Common Crypto Scams to Avoid – A Beginner’s Guide

Cryptocurrencies are decentralized digital assets that have transformed from a niche technology into a mainstream investment option. Despite market volatility and crypto enthusiasts expressing cautious optimism, millions of individuals worldwide are buying, selling, and trading digital currencies. Bitcoin (BTC) has surged past the $100,000 mark, institutional investments are on the rise, and demand for spot ETFs is increasing.

However, the decentralized nature of cryptocurrencies has its own great strengths and unique vulnerabilities. One such vulnerability is the increasing frequency and sophistication of cryptocurrency scams. Fraudsters scam crypto investors through fake investment schemes to steal their funds.

So, before investing in cryptocurrencies, you need to learn about the most common crypto scams to avoid.

Common Cryptocurrency Scams

Cryptocurrencies do not have a physical form and are held in a digital wallet or vault. Unlike traditional bank transactions, payments made with digital currencies are quick, have fewer regulations, and are typically irreversible. Some fraudsters view scamming investors as an ideal way to profit.

As a beginner, you need to be aware of these dangers before falling victim to scams. The following are some of the common crypto scams to avoid.

1. AI-generated Scams

Scammers utilize Artificial Intelligence (AI) to create deep-fake videos and audio to impersonate trusted figures, such as CEOs or influencers. It can be challenging for anyone to identify these highly realistic forgeries. They aim to target victims into sending digital assets or revealing their sensitive information.

In recent years, scammers have used AI-generated videos to promote fraudulent crypto investment schemes or giveaways. The rise of generative AI has made it easier for fraudsters to run phishing schemes using fake identities and deepfake videos. In 2024, the Federal Bureau of Investigation (FBI) estimated that Americans lost around $9.3 billion to crypto scams.

2. DeFi Rug Pulls

DeFi rug pulls are a type of cryptocurrency scam in which developers of a decentralized finance project suddenly disappear after withdrawing users' digital assets. Scammers hype initial coin offerings (ICOs) through marketing and social media. Once a specific amount is raised, the fraudsters cash out the coins and disappear.

According to DappRadar’s report, the frequency of DeFi rug pulls has decreased over time, with fewer incidents recorded in early 2025 compared to the same period in 2024. However, the financial damage has skyrocketed, with losses reaching nearly $6 billion in early 2025 compared to around $90 million in early 2024.

A leading reason behind this is the evolving nature of rug pulls, with a shift from DeFi protocols to NFT projects. For example, memecoins have been used by scammers to generate hype and then disappear with funds.

3. Investment Scams

Investment scams are among the most common crypto scams to avoid. Fraudsters run these scams by promising quick money with little to no risk. They encourage investors to recruit other investors into the investment program, offering higher returns based on the number of participants they bring into the program, like a pyramid scheme.

Scammers also pose as savvy investment managers who promise high returns if you send them some crypto in advance. They use fake websites or apps, employing sophisticated investing methods that appear genuine.

For instance, in May 2025, a victim in Warriewood, Australia, reported a loss of around $64,000 to a crypto investment scam. The victim was contacted via the Signal messaging app with an investment opportunity that required an initial investment of $500 and promised tenfold returns. Upon withdrawing funds, he was informed that he had to pay additional fees, as he had already been paying for several months. After realizing it was a scam, the funds were irrecoverable.

Important Reads: How to Recover Lost Crypto?

4. False Giveaways

A false crypto giveaway is the practice of scamming individuals by fraudsters posing as legit cryptocurrency businesses, notable personalities, and exchanges. Scammers deceive victims by promising to send them cryptocurrencies. The trick is to double or triple the amount sent by a victim and vanish once the funds are received.

Fraudsters use social media platforms, such as X or YouTube, to promote these scams. Additionally, fake websites resembling real exchanges or companies are also used by scammers. In recent years, scammers have increasingly utilized AI to create deepfakes that impersonate prominent individuals, such as Donald Trump or Elon Musk, to promote fake giveaways on platforms like X.

5. Pig Butchering

Pig butchering is a long-term cryptocurrency scam. Fraudsters build trust through social networking to lure victims into investing in fake crypto platforms. Once the funds are deposited, the scammers run away with the money, leaving investors empty-handed. It is called this way since scammers fatten up their victims with the intention of slaughtering them by stealing their funds.

According to estimates, since 2020, millions of dollars have been stolen from victims around the world through pig butchering schemes. Chainalysis reported a surge in pig butchering scams in 2024 and predicted that this trend is likely to persist in the years to come.

6. Phishing Attacks

Phishing is a classic cryptocurrency scam that compromises login credentials of online wallets. Scammers lure victims by sending an email that requests them to log in to their wallet accounts using private key information. Once the hackers acquire the information, they steal the digital assets in the wallet.

This also leads to ransomware, where fraudsters trick users into clicking on malicious links and downloading infected files. Once scammers are inside, they encrypt personal data to access cryptocurrency wallets and demand crypto payments to unlock access.

How Beginners Can Avoid These Scams?

Crypto scams can take many forms, as fraudsters use various tactics to target victims, including promises of guaranteed returns, pressure to make quick decisions, and cold calls and messages, among others. As a beginner, learning about crypto scams to avoid can help you avoid making costly mistakes. 

Listed below are some valuable tips to help you avoid cryptocurrency scams.

• Learn the basics: Begin your crypto journey by developing a solid understanding of how blockchain and cryptocurrency work. Staying active in the crypto space by joining communities, reading news, and following reputable voices can help you stay ahead.
• Use reputable exchanges: Avoid lesser-known platforms for buying or selling cryptocurrencies. Always use established and reputable cryptocurrency exchanges to trade digital assets.
• Be skeptical of guaranteed returns: Legitimate crypto investments always come with risk, as cryptocurrencies are decentralized digital assets whose prices can fluctuate at any time. It is advisable not to fall for investment schemes that promise guaranteed high returns.
• Segment your crypto funds: Use separate wallets to store your crypto funds. For instance, use hot wallets for daily transactions, cold wallets for long-term storage, and sand wallets for testing new decentralized applications. This way, you can limit the damage even if one wallet is compromised.
• Enable two-factor authentication (2FA): Enable 2FA on all your wallets and accounts. It significantly limits unauthorized access to your cryptocurrency funds with one-time passwords (OTPs).
• Be careful of ICOs: Before participating in initial coin offerings (ICOs) or token sales, carefully research the project. It will help you evaluate its legitimacy.

Final Thoughts

Cryptocurrencies can be a convenient and cost-effective way to make online transactions. These digital currencies have the potential to serve as a valuable tool for both short-term and long-term investments. However, don’t forget that digital currencies are not regulated or backed by any central authority, which exposes them to vulnerabilities. Therefore, when investing in digital assets, prioritize safety and develop a robust strategy to protect yourself from cryptocurrency scams.

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