The exponential growth of the crypto industry is one for the books. A decade after Bitcoin technology first made the rounds online with 10 bitcoin (BTC) being traded in January 2009, cryptocurrency assets have reached a market cap value of as much as $138.6 billion in total. That’s not even counting previous losses worth about $700 billion that altcoins incurred because of a series of price drops as well as the volatile nature of cryptocurrencies.

With these staggering numbers, it’s not surprising anymore that cryptocurrencies have become the target of a wide range of scams and other dubious activities. At this point when cryptocurrency is at the height of success, traders are more likely to fall for promises of high profits and instant gains—something that scammers can easily exploit to their advantage.

In fact, the Financial Conduct Authority (FCA) in the UK has reported that more than $34 billion (£27 million) was lost to investment scams in 2018-2019. This comes close on the heels of the FCA’s finding that the number of fraudulent crypto-related cases more than tripled from 530 in 2017-2018 to 1,834 in 2018-2019.

Considering how costly crypto thefts can be, it’s important that you protect yourself from them. In this post, we’ll show you which scams to avoid as well as steps to take so you don’t get easily tricked.


Common Scams in Crypto


  • Unregulated brokers and crypto exchanges

One of the things that attract people to invest in cryptocurrency is its decentralized nature, meaning there’s no central bank or government agency that controls how digital coins are transferred from one party to another within a network. Nevertheless, there are designated exchanges where members can buy and sell crypto money for a reasonable or realistic price.

By contrast, unauthorized brokers or exchanges will be luring you with heavy discounts and still promise quick and high returns. Once you’ve signed up with them and deposited money, they may either charge you with unnecessary fees, make it difficult for you to withdraw your funds, or run away with your money in a so-called exit scam. U.S. security agencies say theft cases involving crypto exchanges during Q1 2019 alone were worth $356 million.

How to avoid this scam: Transact only with legitimate online exchanges and brokerage firms, which you can identify by looking for these things:

  • A web address that shows a lock icon and a URL that begins with “https” to indicate that the site is HTTPS-enabled.

    Bonus Tip: Instead of clicking on a link to visit a site, type the URL address yourself into your browser. 
  • A physical address with contact details listed on the exchange’s website, including the company’s social media profiles. 
  • An official blog page, which provides content about the policies and guidelines of the exchange. 
  • A help desk, where you can chat or call with customer service agents.


  • Automated trading systems

In automated trading systems, brokers talk cryptocurrency users into trading their tokens with fiat currencies through arbitrage buying. This means buying cryptocurrency from one exchange and selling it to another, which supposedly offers higher profits instantly.

What makes this iffy is that trading via online exchanges can take hours, so you can’t expect to make quick profits. This small window of opportunity in automated trading reduces your chances to make profits and may lead to losses instead.

How to avoid this scam: Avoid paying any trading fees without first doing your research about the trading systems you’re in talks with. Check their terms and conditions, making sure that they’re completely transparent about their policies. If you’re in doubt, ask for clarifications, or check third-party sites or online forums for reviews.


  • Scammy ICOs

Initial coin offerings (ICOs) are designed to help companies who are entering the cryptocurrency market raise capital. However, not all ICOs are legitimate.

In September 2017, Hollywood got mired in a controversy when high-profile personalities including DJ Khaled and boxing champ Floyd Mayweather endorsed what turned out to be a fake ICO from Centra Tech. Centra Tech’s scheme defrauded investors of about $60 million.

Beware of other cases of shady ICOs, where scammers create fake or clone websites, prodding users to participate in an ICO and instructing them to deposit coins into a compromised wallet.

As an investor, it would do well for you to heed this advice from Stephanie Avakian, Co-Director at the U.S. Securities and Exchange Commission, Enforcement Division:

“Investors should be skeptical of investment advice posted to social media platforms, and should not make decisions based on celebrity endorsements. Social media influencers are often paid promoters, not investment professionals, and the securities they’re touting, regardless of whether they are issued using traditional certificates or on the blockchain, could be frauds.”

You should also note that certain countries, including China and South Korea, have bans on certain ICOs, so be sure to do a background check on any company offering ICO.


  • Fake mobile apps

To date, there have been at least 10,000 internet users who have downloaded fake cryptocurrency apps. What these apps do range from launching malware that can steal your passwords and other credentials, charge you for downloading the app, or offer fake digital wallets that when downloaded can create a backdoor entry into your phone, compromising any online accounts that are linked to your device.

Look for these red flags when downloading apps from the Play Store or App Store:

  • There are spelling errors either in the name, logo, or content of the app.
  • The branding’s color looks inauthentic or inconsistent with the real one.


  • Hardware wallet theft

Speaking of wallets, e-wallet scammers may be selling hardware wallets that are pre-configured with a seed phrase, which is supposed to be your security key for your wallet. Once you use the wallet, fraudsters will also gain access to your wallet and drain its funds using the pre-installed security key.

The bottom line here then is to accept wallets from trusted sources only.


No to Scams

Crypto scams are rampant, and if you’re not careful, you might find your digital assets falling into the hands of hackers and fraudsters. Best to stick to crypto products and services that are legitimate, regulated, and certified courtesy of BXB Exchange.


BXB is a professional cryptocurrency exchange platform that guarantees easy, intuitive, and most importantly, secure transactions for your crypto investment needs. Download the app today!