Top 8 Crypto Scams: Identify and Avoid Them

In the rapidly growing world of cryptocurrency, scams are becoming increasingly common and sophisticated. Learning to identify and avoid scams is crucial to protect your investments. This article explores the 8 most common crypto scams, along with actionable advice to keep you safe.

Rug Pulls

What Are They?
Rug pulls occur when developers of a meme coin or crypto project suddenly withdraw all liquidity, essentially wiping out all of the investors. This type of scam is the most common in crypto. It preys on people who don’t research and don’t know what to look for. It works by luring you and other investors to invest your money. The developer then suddenly sells their entire share (“rug pull”) and collects all of the profit leaving investors holding worthless bags.

How to Avoid Rug Pulls

• Meme coin Rug Pulls: Always check to see how much of the tokens are owned by the developer. Use tools that wiIl warn you if the developer and/or insiders own the majority. (For Solana memecoins, TrenchRadar and SoulScanner are popular scan tools that will give you deep insight such as previous rug history, insider bundles, and other red flags).
• Research: Always check their online presence and verify their identities and credentials. Is there a website? Do they have social media? Do they have followers? Do they have engagements? Is the coin or project listed/audited by reputable 3rd parties?
• Beware of Too-Good-To-Be-True Returns: Projects promising unusually high returns are often fraudulent.

Impersonation Scams

What are They?
Impersonation scams involve scammers creating fake profiles on social media by copying the profile picture, name, and other details of someone you know and trust, such as a friend, family member, or influencer. They then reach out to you, pretending to be that person, to exploit your trust and manipulate you into sending money, sharing sensitive information, or clicking on malicious links. Or they make a post announcing a too-good-to-be-true offer.

How to Avoid Impersonation Scams

• Verify the Identity: Look at the @username of the real account and compare it to the fake account. There will always be a misspelling in the @usermame of the fake account.
• Inspect the Profile: Look for signs of a fake account, such as a recent creation date, and low activity.
• Be Skeptical of Urgency: Scammers often create a sense of urgency to pressure you into acting without thinking.
• Report and Block: If you suspect an impersonation scam, report the account to the platform and block the user.

Airdrop Scams

What Are They?
Airdrop scams exploit the excitement around free cryptocurrency distributions. Scammers advertise fake airdrops, claiming you’ll receive free tokens if you complete specific actions, such as sharing personal information, connecting your wallet, or paying a small “fee.” Instead of receiving free crypto, victims often lose their funds or compromise their wallets. Airdrop scams are often combined with Impersonation scams (see above) where the scammer will impersonate someone legit then announce an airdrop.

How to Avoid Airdrop Scams

• Avoid Anyone Advertising an Airdrop: 99% of “airdrops” are scams. You will know a legitimate airdrop because it will be advertised by an official source, but these are very rare in the crypto industry. Airdrop scams target newbies who don’t know any better. So just avoid anything that says “airdrop”. Treat the word “airdrop” as an inflammatory word.
• Use a Dedicated Wallet: If you decide to participate in a legitimate airdrop, use a separate wallet with minimal funds to limit potential losses.

Comment Scams

What Are They?
This is where scammers pose as helpful users in social media comment sections, often impersonating influencers or customer support. This type of scam is all over the internet and the most frequently encountered. Their goal is to lure you into visiting malicious websites or contacting fake “gurus” or fake “support” who steal your money.

How to Avoid Comment Scams

• Ignore Links in Comments: Never ever click on unsolicited links.
• Ignore Off-Topic Comments: For example, if the original post is about a specific coin, but the comment is about some completely different coin. That’s a scam.
• Ignore Off-Topic Threads: For example, a comment asking an off-topic question followed by responses that attempt to lure you. That entire thread is a scam.

Support Scams

What Are They?
Fraudsters claim to offer assistance recovering lost funds, often via a fake “support form” that harvests your private keys and personal information.

How to Avoid Support Scams

• Lost Funds Can Not Be Recovered: If you lose your crypto in a transaction, it’s gone forever. Anyone offering to “recover” funds is lying to you and is a scammer.
• Avoid Unsolicited Help: Legitimate platforms won’t reach out to you first.
• Use Official Support Channels: Contact only verified customer support through official websites. Never Google a support number, because scammers litter the internet with fake numbers.

Juxtaposition Scams

What Are They?
Scammers promote a legitimate and popular cryptocurrency or project (e.g., Bitcoin) alongside an unknown or dubious project, hoping you’ll trust the latter by association.

How to Avoid Juxtaposition Scams

• Research Thoroughly: Investigate unfamiliar projects before investing. Often times if you recognize the Juxtaposition, you won’t even waste your time.
• Ask for Second Opinions: Use a trusted community forum like the Rowen Exchange’s Discord to verify claims.

DM Scams

What Are They?
Direct message (DM) scams involve unsolicited messages on social media platforms. These messages often promise investment opportunities or assistance. Scammers will also impersonate a trusted account like a group admin and send you a DM hoping that you won’t notice.

How to Avoid DM Scams

• Delete and Block: Ignore unsolicited DMs from unknown accounts. Block and report the account. If the account is impersonating the admin of a group you’re in, alert the admin. Even if you know the account, no legitimate person in the crypto space will DM you 1st. They will communicate with you publicly and ask for your permission to DM you.
• Enable Privacy Settings: Limit who can message you on social media.

QR Code Scams

What Are They?
These scams involve malicious QR codes that trick victims into signing fraudulent smart contracts. Once signed, these smart contracts will take all of the crypto out of your wallet.

How to Avoid QR Code Scams

• Scan Only Trusted QR Codes: Use QR codes from verified and reputable sources.
• Double-Check the Source: If unsure, don’t proceed without thorough verification.

Additional Tips to Stay Safe

1. Avoid Wallet Connections on Unverified Sites: Never connect your wallet unless you’re 100% certain the source is legitimate.
2. Inspect URLs Carefully: Scammers often use fake domains resembling legitimate websites. Double-check the URL for accuracy.
3. Enable Two-Factor Authentication (2FA): Always use 2FA to secure your accounts.
4. Use a Hardware Wallet: Store your cryptocurrency offline to reduce the risk of hacking. Check out the SecuX Shield Bio
5. Educate Yourself: Stay informed about the latest scams and security practices.
6. Always Be Skeptical: If it sounds too good to be true, it probably is.
7. Join a Community: Join a trusted community like Rowen Exchange so you can always get a friendly 2nd opinion if you’re not sure. Signup for free

Also Read: Top 10 Crypto Mistakes: Are You Making These?!

Final Thoughts: Protect Yourself from Crypto Scams

The world of cryptocurrency is exciting, but like anything in life, it has risks. By understanding common scams like rug pulls, comment scams, and support scams, you can safely navigate this space and better protect your investments. Vigilance, education, and a supportive community are your best defenses.