This story is for all cryptocurrency enthusiasts out there, but it is especially for new enthusiasts and those still learning about the cryptospace. In this article, I explain some of the most common scams I’ve seen, how I was scammed myself, and how you can avoid a similar fate.
The Good and the Bad of Cryptospace
There are many incredible things about the cryptocurrency community. It’s filled with creative visionaries and brave risk takers who see the amazing potential of blockchain technology to address some of our planet’s biggest challenges. Blockchain can help eliminate inefficiency, democratize markets, and open up the global economy to billions of people around the world who are currently excluded.
However, there is another side to the cryptospace, a darker side. This is the side of scammers who are trying to trick you into parting with your hard earned crypto. These scammers are everywhere. For example, I often see posts or messages on Facebook advertising “investment” opportunities like this:
If it sounds too good to be true, it is.
This type of scam is easy to avoid because it is simply too good to be true. If someone were able to turn that kind of profit in a week they wouldn’t need to ask people to send them bitcoin. They would be making money for themselves.
There are more sophisticated versions of this scam, however. I was recently contacted by someone who claimed to have admin access to an online gambling site. They wanted me to create an account and send bitcoin to the site. They claimed they could “make sure” I would win and when I did all I had to do was share half the proceeds to them. A win, win, right? They sent me a link to the supposed gambling site and let me pick a username from the list of players to show how they could control the game.
Again, too good to be true.
Great! Except it makes no sense. If this person really could control the outcome of games on a gambling site why would they need other people’s bitcoin? Wouldn’t they just deposit their own and keep all the winnings for themselves? When I put this question to the person who contacted me they quickly stopped responding. The gambling site was almost certainly fake (and has since disappeared), most likely set up by the scammer themselves to trick people into sending bitcoin. If I had done that I never would have heard from this person again and never seen any winnings.
Investment Team Scams
Another scam I see often on social media involve fake investment team offers. For example, on Twitter a user will tweet they are giving away bitcoin and a winner will be chosen from those who retweet their post. Sometimes these are fake giveaways and the user is just looking for followers. In that case, it’s annoying but not going to cost you anything. In more sophisticated versions of the scam, those who “enter” the bitcoin giveaway will be contacted and offered the winnings but only after they send the scammer some bitcoin. Here is an example:
I responded by asking for more information about this “investment team” and got this reply:
Here the scammer is promising to send me 1 bitcoin if I join their investment team. They asked me to send them .5 BTC or 2 ETH as an initial investment after which I would get the 1 BTC. Once again, this is too good to be true. Why would someone with bitcoin to spare not just invest it themselves? Why send it to someone else in exchange for half as much? It simply doesn’t make sense, which is because it’s a scam. The goal is just to get you to send some crypto after which you will never hear from the scammer again.
HYIP Websites
Another scam to watch out for are websites that offer “High Yield Investment Programs” or HYIPs. These sites will ask you to deposit an amount of bitcoin they claim will be used to day-trade cryptos. The profits from the day trading will supposedly be sent to investors on a daily or weekly basis. Many sites guarantee high percentage returns (10–20% range) and/or to double your initial investment. Once again, this is all too good to be true. You can be sure you are dealing with a scam when investment returns are presented as a guarantee. It’s impossible to guarantee returns as markets are unpredictable. The typical outcome for someone who is scammed by such a site is to never see any payments at all. Some of the more sophisticated versions of the scam will send out one or two initial payments and then stop. I suspect the reason for this is so that people think the site is legit and refer their friends.
How I was Scammed
Ok, so how did I get scammed? First, it is important to know that I was very new to cryptocurrencies and had only been researching for a couple of months when I fell victim. This is the most vulnerable time for any cryptocurrency enthusiast. You feel like you have a handle on the world of cryptocurrency but there is still so much to learn and you don’t know it yet. Second, it’s important to realize few people will ever admit to being scammed. It’s embarrassing because we all like to think we’re smart and no one could pull one over on us. Nonetheless, I’m talking about my own experiences so others can hopefully avoid a similar fate.
Scam 1
In my first few months in the cryptospace, I started doing surveys in exchange for small amounts of bitcoin. Once I had accumulated .005 BTC this way I came across an HYIP website that offered to send 10% weekly returns on initial investments until the investment was doubled. I sent my .005 BTC. I received one payment of .0005 BTC and then nothing more. I sent a couple of messages to the site’s support line and received no reply. Shortly after, the website came down and no longer exists.
Scam 2
You might have thought I learned my lesson after being scammed the first time…. Unfortunately, I had not. Shortly after loosing .005 BTC I was contacted by someone on Twitter inviting me to join their investment team. I had recently sold some airdrop tokens for 2 ETH (it was a great airdrop) so I thought I had nothing to lose. I sent 1 ETH. The person claimed that the transaction never came through, even though I confirmed on etherscan it had. I never heard from them again.
Lessons Learned
It was hard on the ego getting scammed twice. I shied away from telling anyone for quite a while. However, I was lucky in that I never sent any funds I had used my own money to acquire. Everything I lost was either profit from free airdrops or from completing microtasks online. Since then I have seen similar scams advertised over and over again and I often worry about others who are new to cryptospace. I have come to see that telling my story about being scammed can help others avoid a similar fate.
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