Those weird text messages from random numbers you keep getting on your phone? That’s probably crypto fraud.
They often start with a greeting or potential confusion about a wrong number. Most people wisely delete or ignore them, but some take the bait. Tricks like these are most often the first step in global scams that use cryptocurrency to steal money from unwitting victims.
The FBI says that while crypto fraud complaints only make up about 10% of financial fraud reports, they comprise 50% of total losses—about $5.6 billion in 2023 alone, according to the agency’s annual
Cryptocurrency Fraud Report
.
Crypto scams are only expected to rise with the
increased attention from Trump administration policies
, with even greater potential losses from fraud.
“Anytime you have a new technology or something that there's a buzz and hype about that, and people don't fully understand, people use that excitement and euphoria, in some sense, to engage in illicit activity,” says John Griffin, professor of finance at the University of Texas at Austin’s McCombs School of Business.
Cryptocurrencies can be an enticing financial opportunity as a new, innovative way to store, transfer, and invest money internationally, but they come with many risks.
“Cryptocurrency is unique in that it can be incredibly secure, if you take your security seriously,” says Charles Guillemet, chief technology officer of Ledger, a crypto wallet company. “The cryptocurrency industry has made significant strides in security, but it’s crucial for consumers to understand that risks still exist.”
If you fall victim to a crypto scam—or something less criminal like your exchange platform going out of business, sending cryptocurrency to the wrong person, or losing the password to your digital wallet—sometimes there’s little that can be done to help you, even from the government.
At the same time, Guillemet points out that most blockchain ledgers have transaction transparency, meaning it can be possible to track funds and for law enforcement to freeze funds when they reach centralized entities like exchanges.
According to the FBI, investment fraud is the most common crime complaint type. Luckily, there are some best practices to avoid falling victim to cryptocurrency scams.
While cryptocurrency scammers can be convincing, there are often telltale signs that call for suspicion. Broadly, the FBI says that any attempt to get you to invest in cryptocurrency solicited via social media, texting, or dating sites “is likely cryptocurrency investment fraud,” and the Federal Trade Commission adds that no legitimate business will ever demand you to send cryptocurrency in advance.
Any emails, links, or phone numbers should be scrutinized intently for out-of-place characters that could resemble trusted sources but are actually attempts at deception.
People should be especially careful considering some scammers are now
using generative AI technology
to create more elaborate and believable schemes.
“Review every transaction, and ideally do not blindly sign transactions. If your favorite app or service doesn’t support clear signing, encourage them to do so,” adds Guillemet.
If an individual reaches out to you when a proposal includes guaranteed profits or big profits, it almost always is a scam. Griffin adds the same goes for any “risk-free” opportunity.
Some
crypto exchanges
may offer introductory rewards or referral codes, but it is advisable to only engage with well-known exchanges to avoid being scammed. Overall, if something sounds too good to be true, it probably is.
The internet is full of individuals on platforms like Reddit,
X
, and TikTok who are eager to tell you to invest in cryptocurrencies, and while their advice may be convincing, you never know their underlying motives.
Mark Piorkowski, a professor of accounting at Indiana University’s Kelley School of Business, says individuals should be especially weary of any crypto influencers’ investment advice, largely because
gains tend to disappear within days
. Because there are so many different cryptocurrencies, vetting can also be almost an impossible task.
“While Bitcoin and Ethereum and Dogecoin get the vast majority of interest, and to be fair, they do have the bulk of the market cap, there is a limitless number of smaller cryptos that individuals can invest in if they so choose,” Piorkowski tells
Fortune
.
Plus, he adds, there is oftentimes no indication if influencers have a personal stake in the investment advice—including the possibility of being paid by the cryptocurrency’s founders.
“Buyer beware,” Piorkowski says. “Be cautious about the information you're getting from any sources and don't take one person or group of individuals' advice on any investment as facts or as truth.”
The best way to keep your money safe when involved with crypto is to
be aware of best practices and trends
so that when something suspicious appears on your radar, you know whether or not it is real.
While those over the age of 60 are likely targets of financial scams, young adult males can too be targets due to their tendency to be interested in crypto. A common dominator of those affected by crypto scams is a lack of education on blockchain technology. Ultimately, the best practice to follow is that when in doubt about something’s legitimacy, it is best to not engage and instead research safer cryptocurrencies and exchanges.
Piorkowski points out that while crypto scams are widespread, there are still many crypto educators who are trying to do important work but are often distrusted due to the actions of others.
Cryptocurrency scams are known for their elaborate relationship-building methods to gain potential victims’ trust.
According to the FBI
, this can include:
Griffin’s recent research found ‘
pig-butchering’ cryptocurrency
scammers—referring to the notion of feeding a pig before slaughter—likely stole $75 billion from victims worldwide between January 2020 and February 2024.
While he says transactions occurring on popular Western exchanges like Crypto.com and
Coinbase
have protections, elaborate criminal gangs—particularly out of southeast Asia use other platforms to scam thousands of victims.
“It's an epidemic,” he tells
Fortune
.
Griffin’s research notes that scammers are also known to send small inducement payments, in increments of $100 to $500, as part of their efforts to build trust and encourage victims to invest large sums.
His advice is stark: stay out of crypto and put your money in a crypto exchange-traded fund.
“If there was some magic key to making money on some little crypto platform, then those people will be doing it themselves,” Griffin says. “They wouldn't be needing your money.”
For those who may have been targeted by a crime or scam—whether or not it's crypto-related—the FBI encourages individuals to file a complaint with its
Internet Crime Complaint Center (IC3)
.
This story was originally featured on
Fortune.com
