Crypto Scams: What Is a Scammer and How to Protect Yourself

The cryptocurrency market is developing at a rapid pace, but along with it come hidden risks from malicious actors. Fraudulent schemes are becoming increasingly sophisticated, from impersonating websites to manipulating investor psychology. This article will help you understand what scammers are, as well as the common tricks you need to avoid.

What Is a Scammer? Definition and Threat

Scammer refers to individuals who commit fraud to steal money or personal information. In the crypto field, scammers use sophisticated tactics to deceive and manipulate the community of investors.

According to data from Chainalysis, although damages from crypto scams in 2023 decreased by 65% compared to the previous year, the total still reaches billions of USD. This shows that scammers still exist and pose a huge threat to the crypto community.

Most Common Types of Scams Today

Phishing Scam – Classic but Effective Tactic

Scammers impersonate emails, websites, or messages from reputable services to trick users into providing personal and account information. This is the most common scam in crypto due to its high realism.

Pump and Dump – Market Manipulation

Fraud groups collaborate to promote a token, create FOMO waves, then sell off when the price rises high. Individual investors are left with worthless tokens.

Rug Pull – Liquidity Withdrawal and Run

This is one of the most brutal scams. The development team suddenly withdraws all liquidity from the project, leaving investors with worthless tokens. Scammers perform this action after gaining community trust.

OTC/P2P Scam – Direct Transaction Fraud

In OTC or P2P transactions, scammers request payment upfront then disappear, or impersonate to send incorrect amounts. Users should use trusted third-party intermediaries.

Impersonating Apps, Wallets, and Exchanges

Scammers create fake websites or apps impersonating reputable projects to steal assets. For example, fake Ledger apps on Microsoft Store have caused many to lose money.

Impersonating Social Media Accounts

Scammers hack social media accounts of projects or celebrities, spreading scam links. Users should verify before clicking links.

Impersonating Admins or Staff

Scammers contact users pretending to be admins, stealing personal information or assets via email or phone.

Ponzi Scheme – Taking Money from Some to Pay Others

Scammers promise huge profits from crypto investments but use new investors’ money to pay old ones. This model collapses when there are no new participants.

Warning Signs to Recognize Scams

• Too good to be true profits: Promising huge returns without a factual basis
• Lack of clear information: No disclosure of business model, team, or investors
• Overly aggressive marketing but weak product: Heavy advertising without a concrete product
• No security audit: Project not professionally verified
• Negative community feedback: Multiple warnings on crypto forums
• Domain or logo imitation: Copying major project domains with similar characters
• No real product: Just a dream without an app or specific development plan
• Complex or restrictive withdrawal: Requiring multiple complicated steps or strange restrictions

How to Effectively Avoid Scams

Research Thoroughly Before Investing

Read whitepapers, understand the business model, development team, and operation methods. Never invest in what you don’t understand.

Verify Project Information

Ensure the project has an official website, status page, verified social media accounts, and clear contact details.

Protect Personal Information

Never share private keys or seed phrases. Be cautious of any website or project requesting sensitive information.

Use Secure Wallets

Only use popular and security-verified wallets. Avoid wallets without clear sources.

Revoke Access After Transactions

After interacting with DeFi apps, revoke wallet permissions to withdraw access, even for reputable apps.

Use Anti-Phishing Codes

Activate anti-phishing code features on exchanges to add a layer of security against fake emails.

Diversify Investments

Don’t put all your funds into one project. Spread risk by investing in multiple projects.

Check Security (Audit)

Review whether the project has been audited by independent parties. Audits ensure the safety of tokens and the project.

Keep Software Up-to-Date

Use the latest versions of wallets and software to avoid security vulnerabilities.

How to Check if a Project Is a Scam

Use Reliable Verification Sites

CoinMarketCap, CoinGecko are major sites to verify project information. You can also use ScamAdviser, CryptoScamDB, Coinopsy, or Honey Pot to determine if a project is listed as a scam.

Carefully Check Domain Names

Fake websites often use URLs that look identical, with slight character differences (m replacing n, 0 replacing o). They may also run ads on Google, causing users to accidentally visit malicious sites.

Be Cautious of DNS Hacks

Web traffic may be redirected from legitimate sites to scam sites. Even if using bookmarks, you can be deceived. A protective measure is to use offline mode on your computer.

Notable Scams That Made History

Confio – $375,000 Exit Scam

Confio raised $375,000 via ICO at the end of 2017. After receiving the funds, the team suddenly disappeared. The token price dropped from $0.6 to $0.1 in less than two hours.

Centra – Famous ICO Scam with Backing

Centra raised $32 million and was supported by Floyd Mayweather and DJ Khaled. In April 2018, the founders were arrested, and the token lost almost all its value.

LayerZero – Discord CEO Hack

On 7/5, LayerZero CEO’s Discord account was hacked. Subsequently, the account shared scam links titled “claim ZRO tokens.” Many believed it was an official airdrop and became victims.

MiningMax – Fake Cloud Mining Scam Collecting $250 Million

MiningMax required an investment of $3,200 for daily ROI and $200 commission per referral. The scam website collected up to $250 million before being exposed.

Bitconnect – Massive Pyramid Scam

Bitconnect used a multi-level marketing model, with money from some paying others. Market cap reached $2 billion, with tokens at $320. Within 24 hours, the price fell to $6, and market cap dropped to $40 million.

Frequently Asked Questions

Is Crypto Scam Illegal?

Yes. Fraudulent activities are prosecuted under the law in most countries, including Vietnam.

Can You Recover Money from a Scam?

Very unlikely. However, if funds are on a centralized exchange, contact the exchange immediately to lock the scammer’s funds.

What Is the First Step When You Realize You’ve Been Scammed?

Immediately notify the exchange, check the public wallet address, and seek support from the crypto community.

Conclusion: Proactive Actions to Protect Your Assets

The crypto market offers great opportunities but also contains risks from increasingly sophisticated scammers. What is a scammer? They are individuals who exploit trust and community naivety.

The key to avoiding scams is vigilance, proper knowledge, and proactive protective actions. Enable anti-phishing codes, use 2FA, revoke permissions, read whitepapers carefully, check audits, and always research before investing.

Remember: a little vigilance today can save you millions tomorrow. The crypto community is stronger when everyone protects their assets and personal information.