Common crypto scams you should know about before diving into the crypto market

The kind of scams crypto firms and users face can be many, ranging from illicit get-rich-quick schemes that will actually lose you money, to more. For instance, last month India’s Enforcement Directorate conducted several raids in an investigation into a crypto token called
Morris Coin that was floated in the southern states of Kerala, Tamil Nadu and Karnataka to scam over ₹1200 crore from users.

Crypto isn’t always secure

As new as crypto is to the world, one of the most common forms of scams in the industry is actually almost as old as the Internet itself. While a crypto transaction actually is secure, there’s nothing stopping a scammer from creating a fake website that forces the user to send crypto or even their own fiat money to a cybercriminal — basic phishing.



The attacker could drive you to such fake websites through a malicious email, or through posts on social media, text messages and more. Such websites will usually market some attractive scheme around cryptocurrencies or NFTs, designed to convince you to spend money. The transaction, too, looks legitimate but will actually send money to criminals.

To identify and avoid these scams, you should avoid downloading any documents from unknown emails, messages or websites. You should also check if web pages that are accepting payments are https certified.

Social engineering and romance scams

As mentioned before, crypto scams look a lot like regular internet scams. So it’s no surprise that romance and social engineering hacks are common in this world too.

Romance scams, according to the US Federal Bureau of Investigation (FBI), are scams where a malicious actor uses a fake account to lure victims with the prospect of a romantic relationship. They are often carried out through dating apps and matrimonial websites, where people are quick to trust others because of the nature of the app/website. Once they gain the victims trust, they ask for money, and disappear with the same.

Fake crypto investment schemes

In the Morris Coin scam mentioned above, many Indians were cheated off crores of rupees when they were duped into investing into a fake cryptocurrency called Morris Coin. The investors were told that the coin was made on blockchain technologies and would trade for large sums, which would in turn increase their returns. However, the Enforcement Directorate found that the coin didn’t exist in the first place and didn’t trade on any exchanges either.



Morris Coin is one amongst many such incidents that have happened around cryptocurrencies. Fake investment schemes are one to watch. Investment schemes can also include ICO frauds, where you may be duped into investing in the initial coin offering (ICO) of a company that doesn’t exist, or has no intention to actually make a product.

DeFi rug pulls

In November last year, the price of a cryptocurrency themed around Netflix’s popular show, Squid Game,
rose to $2861 before dropping to zero. The incident was an example of crypto rug pulls, which is a phenomenon where the creators of a project use social media, messaging platforms etc. to drive up the price of a coin or an NFT, and once users put their money into the project, they simply disappear.

Rug pulls are relatively new, and they usually affect the NFT side of the industry more than crypto. However, Chainalysis’ Crypto Crimes
report from December noted that scammers had pulled in revenue worth $8 billion through rug pulls in 2021.

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