How To Avoid Crypto Scams
If you know what to look for and how to keep your digital wallet secure, crypto scams shouldn’t pose a problem. Below are the best strategies for recognizing and avoiding crypto scams.
Watch for red flags
Being aware of common warning signs can help you identify potential scams. Here are some important red flags to watch for:
- Promises of guaranteed returns: Legitimate cryptocurrencies never market their coins by promising guaranteed profits—scam coins often do.
- Pressure to invest quickly: Be aware of urgency tactics designed to rush you into rash decisions, such as limited-time offers or countdowns.
- Unsolicited offers: As a rule, ignore any unsolicited messages or emails about crypto investment opportunities. These usually entail a self-proclaimed “crypto expert” claiming exclusive knowledge of a promising investment and using phrases like “once-in-a-lifetime opportunity” or “act now to secure your spot.”
- Giveaway scams: Unsolicited offers can also take the form of giveaway scams, where scammers claim you’re entitled to free cryptocurrency but require your personal information before you can receive the funds.
- Lack of documentation: Real cryptocurrencies will always have whitepapers and records of their initial coin offerings available. However, even this isn’t enough to prove legitimacy. Avoid cryptos that have no official documentation.
- Unusual payment methods: If you’re specifically asked to purchase crypto with a gift card or with another cryptocurrency—often through unsolicited emails, social media messages, or Telegram chats—you’re likely dealing with a crypto scammer.
Only use trusted platforms
Not all crypto platforms are created equal. Reputable, regulated platforms you can trust include Coinbase, Crypto.com, and Gemini. Cryptocurrency scams are most likely to occur on unregulated platforms such as Best Wallet, Margex, Uniswap, and PancakeSwap.
Legitimate, regulated exchanges are usually registered with the Financial Crimes Enforcement Network (FinCEN), demonstrate SOC 2 compliance, and require users to complete identity verification steps in line with KYC and Anti-Money Laundering (AML) regulations.
Not sure whether a given exchange or coin is legitimate? If it has any of the below aspects, it’s probably fake:
- Strange URLs with misspelled words or unusual characters.
- Poor website quality, with frequent typos or bad design.
- A huge amount of niche, unpopular coins available for trade.
Enable two-factor authentication
Two-factor authentication is when you’re required to provide a second piece of information in addition to your password, like a code sent to your phone, before you can access your digital wallet. In the event of a phishing attack where your password is compromised, two-factor authentication could be the final stop that prevents a scammer from accessing your crypto.
Consider using an authenticator app for the second step of your two-factor authentication. An authenticator app generates a new, unique code every 30 seconds, making it much harder for scammers to use your stolen password to access your crypto.
