Online Crypto Fraud: A Complete Guide

The rise of Cryptocurrency

Cryptocurrencies such as Bitcoin have had a meteoric rise in the past year. Currently, the total market capitalization of all cryptocurrencies tops $180 billion, up from $12.5 billion in January 2017, according to As mainstream money continues to pour into the industry, cryptocurrency exchanges have been more frequently targeted by hackers and hackers are using the anonymity and trust of cryptocurrencies to mask their identities and accomplish illegal activities.

In 2017, a series of cryptocurrency heists hit exchanges and wallets around the world, causing millions of dollars in losses to unsuspecting customers.

In early March 2018, a Canadian cryptocurrency exchange, Quadriga, went offline after its founder died. Canadian authorities say he likely died in December.

How does blockchain work?

Let’s say that you’re a scammer and you want to scam crypto investors out of millions. Cryptocurrency companies use a type of technology called blockchain. Each transaction is recorded on this data-heavy platform. These records keep everyone on the blockchain in a single, cryptographically linked database.

If you’re a scammer and you run a scam that uses blockchain technology, you’re going to need investors. You’ll be able to get them with a slick and convincing presentation of your company’s tech and the role it will play in the future.

Remember, blockchain is a good thing for blockchain companies, not cryptocurrency investors. It protects transactions from tampering. For investors, it means that they can trust the legitimacy of the company that holds their funds.

What are the risks of trading cryptocurrencies?

The risk is highest for novice traders. Buy and sell orders are not tracked as closely as in a typical stock market, and the movement of the digital currency is slow. And since there are so few active traders, liquidity can be thin, making it harder to predict a direction. In addition, because the currencies trade on a decentralized market, the possibility of volatility is much greater. When volatility increases, so do the commissions on transactions.

Scammers who prey on inexperienced crypto traders are using sensational headlines in the media to drum up interest.

How to identify a scam website

Make sure your internet browser and desktop web browser are up to date. If you’re seeing advertisements for a cryptocurrency or startup, check out their source, whether it’s an official website or a social media profile. If the brand has a press kit, examine it closely for information that the company is holding back from the public.

Scammers often don’t include important information about the founders or the actual company — it’s important to research a company before engaging in business with it. Even if the team is very legitimate, be on the lookout for overly friendly and casual answers from your potential trading partner. Scammers will often claim to be just a student, someone just starting out, or someone that specializes in the space.

Identify Scams on Social Media


Report this article as inappropriate and incorrect

The following are spoof social media accounts that have been used for crypto scams. If you can easily verify the sources of the information, you should do so.


Who Is Wolin Shilling?

Wolin Shilling is a fake Twitter account. The profile of @WolinShilling was created in 2016 and does not contain any of the correct information. The fake Twitter account seems to have been linked to a website called and the website is not affiliated with Shilling or Twitter.

“Hey, my name is Mitch. i’m going to invest 100K in a new cryptocurrency. Please get a hold of me so i can give you a better quote.

Identify Scams on YouTube

If you’re watching videos about cryptocurrency, you may come across a scammer posing as a cryptocurrency expert. Let’s say a video describes a promising cryptocurrency that it claims has no middleman or centralized servers. The video ends with the recommendation to buy the currency at a certain exchange and says that your money will be safe as the exchange has the resources to help make it work. This is a classic way to lure viewers into making a cryptocurrency investment that they may not be able to keep.

Just like any investment, if the exchange isn’t reputable, you should be wary of how the cryptocurrency will be stored. Check to make sure that the cryptocurrency wallet is backed by a bank or U.S. government in case your assets are lost in the event of a hack.

How to protect yourself from fraudulently invested funds

Once you’ve decided that you want to invest in cryptocurrency, research is key. Find out what type of digital coins are available, the reputation of the company, and ask the founders some questions about the company, its team, and its technology. Not all startups are going to work out, but getting to know the founders’ story can help you avoid the scams. At the same time, you should be careful of well-meaning but overzealous investors. To protect yourself, it’s important to understand that not all ICO’s are scams.

Also, be cautious about whom you choose to help you figure out the business and technology behind cryptocurrencies. Some people are more trustworthy than others. A reputable crypto investor can make the decision whether to invest in a particular startup.

Dealing with Law Enforcement

When it comes to law enforcement, if you’re scammed, experts recommend that you contact local law enforcement. It’s possible that you will never see your money again and you don’t want to live with the guilt of letting someone steal it from you.

If law enforcement can’t help you, then you should follow up with the FTC, who may be able to freeze your account and recover some or all of your cryptocurrency. Again, you don’t want to send a message to the fraudster. Remember, they might still be in control of your account and could take your digital assets before you have a chance to call law enforcement.

Don’t Be a Victim of Cryptocurrency Scams

If you’ve been scammed, you can recover your funds by calling the Federal Trade Commission at 1-877-FTC-HELP (382-4357).

Tips for prevention

From privacy issues to ICOs, scams are everywhere these days, but there are some tricks that may help you spot them. These tips will help you do your due diligence and safely invest in a digital currency exchange, cryptocurrency trading platform or cryptocurrency wallet.

Research the company you’re considering

Do your research before trusting any company you’re researching into any crypto-related services. Don’t be duped into signing up for a service you really don’t want or need. Check reviews of the company or trading platform online, and look into the company in question. What do their previous customers say? How long has the company been in business? You can find answers to these questions from the Better Business Bureau, or the companies themselves.

Table of Contents