Investment Bitcoin Scams
General Investment Scams
There are many fraudulent investment opportunities these days surrounding BTC. Bitcoin investment scams frequently take the form of websites or social media personalities who guarantee to get you incredibly high returns for minimal investment with them. They will then ask you for further funds sent to them in BTC so they can “release” you initial profits.
- Any investment company requesting that you send them BTC instead of standard forms of payment should be considered fraudulent.
- Any investment company asking you to pay them more than your initial investment so they can release your funds should also be considered fraudulent.
- Should you come across these types of investment scams, you should report them to your local authorities.
Blockchain technology has come so far that it is now easy for anyone to create their own coins using commonly available tools. Scam artists have used this as an opportunity to create their own tokens with no real utility except to transfer wealth from the person buying the coin to the scammer selling it.
Beware of anyone asking you to buy a coin that promises to pay you profit. This coin would likely be considered an
by the SEC, and these promised future profits will never materialize.
Pump and Dump Scams
Pump and Dump scams occur when a scammer generates a lot of attention around a coin on social media or other channels in hopes of driving up the price while selling it to unwitting investors.
Once the price is driven up substantially, the scammer
the coins back on the market, causing the price to drop. The perpetrator of the pump-and-dump walks away with profits of the pumped-up coins, while the
are left as victims holding the worthless coins.
Cloud Mining Scams
All new Bitcoins are created through a process called mining, where a worldwide network of powerful computers perform complex mathematical operations to verify new Bitcoin transactions and add them to Bitcoin’s general ledger, the blockchain. In exchange for performing this service, these computers receive a reward from the network in the form of new Bitcoins.
Mining is a very real part of the Bitcoin economy, but unfortunately most of the websites promising quick gains from renting these mining computers are fake.
- Be on the lookout for companies making bold claims about their mining fees and returns without any supporting information.
- It’s essential to research opportunities and understand the risks and costs associated with any mining company before investing your money.
DeFi Rug Pulls
DeFi Rug Pulls are a type of exit scam where the developers of a Decentralized Finance (DeFi) project run away with investor's funds.
In a typical rug pull, scam artists convince their would-be investors to exchange their coins with real utility — such as Bitcoin or Ethereum — for useless coins that the scammers are pitching as
for future returns or will have some promised use case in the future.
happens when the scammers cash out the investors' ETH or BTC. These transactions occur on Decentralized Exchanges (DEX) that are not regulated like real-world companies, allowing scammers to list these unregistered coins to sell to their unsuspecting victims.
Online Exchange Scams
Criminals will create fake cryptocurrency exchange websites to deprive you of money and compromise your private information. These websites often look professionally designed and may claim to be affiliated with legitimate, well-known organizations.
These sites entice customers with unrealistic, below-market prices for selling Bitcoins. Anyone offering such out-of-the ordinary discounts or returns is usually a sign of a scam.
- Never send Bitcoin to a new exchange without first checking its URL for the green lock symbol or ‘https’ tag.
- Type each letter of the URL into your address bar manually to ensure you aren’t clicking on a site pretending to be a legitimate site, and watch for small, hard-to-notice differences in these letters in the URL.
- In the United States, all businesses that exchange cryptocurrencies for U.S. dollars are required to register with FinCEN, a branch of the United States Department of the Treasury.