (like Ledger, Trezor) store private keys in secure chips, isolating them from internet-connected devices
Software wallets have varying security levels, with desktop wallets generally more secure than mobile ones, which are typically more secure than web wallets

Two-factor authentication best practices:

Use authenticator apps rather than SMS-based 2FA when possible
Back up 2FA recovery codes securely offline
Consider security keys like YubiKey for highest protection
Enable 2FA for all exchange accounts, email accounts, and cloud storage

Network security:

Use a VPN when accessing cryptocurrency accounts, particularly on public networks
Consider a dedicated device for cryptocurrency transactions
Keep operating systems and browsers updated with security patches
Use browser extensions that block cryptojacking and malicious scripts

Due Diligence Strategies

Researching projects and teams:

Verify team members’ identities and backgrounds through LinkedIn and other channels
Look for team members with verifiable histories in cryptocurrency or relevant fields
Check GitHub repositories for active development
Analyze community size and engagement patterns

Code audit importance:

Look for projects with multiple audits from reputable security firms
Check whether audit findings were addressed adequately
Be wary of projects that haven’t undergone any external audits

Community reputation assessment:

Monitor community discussions on Reddit, Discord, and Telegram
Look for thoughtful technical discussions rather than price speculation
Be cautious of communities that aggressively attack critics

Investment return warning signs:

Fixed daily or weekly percentage returns are almost always fraudulent
Guaranteed returns of any kind should be treated with extreme skepticism
Multi-level recruitment structures often indicate Ponzi schemes
Pressure to act quickly on “limited-time” opportunities

Exchange and Platform Security

Evaluating exchange security measures:

Proof of reserves: Regular attestations verifying customer funds
Security features: Withdrawal whitelisting, anti-phishing codes, lockdown modes
Insurance: Coverage types and limits for breach scenarios
Regulatory compliance: Licensing in reputable jurisdictions

Key security indicators:

Cold storage policies (percentage of assets kept offline)
Regular third-party security audits
Bug bounty programs
Transparent security incident history
SOC 2 Type 2 or similar certifications

Withdrawal protocols:

Enable withdrawal address whitelisting when available
Set up withdrawal delay periods and notifications
Implement IP and device confirmation requirements
Understand and set appropriate withdrawal limits

Recovery Options and Damage Control

Despite best precautions, scams can still occur. Here’s what to do if you become a victim:

Immediate steps:

If you still have account access, secure remaining funds by transferring to a different wallet
Revoke any smart contract approvals you’ve granted (using tools like Etherscan’s token approval checker)
Document all details of the scam: transactions, communications, screenshots
Change passwords and 2FA on any potentially compromised accounts

Reporting to authorities:

File reports with local police
Submit complaints to FBI’s Internet Crime Complaint Center (IC3) in the US
Contact the Financial Conduct Authority (UK) or equivalent in your jurisdiction
Report to your country’s national CERT (Computer Emergency Response Team)
Submit details to crypto-specific scam trackers like CryptoScamDB

Blockchain forensics:

Transaction tracking may be possible through services like Chainalysis, CipherTrace, or TRM Labs
Some exchanges can freeze funds if notified quickly enough
Consider consulting with cryptocurrency forensic specialists for significant losses

Legal recourse:

Consult with attorneys specializing in cryptocurrency
Understand that recovery is rare but sometimes possible
Class-action lawsuits may be an option for widely-affecting scams
Civil litigation may be viable if the scammer’s identity is known

Evolving Regulatory Landscape

Cryptocurrency regulation continues to develop worldwide, affecting both security practices and recovery options:

Current frameworks by region:

United States: Patchwork of SEC, CFTC, FinCEN, and state regulations
European Union: Markets in Crypto-Assets (MiCA) regulation providing comprehensive framework
Singapore: Payment Services Act licensing system for crypto businesses
Japan: Registration requirements through Financial Services Agency

Consumer protection developments:

Travel rule implementation requiring identity information for transfers
Increasing exchange licensing requirements
Emerging insurance products for cryptocurrency holdings
Deposit guarantee schemes being considered in some jurisdictions

Reporting requirements:

Tax authorities requiring cryptocurrency transaction reporting
Suspicious transaction reports for potential money laundering
Large transaction reporting thresholds
Legal obligations to report certain types of cybercrime

Future of Crypto Security

The battle between cryptocurrency security and sophisticated scammers continues to evolve:

Emerging security technologies:

Account abstraction and social recovery systems
Zero-knowledge proof systems for privacy-preserving verification
Formal verification of smart contracts
Decentralized identity solutions

Education initiatives:

Increasing integration of cryptocurrency security in academic curricula
Industry-led certification programs
Peer-to-peer education communities
Interactive security simulation tools

Industry self-regulation:

Development of security standards and best practices
Security rating systems for protocols and exchanges
Collaborative threat intelligence sharing
Decentralized insurance protocols

Final Thoughts

Cryptocurrency offers revolutionary potential for financial independence and innovation, but this comes with the responsibility of securing your own assets. By understanding the common scams and implementing robust security measures, you can significantly reduce your risk exposure while participating in this emerging asset class.

Remember that cryptocurrency security isn’t a one-time setup but an ongoing practice. Scammers continuously adapt their tactics, requiring vigilance and continuing education. The most important security factor remains the human element—maintaining healthy skepticism, conducting thorough research, and resisting the emotional triggers that scammers exploit.

The definitive rule remains: If an opportunity sounds too good to be true, it almost certainly is. By balancing the exciting potential of cryptocurrency with prudent security practices, you can navigate this space more safely and confidently.

Resources

Trustworthy information sources:

CoinCenter.org - Non-profit research and advocacy center
Chainalysis Insights - Research on cryptocurrency crime
SANS Internet Storm Center - Security threat updates
Chain Security Blog - Smart contract vulnerability analysis
Official documentation from reputable projects

Security tools:

Metamask Defender - Enhanced security for Metamask users
EtherScan Token Approval Checker - Monitor and revoke smart contract approvals
Wallet Guard - Browser extension for phishing detection
Blockdata Explorer - Analyze transaction patterns
Have I Been Pwned - Check if your email has been in data breaches

Reporting channels:

IC3.gov (US) - FBI’s Internet Crime Complaint Center
FCA.org.uk (UK) - Financial Conduct Authority
ACCC.gov.au (Australia) - Australian Competition and Consumer Commission
CaFC.ca (Canada) - Canadian Anti-Fraud Centre

Support organizations:

Global Anti-Scam Organization - Support for romance scam victims
Cryptocurrency Regulatory Education Alliance - Educational resources
Blockchain Privacy, Security & Safety Group - Security best practices
CryptoSecurity.org - Community-driven security resources

Blockchainsure stands by the pursuit of truth, and each article we publish draws on reliable sources and scientific principles. We are resolutely committed to accuracy and integrity. If you have any questions or notice errors, please reach out through our contact page.

Cryptocurrency Scams

Crypto Scams and Hacks