Cryptocurrency, sometimes abbreviated as crypto, is a digital currency. Unlike standard hard currency issued by governments, cryptocurrencies are based entirely in the digital world and are not based on any tangible assets. Common cryptocurrencies include Bitcoin and Ethereum, but there are many different types.
Cryptocurrency transactions are anonymous. For this reason, and although there are many legitimate uses for cryptocurrency, crypto is a common tool for scammers and other criminals.
What is a cryptocurrency scam?
There are several different types of cryptocurrency scams.
Some scams convince consumers to invest money directly in cryptocurrency, with false promises of large returns. Scammers may convince consumers that they are seeing returns on their investments in cryptocurrency—convincing consumers to invest even more money before the scammers take consumers’ money and run.
Other scams use cryptocurrency as a tool to send your money to scammers in other types of schemes, whether through an employment scam, a government imposter scam, a bank imposter scam, or other method. At some point during the scam, scammers ask consumers to send money in crypto. The scammer may tell you that crypto is the only possible form of payment and will often pressure you to pay as soon as possible. Like wire transfers, gift cards, and peer-to-peer payment apps like Venmo and CashApp, demands for payment in crypto is typically a red flag for scams.
What kinds of cryptocurrency scams should I watch out for?
It is increasingly common for scammers who are impersonating trusted people and organizations such as government and law enforcement officials, financial institutions, or employers to seek cryptocurrency from victims.
Other common scams that can involve crypto are lottery scams, charity scams, romance scams, investment scams, and more.
Scammers are creative. If you’re asked to make a payment in crypto, do extra diligence and be on your guard.
How does a cryptocurrency scam work?
Often cryptocurrency scammers will guarantee you a return on investment, or they will pretend to be an official or business owner. Regardless of the scam type, they always end with the scammer demanding you pay them in cryptocurrency.
How do I spot a cryptocurrency scam?
Spotting a cryptocurrency scam may not be immediately obvious. However, after setting up the framework for the scam, fraudsters will use high-pressure tactics and demand you pay them immediately. If someone is asking for money from dating apps, as a business, or for an investment, don’t act in the moment.
Another increasingly common tool for scammers to get cryptocurrencies from victims are crypto ATMs. These machines are located across the state and, while they make legitimate cryptocurrency transactions convenient, scammers often use them to get their victims to convert money from their bank accounts directly into cryptocurrencies.
Just like with any scam, trust your gut, and if something seems off, it probably is.
How do I get my money back?
If you paid a scammer with a gift card, wire transfer, credit or debit card, or cryptocurrency, contact the company or your bank immediately. You should also frequently monitor your accounts and your credit report in case the scammers stole your identity in addition to your money.
