The 5 Most Common Crypto Scams in 2023
According to the Federal Trade Commission (The American consumer protection agency), 46,000 Americans lost $1 billion in crypto scams, since 2021.
There is no official statistic for Europe, but we have no reason to believe the situation is any better.
Crypto scams are so effective because they exploit people’s impulses like FOMO, greed, curiosity, and ignorance over a technology that still few understand well. Besides, scammers leverage people’s frustration over their financial situation, presenting crypto as an easy way to exit poverty and to reach financial freedom without effort.
Crypto can be an extraordinary tool to reach financial freedom, but only if you are willing to learn and have the patience to build and retain wealth over time. The more patient and diligent you are with your crypto wealth, the less exposed to scams you will be.
This article wants to heighten your guard against possible shady situations you might incur during the coming months, especially should the market recover! We will analyse the following traps, starting from the most obvious to the least obvious:
- Ponzi Schemes
- Fake Crypto Exchanges
- Remote Assistance
- Fake Employees
Ponzi schemes are a classic that never fades away. Even in 2023 you can expect new, fancy Ponzi schemes arising here and there. Should 2023 see a bull market, the risk will increase exponentially.
Every crypto investor should know what a Ponzi scheme is by now, but we take the chance to refresh our dear readers’ knowledge.
A Ponzi is a fraudulent scheme where new investors’ deposits are used to pay yields to older investors. A Ponzi scheme can pay really high yields, as long as new investors enter the game. The moment the new money flowing in the scheme is no longer sufficient to sustain the promised yield, the scheme collapses.
A Ponzi scheme is recognisable by these key characteristics:
- Double or even triple digits yields
- No clear explanation on how the yields are generated
- Unlicensed provider or based in offshore jurisdictions
- Too-good-to-be-true conditions
- Withdrawal of funds made difficult or not available
Let’s have a look at some historical examples of Ponzi schemes in crypto:
- Bitconnect: This scam became a popular meme, thanks to Carlos Matos’ legendary yell “BitConneeeect!!!”. This platform promised investors high returns through a trading bot and lending program, but it turned out to be a Ponzi scheme in 2018, the very day after Matos’ yell. Their token (BCC) crashed and the scheme was shut down.
- OneCoin: Talking about offshore jurisdictions, OneCoin protected its scheme behind multiple offshore companies with operations in Bulgaria, but registered in Dubai, and with a subsidiary registered in Belize. The scheme is estimated to have stolen around $4 billion worldwide and its founder, Ruja Ignatova is still on the loose, making her one of the most wanted criminals in crypto.
- PlusToken: They started in April 2018, shortly after BitConnect’s downfall. The scheme offered monthly payments to every user opening a PlusToken wallet and buying the native token, PLUS. The scheme collapsed in 2019, when its leaders were arrested in China. It was one of the biggest Ponzi schemes of all time and affected mostly Chinese investors, who lost billions of dollars.
Remember, when something is too good to be true, it is NOT true!
Phishing is as old as the internet, yet people keep falling for it.
Crypto is the richest sea for phishing. Scammers will usually spark anxiety in their victims, sending them fake emails or even SMS claiming that their crypto exchange account will be closed (and related assets confiscated) if they don’t change their credentials immediately! The dire ending is the victims entering their passwords on a fake web page controlled by the scammers.
This risk can be mitigated by adopting 2-factors authentication, though it doesn’t eliminate the risk completely. Hackers will still be able to access your funds if you give them your 2FA recovery key.
Do not trust emails, even when they seem to carry a real email address. Same works for SMS messages, even if the number bears the exchange name.
Remember: a legit exchange platform will NEVER send you emails or messages containing links. If anything is off with your account, they will kindly ask you to manually go to their website and log in from there. A detailed explanation of the issue affecting your account will be accessible only within the exchange’s website/app.
Fake Crypto Exchanges
Scammers are able to create catchy websites looking like legit exchanges. These fake exchanges usually promise the best rates, 0 commissions, and amazing APY yields if you stake with them! Usually scammers employ their own made up brands, but sometimes they even copy the layout and name of legit exchanges to deceive their victims and win their trust.
The best way to protect yourself from this predatory technique is to use only widely known crypto exchanges, such as Binance, Coinbase, or Bitfinex and make sure you visit their real site.
An even more efficient way is to trade on these platforms through the SwissBorg app . Our app is an exchange aggregator that helps you access the best rates among the following exchanges, without the need to create an account for each of them and without the risk of falling for fake copies of their websites:
It saves you time and efforts. At SwissBorg we are in love with efficiency and security!
Scammers can approach inexperienced victims offering help to invest in Ponzi schemes offering incredible returns. They will ask the victims to purchase crypto on a legit exchange and then to withdraw these funds to an external wallet. The victim will believe this wallet will return amazing yields, but in reality it is a private wallet controlled by the criminals, who will disappear after the operation is concluded.
Very often these scammers target older people, who are novice to crypto and with low tech literacy, or very young individuals, luring them on Instagram and TikTok. The scammers will even offer to assist their victims via WhatsApp or remote access apps like TeamViewer or AnyDesk. Sometimes, the scammers will even pretend to be employees of legit exchanges. NEVER EVER trust this pattern!
Legit employees will never contact you on your private number and will never ask to take control of your computer and carry financial operations on your behalf!
This kind of scam is pretty recent. It is a mix of all the above techniques and it targets more businesses than private individuals. If you’re a business owner, pay extreme attention to the following lines.
The US Treasury Department's Office of Foreign Assets Control (OFAC) released a detailed report about the threat of North Korean cyber actors targeting IT workers in various sectors and of course crypto is not spared from this phenomenon.
The OFAC states that North Korean hacking squads, such as Lazarus Group, Bluenoroff and Andariel, have been known to use a variety of tactics to compromise IT systems, including phishing, malware, ransomware and remote access tools. These tactics are used to gain access to sensitive information and disrupt operations.
IT workers and business owners in particular should be vigilant in protecting themselves from these threats. This includes being cautious of unsolicited messages, even if they appear to come from legitimate sources, and not clicking on any links or downloading any attachments from unknown senders. Keep your software up to date, have multiple calls with the candidate and carry thorough background checks before interacting with any possible new contractor.
From now on, marriage proposals or spam messages won’t be the only threats coming from your new LinkedIn connections.
How does it work in practice?
A fake freelancer approaches you on LinkedIn with his/her impressive resume, eager to help your crypto project grow beyond any limit. Once inside the organisation, this person will steal your secrets, often including the access to your business crypto wallets. Other times they will install ransomware and your hard work will get unlocked only if you send your crypto to some North Korean wallet…
The crypto space offers many opportunities, especially to smaller investors who are willing to build their own wealth. Crypto is democratising finance at a pace never seen in history. However, this same space offers opportunities to malevolent actors too. Stay vigilant, take cyber security seriously, and above all, be patient. Avoid of rushing into get-rich-quick schemes. Your patience will be rewarded.
Patience has always been the strongest asset of the SwissBorg community and will continue to be so across 2023 and beyond!
If you are looking for a platform where you can buy crypto, or put them to yield, in a simple and safe way, using state-of-the-art technology, SwissBorg is the platform you were looking for!
STAY HEALTHY, STAY WEALTHY!
Alessandro Giuntini, SwissBorg Payments Officer