A friend once called, panicked. He had just sent ₦50,000 (US$32.75) worth of crypto to what he thought was a legitimate investment platform. The site looked polished. The returns seemed realistic. There were even video testimonials. But after he sent the money, the support chat went silent, and the dashboard stopped updating. That was when he realised he’d been scammed.
He’s not alone. We spoke to people who lost their life savings, tech experts who trace scam wallets for a living, and a former crypto employee who witnessed firsthand how shady projects are built.
What we learned was clear: scams in the crypto space aren’t always loud or obvious. They don’t always come with a sketchy message or a too-good-to-be-true offer. Sometimes, they look and feel real until it’s too late.
That’s why we created this guide. It’s built on real stories, real insights, and a simple mental model we call PATH: Promises, Authority, Transparency, and Hygiene. Once you understand how to use PATH, spotting crypto scams becomes easier, and protecting your money becomes second nature.
Common crypto scams and how they work
To protect yourself in crypto, the first step is to be aware of the types of tricks scammers use. Many of these scams aren’t new; they’re just old tactics with a new look, now using crypto and digital platforms to do the damage. Once your cryptocurrency is gone, it’s almost impossible to recover it. So knowing what to look out for is your best defence.
Here are the most common types of crypto scams:
1. Fake investment offers
My friend Tomi fell for this one. It started with an Instagram DM about a “crypto investment platform” that promised double returns in 7 days. They showed him screenshots of other people cashing out, and even offered to “match” his first deposit as a bonus. He invested ₦50,000 (US$32.75). A week later, the account was gone. No money, no replies.
“It looked real,” he said. “ They even had a Telegram group where people were posting fake withdrawal alerts. I thought, maybe this is my chance.”
That’s the trap. These scams rely on creating a sense of urgency and using fake testimonials to lure you in. Once you send your money, they disappear, and there’s no way to get it back.
2. Ponzi schemes
This is where early investors are paid with money from new investors. It all looks real at first. You might even get some profit early on. However, the entire setup relies on continually recruiting new individuals. Eventually, it crashes, and many people lose their money.
3. Rug pulls and pump-and-dumps
Here, scammers hype up a new token, creating fear of missing out. As more people buy in, the price jumps. Then the scammers pull out all the money, crash the value, and vanish, leaving everyone else with worthless coins.
4. Fake tokens and projects
Some scammers build fake coins or projects from scratch. The websites and whitepapers look legit, but everything is fake. Once people invest, the scammers take off with the funds.
5. Impersonation scams
Scammers pretend to be someone you trust, a business, a government agency, or even a police officer. They might claim you owe money or that your account has issues, and then ask you to send cryptocurrency to resolve the issue.
Watch out for:
- Calls or emails from “banks,” “IRS,” or “tech support” asking for crypto.
- Instructions to use crypto ATMs.
- Scammers pretending to be celebrities or influencers backing a coin or platform.
6. Romance and emotional scams
A scammer might connect with you on a dating app or social media. Over time, they build trust and ask for money, maybe for a “business opportunity” or a fake emergency. In some cases, they even show you fake profits from a fake trading platform to get you to invest more.
This type of scam is sometimes referred to as “pig butchering.” They fatten up the victim with fake love and trust, then take everything.
7. Phishing and fake websites
Image source: cwatch.comodo.com
This is where scammers replicate the appearance of a genuine crypto site or wallet app. If you’re not careful, you might enter your login details or send money to the wrong address. These fake sites often use URLs that are just slightly different from the real one.
8. Malicious smart contracts
Some smart contracts are built to trap you. For example, they may allow you to buy a token but block you from selling it. Others might drain your wallet once you connect to them. Always double-check contracts and only use trusted platforms.
9. Blackmail and fake charities
Some scams involve threatening emails in which the sender claims to have information about you and demands payment in cryptocurrency. Others set up fake charity sites and solicit cryptocurrency donations, especially after disasters.
Why crypto scams are so effective
The biggest danger with crypto scams is that once you send your money, it’s gone for good. Blockchain transactions can’t be reversed. That’s why scammers love crypto; it makes it much harder for victims to recover anything.
This also means the pressure is on you to spot the warning signs before it’s too late.
Table 1: Common crypto scam types & characteristics
| Scam type | Description | Characteristics/Tactics |
| Investment scams | ||
| Ponzi scheme | Promises high returns to early investors using funds from new recruits. | Guaranteed high returns; continuous recruitment; fabricated documents. |
| Rug pull (Pump-and-dump) | Fraudsters promote a crypto product, inflate its price, then abandon the project. | Anonymous developers, lack of transparency, sudden project abandonment, worthless tokens. |
| Fake crypto projects/tokens | Scammers create fictitious cryptocurrencies or tokens to deceive people into purchasing them. | Slick but fake websites; unrealistic promises; no real use case. |
| Impersonation scams | ||
| Business/Govt/Job impersonation | Scammers impersonate trusted entities (e.g., banks, Amazon, the FBI) to demand cryptocurrency. | Unexpected contact; demands for crypto payment for “fraud” or “debt”; guides to crypto ATMs. |
| Celebrity endorsement | False claims of celebrity/influencer backing for a crypto project. | Fake social media posts/ads; unexpected links/QR codes; easily faked endorsements. |
| Social engineering scams | ||
| Romance scams (“Pig butchering”) | Builds fake emotional connection, then pressures the victim to invest in fake crypto or send funds. | “Love bombing”; refusal to meet/video chat; urgent requests for crypto for “crisis” or “investment”; initial small “gains”. |
| Blackmail scams | Threatens to release compromising personal information unless crypto is paid. | Unsolicited emails/mail with threats; demands for crypto payment. |
| Charitable donation scams | Poses as a legitimate or made-up charity to solicit crypto donations. | Fake charity websites; appeals to charitable inclinations. |
| Technical scams | ||
| Fake websites/phishing | Creates replica websites/apps with altered domain names to steal credentials/funds. | Slightly altered domain names; phishing emails/texts; requests for private information. |
| Malicious smart contracts | Contracts designed to prevent the selling of tokens (honeypots) or siphon funds. | No “sell” transactions observed; hidden code preventing withdrawals. |
The PATH to safety: A simple way to spot crypto scams
When it comes to spotting crypto scams, one of the best things you can do is pause and ask the right questions. That’s where “The PATH to Safety” comes in. It’s a straightforward model you can follow before investing your money in any crypto project. Each letter in PATH represents a key area to examine.
“Scammers move fast and prey on emotion, greed, fear, and love,” said Jeremy, a blockchain security analyst who works with fraud investigators to trace stolen funds. “PATH helps you slow things down. It gives you a clear lens to look through before you invest or send money. If more people used it, I’d have fewer cases to trace.”
Let’s break it down:
P – Promises
Scammers love to make big promises. That’s how they hook you.
Watch out for:
- Guaranteed profits or huge returns — no one can promise that in crypto.
- “Low risk, high return” — sounds nice, but it’s not true.
- Free giveaways — these are often used as bait to steal your money or personal information.
- Sketchy token setups — if most of the tokens go to the team or early buyers, that’s a red flag.
- Time-limited offers — they push you to act fast so you don’t think too much.
If it sounds too good to be true, it probably is.
A – Authority
Scammers often pretend to be someone important or someone close to you.
Be careful of:
- Random messages or calls from people discussing cryptocurrency.
- Demands for payment in crypto — no legit company or government agency does that.
- Fake accounts pretending to be celebrities, banks, or friends.
- Pressure to act now or else “something bad” will happen.
- Excuses to avoid video calls or face-to-face meetings — common in romance scams.
They use fear, trust, or fake emotional bonds to trick you. Don’t fall for it.
T – Transparency
Real crypto projects have nothing to hide.
Check for:
- A clear whitepaper and roadmap — not just fancy words.
- A visible team — with real names, profiles, and experience.
- A proper website — not one with weird links or hidden ownership.
- Legal information — such as our privacy policy and terms. Scam sites often leave these out.
- Genuine community — not just bots or fake engagement.
If you can’t find real, clear details behind a project, walk away.
H – Hygiene
Good digital hygiene keeps your crypto safe.
Never do this:
- Share your private key — that’s your wallet’s password. Once it’s out, your money is gone.
- Click on random links from emails, DMs, or texts, even if they seem familiar.
- Download unknown apps or files — these could give scammers access to your device.
- Use unverified platforms — always double-check before signing up or sending funds.
- Skip research — always search for reviews, complaints, or scam alerts about a project.
Crypto puts the control in your hands. That also means your safety depends on you.
Use PATH before you invest
Keep this model in mind whenever someone discusses a crypto opportunity with you. It’ll help you slow down, ask better questions, and avoid getting caught in a scam.
Table 2: The “PATH” framework
| PATH component | Core principle | Key red flags | Psychological tactic exploited |
| P | Promises | Guaranteed profits, big returns, “low risk” claims, free money offers, unrealistic tokenomics. | Greed, desire for quick wealth, urgency. |
| A | Authority | Unexpected contact, demands for crypto payment, impersonation of trusted entities (gov’t, business, celebrity, love interest), pressure tactics, refusal to meet/video chat. | Fear, trust, emotional manipulation. |
| T | Transparency | Vague/missing whitepaper/roadmap, anonymous team, poor website quality/domain issues, missing/generic legal documents, fake community engagement. | Illusion of legitimacy, reliance on superficial polish. |
| H | Hygiene | Requests for private keys, suspicious links/downloads, unverified apps/platforms, lack of independent due diligence. | Lack of technical knowledge, urgency, and desire for convenience. |
How to verify crypto projects, tokens, and smart contracts
Spotting red flags is a good first step, but real protection comes from doing your checks. You don’t need to be a blockchain expert; just knowing what to look for and using the right tools can save you from losing money.
“People see a clean website and think it’s legit,” said Jeremy, the blockchain security analyst. “However, scammers have become quite adept at replicating things. What they can’t fake well is the full picture, especially what’s on-chain.”
1. How to check if a crypto project is legit
- Look at the whitepaper & roadmap: A good project will explain what it’s about, how it works, and where it’s going. If the whitepaper is vague or full of buzzwords without a clear plan, that’s a bad sign. Also, check if the team has hit past goals or keeps missing them.
- Review the token distribution to see how the tokens are allocated. If most of the tokens are allocated to the team or early investors and are released too quickly, it typically means trouble. Real projects spread out token releases over time.
- Check the team: Search the names of the people behind the project. Do they have a history in crypto or tech? Can you find them on LinkedIn? If the team is anonymous or sketchy, be careful. Also, don’t just take their word for partnerships. Check if the other party (e.g., Binance, a celebrity, or another company) has confirmed it on their official page.
- Look at the community: A strong crypto project usually has an active community on X (formerly Twitter), Discord, Telegram, or Reddit. Pay attention to how the team interacts with each other. Are they answering questions or just posting hype? Fake projects often purchase followers and utilise bots to generate comments.
- Legal information & contact details: If you can’t find a physical address, real email addresses, or proper legal documents (such as a privacy policy or terms), that’s a red flag. You can also check if their company name shows up in public records online.
2. How to check smart contracts and tokens
Some scams are hidden in the code of the token or smart contract. Here’s how to check if something shady is going on:
Use Blockchain explorers (like Etherscan.io)
- Search for the contract address on the project’s official site. If you can’t find it, that’s a problem.
- Look for a verified contract badge on Etherscan; this indicates that the code is open and matches what’s on-chain.
- See how people are using it. If nobody can sell the token, it could be a honeypot scam (where you can buy but can’t sell).
Use tools to make it easier
- DEXTools – Shows real-time data, a “DEXT Score,” and lets you see if the token has locked liquidity or selling limits.
- Token Sniffer / BSC Check – Scans the smart contract for hidden tricks or bugs, and shows if it’s linked to known scams.
- AML Crypto Tools – Checks the wallet address you’re dealing with and gives a risk rating.
- Honeypot Detectors – Sites like honeypot.is tell you if a token won’t let you sell after you buy.
Final advice from the inside
One former employee of a crypto startup had a stark warning for everyday users: be cautious, ask questions, and don’t rush into projects that seem too good to be true.
“If you saw how some of these projects are built from the inside, you’d think twice before clicking on that Telegram link or sending crypto to a stranger online,” said the person who asked not to be named. “ I’ve seen roadmaps made in 30 minutes just to raise funds.“Most crypto scams work because people are afraid to look dumb. They don’t ask questions. They rush. That’s how you get burned.”
So let’s leave you with a few quick reminders to keep in mind:
Quick safety checklist
- Never share your private key: If anyone asks, it’s a scam. Full stop.
- Double-check every offer: Google the project to verify its legitimacy. Verify the contact. Never act in a rush.
- Ignore DMs & unsolicited investment advice: Scammers don’t come with warnings. Block, report, move on.
- Use strong passwords + 2FA: Enable two-factor authentication on every crypto platform.
- Stick to official app stores & tools: Avoid shady download links or browser extensions.
- Only invest what you can afford to lose: If losing it would wreck your month, don’t send it.
- Keep learning: Scams evolve. So should your knowledge.
The bottom line
Scams won’t go away. But with tools like PATH, insights from people who’ve been there, and your curiosity, you can stay ahead. Don’t be afraid to ask questions. Don’t let anyone rush you. And always remember: If it feels off, it probably is.
