How to spot and avoid common crypto scams

From Bitcoin scams to romance scams, most crypto schemes have one thing in common: online fraudsters are trying to trick you out of your funds. 

One way of protecting yourself against crypto scams is to recognise them immediately when you see them. There are a few telltale signs - spelling mistakes, suspicious tone, poor grammar, unusual links or attachments - but there is one piece of advice that always applies: If it seems too good to be true, it most likely is. If you feel something is off, then investigate and do your research before clicking anything - and especially before sending any of your crypto.

We’re going to take a look at how five common crypto scams work and what you should do to avoid falling for them.

And remember: Never send funds to a user or a platform you don’t trust. Visit our Security hub to learn more about our approach to security at Bitpanda.

The five most common types of crypto scams

Unfortunately there is a staggering amount of different types of crypto scams, but in this guide we’re focusing on the ones that are most ubiquitous, including the following:

1. ICO scams
2. Investment scams aka 5x1 scams
3. Recovery scams
4. Impersonators
5. Social media scams

ICO scams

What are ICO scams?

Initial Coin Offerings (ICO) are a way of fundraising by which companies sell a cryptocurrency to the public. Buyers purchase the crypto expecting that the value will increase once the company becomes established, or that they will be able to use the cryptocurrency as a token in exchange for that company’s future services. Unfortunately there have been a number of scams pretending to be legitimate ICOs. In an ICO scam, fraudsters promote a fake project with a fake cryptocurrency, hoping that people will invest their funds in the seemingly cool new blockchain project -but it’s a fraud.

How to spot an ICO scam:

You may come across a social media profile or post, blog article or private message in which a seemingly legit company is offering an ICO in order to raise funds. You check out the company website, all of their socials, the white paper, but you don’t really understand what this new project is supposed to be about. The information provided is very vague. You try finding information on the “founders” associated with the project, but they seem to have appeared out of nowhere and have no ties to legitimate companies or institutions. There are dark periods in the entire timeline. There’s no real project plan and the research provided is superficial. 

If something feels off or fishy, it’s always good to dig as deep as you can before investing any funds. Usually when a so-called opportunity seems too good to be true, and the founders or team behind a project are promising the world, then it’s probably a scam.

Learn more about the red flags to consider before investing in an ICO on the Bitpanda Academy.

Investment scams

What is an investment scam?

An investment scam, also known as a 5x1 scam, is very similar to the “get rich quick” type of scam. It’s a scheme that tricks victims into sending funds to the scammer, and it’s becoming especially prevalent in the crypto world. Basically, the scammer will offer you to make x times as much money by asking you to invest an initial small amount. But, of course, you will never get the promised crypto, and you will have lost money in the process.

Example of an investment scam:

The scammer will contact you (for example via social media, Whatsapp or email) and ask you to invest a certain amount of crypto, like 1 Bitcoin, promising that you will earn five times as much Bitcoin in return (“make five times as much as your initial investment”, hence the name) within a very short time. 

Scammers behind this scheme often pose as experienced investors claiming to be sharing their “knowledge” with you and may also be hiding behind a fake social media account. Be aware that these scammers may also be using a fake Bitpanda account when they approach you. 

This is what a 5x1 scam might look like (this is an example from a fake Bitpanda account): 

Official Bitpanda social media accounts would have a blue tick next to their name. We’ve provided a list of our official accounts later in this article. The Bitpanda team would also never contact you directly regarding this topic and all giveaways are announced on our social media channels.  

What to do:

Ignore the message, don’t click on any links and do not send any funds. If you’re contacted via social media, report the profile of the user or the fake account to the respective social media company.

Remember: If something is too good to be true, it probably is. Bitpanda will never ask you to send funds to a wallet in exchange for more funds.

Recovery scams

What is a recovery scam?

If you have fallen victim to a scam where you mistakenly sent crypto or other funds to a scammer, then unfortunately you could be a target for a type of follow-up scam known as the recovery scam. The fraudsters behind this kind of scam prey on scam victims by promising they’ll help recover your lost funds if you pay them a fee. Sometimes they pretend to be lawyers or technical experts with blockchain knowledge. 

Example of a recovery scam:

You fell for a 5x1 investment scam and sent 1 BTC to an address. You were promised 5 BTC but instead, you got scammed and now your crypto is lost. You tried to get your funds back, but unfortunately, blockchain transactions are not reversible. Afterwards, opportunistic scammers come again: they tell you they know a way to get your 1 BTC back, that they know how to reverse the blockchain, or that they know how to get your investment platform to give you that 1 BTC back. The scammers ask you to pay a fee for their services.

Can you ever recover money from a crypto scammer?

These recovery “services” are actually another scam, and you are just about to lose more money. Please note that blockchain transactions are irreversible and this means that it is not possible to recover funds sent to other wallet addresses. If you’ve fallen for a 5x1 scam or similar, unfortunately your crypto is gone forever.

Imposters and impersonators

What are imposters and impersonators?

Imposters might contact you via social media, email or by phone by impersonating a Bitpanda employee or an employee of other reputable companies. When this happens, these fraudsters might tell you that your funds on Bitpanda have been frozen and you need to pay a fee to access them again, or that you need to pay to be able to deposit. 

How do imposters scam people?

You could get a phone call from scammers pretending to be from Bitpanda’s support team, asking for your credentials, password and other personal data. This attempt could even take place via email and/or social media channels, prompting you to click on a fake page or to open malicious attachments. 

How to spot imposters:

Bitpanda will never contact you and ask you for your personal information. Always check the message, email address or username for any errors or discrepancies. There’s a full list of Bitpanda’s official channels at the bottom of this article. If you receive a call, email or message on social media from a source pretending to be representing Bitpanda that seems suspicious to you, please contact us via our contact form to verify if it was us, and make sure to report any fake accounts.

Social media scams

What are social media crypto scams?

Most of the scams we’ve mentioned above mostly occur on social media platforms. And most of the time, they are trying to get your personal data, track your habits or gain access to your funds. 

How do social media scams work?

Fraudsters might pretend to be a Bitpanda employee, or they might even be trying to pass off as Bitpanda itself. If you’re on a dating app, they might be pretending to be someone they are not, often known as a catfish. 

Next to private messages from fraudsters trying to manipulate you into sending them money, they might also post about fake giveaways, advertise fake promotions and use stolen images and other content from the official Bitpanda account. This is why it might be tricky at first to tell if a user or an account are legit. 

Scammers trying to lure you into a romance scam might contact you via a dating app and start asking about your financial history and other personal details, before eventually asking you for money, and then later blackmailing you into sending them money.

How to avoid social media scams:

Remain vigilant at all times, be careful who you connect with on social media, never share personal details with strangers and make sure you’re following our official Bitpanda social media accounts - including our official Telegram groups. You can find a full list of all official Bitpanda accounts and groups below.

Only trust our official websites and social media accounts 

A good way to avoid social media scams is by following our official Bitpanda channels. Here you can find a list of our official Bitpanda social media accounts.

Twitter:

@Bitpanda
@Bitpanda_global
@PantosIO
@BitpandaCustody
@Bitpanda_FR
@Bitpanda_ES
@Bitpanda_IT
@Bitpanda_TR

Instagram:

@Bitpanda
@bitpanda_global
@bitpanda_fr
@bitpanda_es
@bitpanda_it
@bitpanda_turkiye

LinkedIn:

Bitpanda
Bitpanda Custody

YouTube:

Bitpanda
Bitpanda Global

TikTok:

@Bitpanda

Facebook:

@Bitpanda
@PantosIO
@Bitpanda.AT
@Bitpanda.FR
@Bitpanda.ES
@Bitpanda.IT
@Bitpanda.TR

Reddit:

r/bitpanda

Discord: 

Bitpanda Official

Telegram:

official Telegram groups. 

If an account looks suspicious, take a look at the handle: if it doesn’t match the ones we mentioned above, this means you’re dealing with a fake Bitpanda account. In this case, be aware that we can’t personally remove fake accounts, so please report the fake account to our Bitpanda Support team as well as to the respective social media platform and ask them to block it.

Don’t fall prey to scams - be aware and be safe

Don’t forget: It’s better to be sceptical and safe than naive and sorry. Take your time when reading information and really take it in. Always be cautious on the web. 

Try to research regularly and keep up-to-date on common scams and the latest scams around, remain vigilant at all times, even if you are feeling stressed. Find more information, warning lists, examples and guidance in our Helpdesk article on how to spot online scams. 

Be safe on the web and you’ll keep your funds safe.

Disclaimer 

This article does not constitute investment advice, nor is it an offer or invitation to purchase any digital assets.

This article is for general purposes of information only and no representation or warranty, either expressed or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of this article or opinions contained herein.

Investing carries risks. Make sure to conduct your own research before making any investment. Past performance is no indication of future results.