Cryptocurrency Scams: Prevention Guide
Cryptocurrency scams cost Americans $5.6 billion in 2023—a 69% increase from 2022—with average losses of $35,000 per victim, the highest of any fraud category. The FBI reports investment scams account for 71% of crypto losses, with "pig butchering" (romance-led investment fraud) as the fastest-growing category. Cryptocurrency's irreversible transactions and limited regulation create ideal conditions for fraud, with only 5% of stolen crypto ever recovered according to blockchain analysis firms.
Common scam types: Investment/Ponzi schemes promising 20-50% monthly returns paid from new investor funds until collapse. Pig butchering operations where romance leads to fake trading platforms showing artificial profits—victims average $100,000 losses. Fake exchanges that accept deposits but prevent withdrawals before disappearing. Celebrity impersonation giveaways ("send 1 BTC, receive 2 BTC") targeting social media users. ICO (Initial Coin Offering) scams selling worthless tokens before project abandonment. The FTC reports social media is the starting point for over 50% of crypto scams, with people in their 20s-40s 3x more likely to be victimized than older adults.
Protection: Only use established exchanges listed on CoinMarketCap or CoinGecko. Never share private keys or seed phrases—legitimate platforms never request these. Reject guaranteed returns and "risk-free" investments as definitive fraud. Research team members, verify company registration, and check domain registration dates (new sites indicate scams). Enable two-factor authentication and use hardware wallets for significant holdings. Treat anyone pressuring quick investment decisions as fraudulent. Report suspected crypto fraud to FBI IC3 (ic3.gov), FTC (reportfraud.ftc.gov), and CFTC (cftc.gov/complaint).
References
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FBI Internet Crime Complaint Center (IC3). (2024). 2023 Internet Crime Report: Cryptocurrency Fraud. Retrieved from https://www.ic3.gov/Media/PDF/AnnualReport/2023_IC3Report.pdf
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Federal Trade Commission (FTC). (2024). Reports Show Scammers Cashing in on Crypto Craze. Retrieved from https://www.ftc.gov/news-events/data-visualizations/data-spotlight/2024/01/reports-show-scammers-cashing-crypto-craze
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Chainalysis. (2024). The 2024 Crypto Crime Report. Retrieved from https://www.chainalysis.com/blog/2024-crypto-crime-report-introduction/
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Commodity Futures Trading Commission (CFTC). (2024). Customer Advisory: Beware Virtual Currency Pump-and-Dump Schemes. Retrieved from https://www.cftc.gov/
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Securities and Exchange Commission (SEC). (2024). Investor Alert: Crypto Investment Scams. Retrieved from https://www.sec.gov/investor/alerts
Report Cryptocurrency Fraud
- FBI IC3: https://www.ic3.gov/complaint
- FTC Report Fraud: https://reportfraud.ftc.gov
- SEC Complaint Center: https://www.sec.gov/tcr
- CFTC: https://www.cftc.gov/complaint
- Crypto Exchange Support: Contact your platform's fraud department immediately
Legitimate Resources
- CoinMarketCap: https://coinmarketcap.com/
- CoinGecko: https://www.coingecko.com/
- Blockchain.com Explorer: https://www.blockchain.com/explorer