How to Identify Crypto Scams and Ways to Protect Your Assets

While the crypto industry continues to grow rapidly with growing retail and institutional adoption, some concerns, like bad actors exploiting investors, have also grown. Hence, it is of the utmost importance for everyone to understand the common threats and how to actively mitigate or avoid them. 

Not all scams look the same. Some are easy to spot, while others appear highly convincing. 

Fake Exchanges: Often, bad actors create fake exchange websites or wallet apps to misguide innocent investors into sharing sensitive information. These platforms are designed to look professional, with slick websites and even fabricated customer reviews that vanish as soon as funds are deposited. 

Similarly, celebrity endorsement scams use doctored images or videos of well-known personalities to lure investors into projects with no intrinsic value. With the use of AI and deepfakes, these scams are growing in numbers and becoming harder to identify. 

Phishing: Finally, there are phishing and impersonation attacks where scammers send emails, texts, or pop-ups that mimic trusted services and trick users into revealing their private keys or clicking malicious links. According to a report by ESET, crypto-related phishing sites accounted for 8% of all the phishing observed in H1 2024 by ESET. These scams may look technical, but at their core, they rely on rushing people into acting without thinking.

The most common examples are forwarded messages on Telegram or WhatsApp that promote work-from-home opportunities or quick get-rich schemes with circulating links attached. Anything that is too good to be true is a definite scam. 

Pump and Dump: This is another method that some bad actors use where the price of a token is artificially inflated to attract innocent investors and then dump the tokens into the market, leaving retail investors stuck at higher levels. 

A recent example of a pump-and-dump scheme can be seen with the OM Mantra Token. The token was artificially pushed to a peak price of $9 through heavy promotion and hype. However, once the price surged and unsuspecting investors bought in, the early promoters sold off their holdings. This sudden sell-off caused the token’s value to collapse by nearly 95%, leaving late investors with significant losses.

How Investors Can Stay Safe

Verifying Exchange/Platform: A little research before investing goes a long way. Checking when a platform’s website was created, verifying whether the company is registered with financial regulators, and looking up the team behind the project are easy steps that quickly separate legitimate businesses from fraudulent ones. Testing customer service with a phone call also helps confirm whether real people are standing behind the brand.

Identifying Red Flags: Equally important is learning to trust your instincts when something feels off. If an offer comes with pressure to act immediately, promises guaranteed returns, or involves unusual requests for crypto payments, it is always better to pause and verify. Real opportunities allow time for thoughtful decision-making.

Use Compliant Exchanges: One of the safest ways to protect your crypto is by trading and storing it through FIU-registered exchanges. These platforms follow regulatory guidelines, which adds a layer of security and reliability for investors. Using non-compliant platforms, on the other hand, carries the risk of sudden shutdowns or restrictions, which could make it difficult to access your funds. By choosing compliant exchanges, you not only secure your assets but also ensure that your investments are aligned with the country’s evolving regulatory framework.

Conclusion

As the crypto industry continues to mature, so will the safeguards around it. Education, regulation, and technology are all working together to create a safer environment for investors. While scammers may evolve their tactics, they can never outpace a well-informed community.

With awareness and discipline, investors can participate in an emerging asset class and build wealth over the long term. Crypto markets often reward patience, knowledge, and informed decision-making. With the right approach, it offers far more opportunity than risk.