How to spot crypto scams: red flags, common schemes and where to report

Crypto scams work because crypto payments are fast, global and almost impossible to reverse, so once money leaves your wallet, it’s usually gone. The good news is that most schemes follow a handful of familiar scripts, and nearly all of them depend on getting you to trust a stranger, act in a hurry or hand over control of your wallet. Learn those scripts and the red flags that give them away, and you’ll be far harder to fool.

Why crypto is a favorite tool for fraudsters

The scale of the problem is large. The FBI’s Internet Crime Complaint Center reported in its 2024 Internet Crime Report that complaints referencing cryptocurrency involved about $9.3 billion in losses that year, out of $16.6 billion in total reported internet crime losses, with people over 60 the hardest-hit age group. Reported figures likely understate the true toll, since many victims never file a report.

A few features of crypto make it attractive to criminals:

• Irreversibility. There’s no chargeback button on a blockchain transaction.
• Speed and reach. Funds can cross borders in minutes.
• Confusion. Many people are new to wallets, keys and exchanges, which makes fake ones easier to pass off as real.
• Hype. Stories of overnight fortunes make outlandish promised returns sound plausible.

If you’re still getting to grips with the basics, our explainer on what bitcoin is and how wallets work is a useful starting point.

The most common crypto scams

Pig butchering and romance scams

The name comes from the idea of “fattening the pig before the slaughter.” It starts with a friendly message, often a supposed wrong-number text or a match on a dating or social app. Over weeks, the scammer builds a relationship, then mentions how much they’ve made trading crypto and offers to show you how. The SEC calls these relationship investment scams. The FBI describes them as confidence-based schemes in which victims are coached to invest more and more in a platform that looks extremely profitable, only to find they can’t withdraw.

Fake investment platforms

Many scams lead to a polished website or app that looks like a real exchange or trading service. Your account balance climbs impressively, but the numbers are fiction. When you try to withdraw, you’re told to pay a “tax,” “verification fee” or “unlock deposit” first. Paying never releases the money. It just takes more.

Giveaway and impersonation scams

Scammers impersonate celebrities, business leaders, crypto companies or government agencies. A classic version promises to “double” any crypto you send. Another involves a call from someone claiming to be from your bank, a government agency or law enforcement, telling you your accounts are compromised and you must move your money into crypto, sometimes through a bitcoin ATM, to “protect” it. Real organizations don’t do this.

Rug pulls

In a rug pull, the developers of a new token or project attract investors with hype, then abruptly drain the project’s funds or dump their own holdings and vanish, leaving the token worthless. Warning signs include anonymous teams, unaudited code, aggressive social media promotion and holders being unable to sell.

Phishing and seed-phrase theft

Phishing is a fake message or website designed to steal login details or keys. In crypto, the prize is often your recovery phrase, the 12 or 24 words that restore a self-custody wallet. Fake wallet apps, lookalike exchange sites, bogus “support agents” in chat channels and malicious links that ask you to “validate” or “sync” your wallet are all common. Another trick is getting you to approve a smart-contract transaction that quietly grants permission to drain your wallet. CISA’s guide to recognizing phishing applies here: be suspicious of urgent requests, unexpected links and messages asking for sensitive information.

Recovery scams

After losing money, victims are often targeted again by people claiming they can recover the funds, sometimes posing as lawyers, “blockchain investigators” or even government officials. They ask for an upfront fee or for your wallet details. Legitimate law enforcement agencies don’t charge victims to investigate.

Red flags checklist

Run through this list whenever crypto comes up in a conversation, an ad or an offer. One “yes” is reason to pause. Several means walk away.

1. Guaranteed or unusually high returns. No real investment guarantees profits, least of all in crypto.
2. An online contact you’ve never met steers you toward investing. Especially if they “know a platform” or will “teach you.”
3. Pressure to act now. Limited-time offers, countdowns and “don’t tell anyone” requests are manipulation.
4. Requests to pay in crypto, gift cards or wire transfers. Particularly from someone claiming to be a government agency, utility or employer.
5. Anyone asking for your seed phrase or private key. No legitimate person or company ever needs it.
6. Withdrawal requires a fee or tax up front. This is almost always a sign the platform is fake.
7. Links to unfamiliar apps or websites, or addresses that are slightly misspelled versions of real ones.
8. Celebrity endorsements and “send one, get two back” giveaways.
9. Anonymous teams and unverifiable claims behind a new token.
10. Offers to recover lost funds for a fee.

How to protect yourself

• Never share your recovery phrase. Write it down offline and store it securely. Don’t type it into any website or send it by message.
• Go to exchanges and wallets directly. Type the address yourself or use a saved bookmark rather than clicking links in messages, ads or search results.
• Turn on strong sign-in protection on exchange and email accounts, ideally an authenticator app or passkey rather than text codes.
• Verify before you invest. Check whether a firm is registered with regulators, and research complaints. The CFTC’s Learn & Protect pages flag common fraud schemes.
• Treat stablecoins like cash. Scammers often ask for stablecoins because they’re easy to move and hold steady value. Our explainer on stablecoins explains how they work.
• Talk to someone you trust before sending money to anyone you’ve only met online.
• Test withdrawals early. Before adding more money to any platform, try withdrawing a small amount to your own bank or wallet. A real exchange processes it without demanding new fees.
• Use a separate wallet for experiments. If you want to try new tokens or apps, keep only a small amount in a dedicated wallet, so a malicious approval can’t drain your main savings.

Here’s how quickly a scam can escalate. Say a hypothetical victim invests $500 after weeks of friendly chats and sees it “grow” to $2,000 on the platform’s dashboard. Encouraged, they add $20,000. When they try to cash out a balance that now shows $22,000, they’re told to pay a 15% “tax” of $3,300 first. Every step feels small and logical, which is exactly the point.

This is general education, not personal financial or legal advice.

What to do if you’ve been scammed

Speed matters. If you think you’ve been targeted:

1. Stop sending money, no matter what fees or penalties you’re threatened with.
2. Contact the exchange or platform you used to send the funds and report the fraudulent transaction. They may be able to flag the receiving address.
3. Secure your accounts. If your seed phrase was exposed, move any remaining funds to a new wallet with a new phrase. Change passwords and enable stronger sign-in protection.
4. Gather evidence: transaction IDs (hashes), wallet addresses, amounts, dates, website addresses, usernames and screenshots of messages.
5. Report it. File a complaint with the FBI’s Internet Crime Complaint Center (IC3) and with the FTC at ReportFraud.ftc.gov. If an investment or trading platform was involved, you can also tip off the SEC or CFTC. Reports help investigators connect cases and, in some instances, trace and freeze funds.
6. Watch for recovery scams. After a report, expect possible contact from people promising to get your money back. Verify any claimed official independently.

Feeling embarrassed is normal, but these schemes are run by organized, professional operations. Reporting protects others too.

The bottom line

Crypto scams come in many forms, including fake romances, polished fake platforms, celebrity giveaways, rug pulls, phishing and recovery cons, but they rely on the same few levers: trust, urgency, greed and your keys. Be skeptical of unsolicited investment advice, never share your seed phrase, verify every platform yourself, and test withdrawals before trusting a site. If something goes wrong, act fast and report it to IC3 and the FTC.

For more guides on staying safe with digital assets, visit our Crypto & Fintech hub.