There are a lot of fraud methods in the cryptocurrency field, as fraudsters are constantly innovating new methods.
Being aware of scams is an important first step towards avoiding them completely. In this article, we have tried to highlight the most common methods.
Extortion is a well-known method used by fraudsters to threaten others by revealing certain sensitive information.
Extortion occurs when fraudsters either gain access to sensitive information about the victim, or make up this information, and use it to force them to send cryptocurrency to them.
Ransomware is a type of malware that shuts down victims’ mobile devices or computers, or prevents them from accessing important data.
Usually, ransomware blocks access to important files or databases, and threatens to delete them if the ransom is not received before a certain deadline.
3. Romantic style
This scam usually starts on dating sites, where the scammer takes advantage of his relationship with the victim.
The fraudster tells the victim about the huge gains he made in the cryptocurrency markets, and about his trading skills to get her approval to enter into some investments, which pay off to get more of the victim’s trust with the aim of withdrawing the largest possible amount.
4. Cloud Mining Tricks
Cloud mining refers to companies that allow you to rent your mining hardware for a fixed fee and a share of the revenue you are supposed to generate.
In theory, this allows people to mine remotely without buying expensive mining hardware.
However, many cloud mining companies are scams or at best ineffective, where you end up losing money or making less profit than advertised.
5. Initial Coin Offerings (ICOs)
An initial coin offering (ICO) is a way for start-up companies to raise funds from users. Customers are usually promised a discount on new cryptocurrencies.
Most ICOs turn out to be fraudulent, with criminals making efforts to deceive investors, such as renting fake offices and creating high-quality marketing materials.
6. Giving gifts (impersonation)
Scammers try to appear as celebrities, businessmen, or influencers in the cryptocurrency space.
The scammer creates a social media account in the name of a character. Famous, promising to double the digital currencies sent to him, and reports from 2021 that more than $2 million in cryptocurrency has been transferred to Elon Musk impersonators.
The phishing scammer intentionally sends an email to the victim that looks like it’s from the platform you’re dealing with and asks to take a certain action such as locking the account, updating account information, resetting the password, or downloading certain documents, by clicking on the URL link within The message is controlled by the fraudster as the victim’s login information is collected.
8. Fake platforms and wallets
Scammers deliberately create fake trading platforms, which appear to be reputable, but are a front to steal investors’ money. Some of these platforms lure investors with promotions, which in some cases seem illogical, while some offer “bonuses” to those who deposit larger amounts.
Once they get the victim’s money, these platforms may charge high withdrawal fees, make it extremely difficult to withdraw funds or simply steal the victims’ entire deposit.
Some scammers have even created highly sophisticated fake wallet apps that, once downloaded to the victim’s smartphone, can be used to steal important account details.
These apps have successfully added the fraudulent app to official and legitimate app stores like Google Play.
9. Malware (malicious)
The malware is designed to access and drain the victim’s wallet by replacing their main address with one that belongs to the scammer, or even uses their computer for mining.
10. Pyramid scheme (Ponzi scheme)
The pyramid scheme method, is a fraudulent investment process that works by paying older investors using money raised from new investors.
For example, a fraudster offers a certain project to an investor, and takes $1,000 from him for a profit of 10% within a certain period.
He convinces another investor of the project before the end of the period agreed upon with the first investor, so that he pays the dues of the first investor from the money of the second investor, and encourages the first investor to reinvest the $1,000 again, and asks him to invite more investors (victims) in return for rewards.
Thus, the fraudster pays the returns promised to the early investors by taking money from the new investors.
Eventually the scheme becomes unsustainable, and the fraudster is caught, or disappears with the victims’ money.
11. Pumping and dumping (Pump & Dump)
Pump & dump scammers introduce a new digital currency, promote it, and raise its price.
When investors go to buy the currency, scammers start selling the currencies, or dispose of them at a high price, which leads to massive selling and taking profits at the expense of the victims.
12. Pull the rug out
The scammers, who follow the “rug-pull” method, inject useless digital currency and promote it to raise its price before disappearing with the victims’ money.
One of the main differences between “pumping and dumping” and “pulling the rug” is that pulling the rug only allows selling to the founders (the fraudsters).
13. Free distribution (airdrop)
The fraudster sends cryptocurrencies to the victim’s wallet as a reward for taking certain actions using a specific platform or software.
When the victim goes to exchange the free currency for a more popular one, they give the protocol more permissions than they realize, and this allows the scammer to access all the assets in their wallet.
14. Dust attack
A dust attack refers to a relatively new type of malicious activity in which hackers attempt to break the privacy of Bitcoin and cryptocurrency users by sending small amounts of coins to their personal wallets.
The transaction activity of these wallets is then tracked by the attackers, who perform a joint analysis of multiple addresses in an attempt to identify the person or company behind each wallet.
In crypto parlance, dust refers to a small amount of cryptocurrency, an amount so small that most users don’t even notice it.
If we take bitcoin as an example, the smallest unit of a bitcoin is (1) satoshi, so we might use the term dust to refer to a few hundred satoshis.
Dust in cryptocurrency exchanges is also the name given to the small amounts of coins that remain in users’ accounts after trading orders are executed.
Dust balances are not tradable, but Binance users can convert them into BNB.
When it comes to Bitcoin, dust is defined as any transaction output less than the fee for that transaction, which leads to the concept of counting that amount as dust.
Technically, the dust limit is calculated meaning that any regular transaction equal to or less than 546 satoshis will be considered a spam transaction and will likely be rejected by the authenticating nodes.
The hackers realize that cryptocurrency users don’t care much about the tiny sums that appear in their wallets, so they begin to “dust” a large number of addresses by sending them a few satoshis. After “dusting” multiple addresses.
The next step of the dust attack involves a joint analysis of those different addresses in an effort to determine which addresses belong to the same wallet.
The goal is ultimately to link the addresses and wallets belonging to the victim, helping them to carry out phishing or extortion attacks.
special| Al-Nahda News _ Hossam Mohamed