An Epidemic of Cryptocurrency Scams

Despite the wide acceptance of cryptocurrencies, there is a problem threatening to stifle the growth – crypto scams.

crypto scams
  • A whopping $1.7 billion was lost to cryptocurrency scammers in 2018.
  • Critics of cryptocurrencies cite the lack of institutional regulation as the reason for scams in the industry.
  • Fraudulent ICO’s and fake exchanges, fake air impersonations are among the popular cryptocurrency scams in the industry today.
  • Other scams include malware pump and dump scams, fraudulent wallets, and honey pot scams.

Cryptocurrencies are becoming increasingly popular in today’s world, and more persons and institutions are recognizing the value of digital currencies. Cryptocurrencies’ total market capitalization is at $1.72 trillion at the time of publishing, while the volume traded was $128.58 billion.

Despite the wide acceptance of cryptocurrencies, there is a problem threatening to stifle the growth – cryptocurrency scams.


In 2018, over $1.7 billion was lost to scammers through fraudulent ICOs and Exchanges, fake Airdrops, and impersonations. The figure more than doubled in 2019, where over $4 billion was lost to crypto crimes.

In the first ten months of 2020, $1.8 billion was lost to cryptocurrency thefts, hacks, and frauds netted first. Below are the most prevalent types of cryptocurrency scams and how you can protect yourself from being victim.

ICO’s stand for Initial Coin Offerings, and it is a form of crowdfunding in which a firm uses to raise funds for a project.

The lack of red-tapism, regulations, and bureaucracy has made ICO’s really popular in recent years as companies have raised billions within a short time. For example, EOS raised $4.2 billion while Petro raised an impressive $735 million from ICOs.


Fraudulent ICO’s operate by falsifying a whitepaper and generating enough buzz on social media to get people to buy with the hopes of reaping the rewards of being an early investor. An example of this is the ICO of Modern Tech that raised $660 million and disappeared into thin air.

Plexcoin, Contratech, Benebit, and Vernan are amongst the list of fraudulent ICO’s that have cost investors money. To prevent being a victim, you should thoroughly study the white paper, understand the roadmap, and have a decent understanding of the individuals behind your token.

Fake Cryptocurrency Exchanges

The boom in cryptocurrencies has made it necessary for exchanges to exist within the space as an avenue for buying and selling digital assets. The industry’s unregulated nature has created a breeding ground for scammers to make fake crypto exchanges to rob investors of their money.

They create fake exchanges and manipulate trading volumes and charge exorbitant fees before users can access funds. They also use a celebrity endorsement to lure unsuspecting investors and use unsolicited calls and emails to pressure potential victims to invest.

In 2017, South Korean authorities discovered BitKRK as a fake crypto exchange posing as an affiliate of the legitimate trading platform, KRK (Korean exchange). Investors lost millions of dollars to the BitKRK scam.
Other known fake cryptocurrency exchanges include nettocrypto, coingeek, crypto stock,, Finance-nag etc. To avoid being a victim, stick to popular platforms like Binance, Coinbase Pro, Kraken, and Huobi Global.

Ponzi Schemes

Named after Charles Ponzi, Ponzi schemes are fraudulent investment schemes that provide money for earlier investors with money taken from latter investors. These crypto projects promise unreasonable high returns and urge you to refer new people to the site.

Fraudsters behind Ponzi schemes promise consistent returns and are all unregulated and unregistered by the SEC. Plustoken in China raked in at least $2 billion, making it the largest cryptocurrency Ponzi scheme ever.

On the Flipside

  • The biggest impact of Blockchain will be security, top experts say.
  • The Bank of America opines that crypto investors are at risk from anti-privacy regulations.
  • Oracle plans to introduce blockchain to the general public through a crypto-secure data offering

Fake Airdrops

Airdrops are a way to earn cryptocurrency for free without paying any money. It works by asking users to perform certain tasks to generate awareness for a token, and in exchange, they are rewarded with cryptocurrencies.

Scammers use fake airdrops to steal vital information on user accounts. Unsuspecting investors are asked to drop their details before being able to participate in the fake airdrop. Unfortunately, unsuspecting investors submit their details and lose a fortune to scammers in the process.

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Milko Trajcevski

Milko Trajcevski is a DailyCoin news reporter, mainly focused on Ethereum (ETH), Cardano (ADA), and their founders (Vitalik Buterin and Charles Hoskinson). Milko is an avid follower of crypto and blockchain technology and has written thousands of articles on the subjects. He finds joy in transforming complex issues into written content that anyone can understand. Milko has used and analyzed numerous exchanges, such as Coinbase, FTX, and Binance. He also closely follows all of the latest news around the largest decentralized exchanges (DEXs). Location: Skopje, Macedonia