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Cryptocurrency Investment Scams on the Rise

woman with bitcoins

Investing in cryptocurrancy has gained much attention in recent years. During the Coronavirus pandemic, multitudes of consumers are flocking to platforms like Robinhood, Coinbase, and eToro looking to buy and sell crypto. In May 2021 the total value of cryptocurrencies briefly surpassed $2.5 trillion. As most trends do, the crypto investment frenzy has created a surge in cryptocurrency investment scams. The internet and social media is a feeding ground for many of these scams. For anyone considering investing in crypto, here are some common scams to look out for and tips to help you invest wisely.

How Cryptocurrency Works

Crypotocurrency is digital currency kept in password protected electronic wallets and tracked on digital ledgers. They are not backed by real assets or tangible securities. They are not operated by the government or banks. There isn’t any physical money unless you use a service that allows you to cash in cryptocurrency for a physical token. Bitcoin and cryptocurrency can be exchanged with anyone online; by phone or computer; without using an intermediary, such as a bank. Cryptocurrency can be purchased through online exchange platforms and there are also Bitcoin ATMs around the world. There are more than 10,000 different cryptocurrencies that are publically traded and more brands being created.

Spotting Cryptocurrency Investment Schemes

According to the Federal Trade Commission (FTC), since October 2020 some 7,000 consumers have reported losing more than $80 million to cryptocurrency scams. The average loss for consumers is about $1,900. The scammers use many tactics that are common in other scams. Knowing what to look out for can save you valuable time and money. Let’s look at how many of these scams work.

The Invite

Cryptocurrancy scams may start out with someone offering a “tip” or “secret” that will supposedly net you a handsome sum. Online ads, emails, solicitations, and social media posts often lure in unsuspecting victims. Watch out for these offers.


Scammers often pose as wealthy business persons, celebrities, and other famous individuals to scam others. In many scenarios, the “catfish” impersonates a well-known entity and convinces others to send crypto to their digital wallet with promises to multiply their investment. They may even promote fake giveaways to get consumers to send crypto in hopes of getting rich. In other cases, scammers pose as government agencies offering to increase social security or other benefits if they receive bitcoin payments. Still others pretend to be cryptocurrency exchange businesses to steal crypto. Millions and sometimes billions of dollars are lost in these types of schemes.

Phony Websites

Crooks set up convincing websites with bogus testimonials and cryptocurrancy terminology to appear reputable. They may even make it look as if your investment is growing. Some have reportedly tried to withdraw their profits only to be told they need to send more crypto to do so. When investors begin to realize that promises of guaranteed returns are nothing more than lies, it’s too late.

Recruiting Scams

Some offers entice you to pay in cryptocurrency for the right to recruit others into a program. Those that do are told they will receive recruitment rewards paid in cryptocurrency. They even promise you’ll make more money if you pay more cryptocurrency. But these are false guarantees.

The Dating Game

Con artists even use love and romance scams to trick victims into investing in crypto scams. Swindlers hunt online dating sites and strike up long-distance relationships looking for someone they can convince to jump on a cryptocurrency opportunity. After getting their love interest to send crypto, they vanish.

Before You Invest

There are no limitations to what scammers will do to defraud consumers. They will use any lie to convince people to send crypto. That means investors interested in getting into buying and selling crypto need to carefully research any offer. Anyone that promises guaranteed huge returns or claims that your cryptocurrency will be multiplied is trying to scam you.

Before buying or sending cryptocurrency:

  • Investigate the company. Find out who owns and operates the business.
  • Look for their reputation report on the Business Consumer Alliance website.
  • Search online for the company and cryptocurrency name, using the words “scam,” “complaint,” or “review” in your search.
  • Don’t trust endorsements alone when considering any investment.
  • Look into who else is investing in the offer. Are they well-known investors?
  • Find out if the currency is already developed or if it is a start-up investment for a company looking to develop a new cryptocurrency.
  • Is your investment an offer to own stake in the company or just the currency or tokens? Owning a stake in the company means you can participate in its earnings as opposed to just being able to use the currency.

Reporting Scams

Cryptocurrency is very volatile. Any payment by Bitcoin or cryptocurrency is risky. There is usually no way to retrieve your money back if there is a problem. If you suspect cryptocurrency fraud, immediately contact the cryptocurrency exchange company you used to send the money. Also file a complaint with BCA. You can also report suspected frauds to these agencies:

  • the Commodity Futures Trading Commission (CFTC) at or call 1-866-FON-CFTC (866-366-2382);
  • the U.S. Securities and Exchange Commission (SEC) at or call (800) SEC-0330 or (202) 551-6551;
  • the FTC at

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About Business Consumer Alliance Business Consumer Alliance (BCA) is a non-profit company that started in 1928. The broad purpose of BCA is to promote business self-regulation. BCA's mission is achieved by assisting consumers in resolving complaints with businesses and using that complaint information, along with other relevant information such as customer reviews, to forecast business reliability. With community support, BCA can identify trustworthy and ethical businesses and warn the public to avoid unscrupulous businesses whose purpose is to defraud the marketplace. BCA also helps businesses promote themselves by providing services and tools to protect their business and reach out to their customers. BCA obtains its funding from member businesses who support the mission and purpose of the organization and who agree to abide by high standards of ethical business practices.