Every significant rise in the price of Bitcoin (aka “bull run”) has introduced many new companies and investors to the space. This has also introduced numerous types of investment scams that prey on unsuspecting investors. These types of scams come in a variety of ways but here are some of the most typical scams:

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With the rising popularity of cryptocurrency investments, scammers have also refined their strategies by creating fake investment or broker platforms. These fraudulent sites often mimic the look and functionality of legitimate trading platforms or invent entirely new identities with sophisticated branding to appear credible. They attract investors by promising high returns with little to no risk, asking for deposits in cryptocurrencies such as Bitcoin or Ethereum, or even cash.

Be wary of platforms that use URLs or business names very close to those of well-known legitimate firms. They may also boast fake endorsements or create counterfeit profiles on social media to further their illusion of legitimacy. Before making any investment, verify the platform’s registration status through reliable financial regulatory websites. It’s important to investigate their claimed affiliations with registered investment professionals or firms.

Always approach new investment platforms with caution. Conduct thorough research by checking multiple sources for any red flags or warnings from other investors. A simple search combining the platform’s name with terms like “fraud” or “scam” can unveil crucial insights about its operations.

Thousands of new blockchain-based companies enter the market each year with unique ideas and exciting projects. To raise money for their new company, they will often fundraise using an Initial Coin Offering (ICO). The company will accept Bitcoin or Ethererum as a deposit and in return, you’ll get their new crypto coin. Sometimes, these new companies have good intentions - other times, they are outright scams trying to steal your crypto.

The best way to avoid these scams is to perform your own due diligence by researching the company. This involves reading the white paper, reviewing the team and key board members, and reading forums on what others are saying about the company. Putting the company name + “scam” into your preferred search engine will often immediately tell you if the company is legitimate or not. Before transferring your crypto, it’s vital to learn as much about the company as possible to avoid getting nothing in return.

Another way investors get involved in cryptocurrencies is through mining. Instead of setting up the miner yourself, certain companies can offer users “cloud mining contracts” to rent some server space to mine coins for a set rate. You send the company bitcoin and in return you get a portion of the profits of the miner over time with the goal of earning back more than you invested.

Some cloud mining services make bold claims regarding their returns without being transparent about the true costs and diminishing returns. Some companies go as far as to guarantee returns. This is one of the most telltale signs that this is a scam. No company can guarantee a return when it comes to mining because of how complex and dynamic the mining business really is. Remember, if it sounds too good to be true then it most likely is.

Often referred to as “MLM” or “Ponzi”, these are simple but alarmingly effective scams that lure people in with the promise of extraordinary profits. They operate by taking money from new investors to pay previous investors. These companies often promise you returns based on the number of people you invite to join. They rely on recruiting as many people as possible in order to sustain the business, often growing virally and rapidly. Eventually they collapse when the founders run off with the funds after they have exhausted their amount of new clients coming in.

Most of the time, you will find that there is little to no information available on the company outside of their own website. It’s also often difficult to find reviews online. You should pay attention to the company’s fine print and ensure that their claims are feasible and not too good to be true.

Note: These are only a few of the most widely known investment scams found in the cryptocurrency industry. If you need to report an incident or you have fallen victim to this type of scam, reach out to our Live Chat support or submit a request at [email protected].

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