Attention, Crypto Investors! The Most Prevalent Fraud Schemes with Cryptocurrencies and ICOs

Crypto-analysts and financiers may be waiting with trepidation for the crypto industry to stabilize. How will this stability be built and what will it mean for the world economy? As always, scammers have their fingers on the pulse. While mainstreet economics go head to head with decentralized global currencies, these crypto crooks find the time is ripe for scams on all ends. To protect ourselves from this ominous trap, let’s learn all about the most pervasive cryptocurrency fraud schemes of our times.


Phishing is stealing confidential data that allows cryptocurrency scams to access an online resource on the user’s behalf. Bitcoin exchange frauds, fake storage services and scam ICO projects are a few of the most lucrative methods of enrichment for these interpolators. By changing one letter in the URL they create fake clones of Internet resources, through which users allegedly can store or exchange their cryptocurrencies or invest in initial coin offerings. The goal of phishers is to steal registration information or force the user to perform operations with cryptocurrency, all of which eventually ends up in fraudsters’ wallets.

The Most Common Cryptocurrency Phishing Schemes:

  • Emails from technical support. A very popular cryptocurrency fraud strategy, in which the swindler pretends to be an official employee of an existing company that is familiar to the potential victims. The scammer sends the user a fake link to a fake website. Then a trustful user enters his login and password, and the fraudster gets access to the user’s account and money.
  • Emails of Happiness. These emails contain information about a big win, bonuses, unique promotions, or gratitude for loyalty to the cryptoexchange platform and so on. The main goal is to make crypto-beginners believe in happiness falling on their head; simply go to a fake site and, again, enter their data.
  • Emails about the AirDrop during the ICO. In such messages, holders of one cryptocurrency “have a chance” to get a certain number of other tokens for free. The scheme is very effective since the accrual of bonus coins is a common practice among developers who promote their project.

One of the vivid examples of phishing is the sensational Telegram ICO project. Scammers created (and continue to create) dozens of Telegram clone websites. They invite investors to deposit funds at the presale stage with a tempting discount. Be careful! We remind you that the GRAM cryptocurrency will be ready in 2019 only, and the public stage of the Telegram ICO may not even begin at that time.

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Many users are sure that such a cryptocurrency fraud will not affect them in any way. But today, cryptocurrency and ICO phishing has become a very urgent and widespread problem. Over the last year, more than 200 million users have received phishing emails. The earnings of phishers are also impressive. For example, the phishing company Coinharder (exposed in February 2018) stole more than $50 million from Bitcoin owners.

Cryptocurrency Fraud Deposits

Bitcoin fraud schemes penetrate into all earnings strategies. The creators of MLM-structures are aimed at those who already have a certain amount of cryptocurrency and the desire to multiply it. They suggest investing Bitcoin or other cryptos by placing them on a deposit and promise a high yield (2-3% per day).

One of the last such projects is Trinity, launched in the summer of 2017. For three months, the service regularly paid the money, attracting customers on the referral program. The profit of the deposit could be increased at the expense of the people involved. But in the end, Trinity’s bubble burst, being an example of classical financial pyramids, which were previously used in other systems. Now they have been applied to cryptocurrencies.

Cloud Mining

Cloud mining is often another cryptocurrency fraud. In fact, it allows you to mine cryptos without hardware and software. Instead, the investor gets the opportunity to rent out computing power for a fee. In most mining cryptocurrency fraud cases, cloud mining is the swindle. Scammers always say they are the best bitcoin cloud mining service and then offer you access to a counter that allegedly displays the mining process. But if you try to withdraw your funds, “technical difficulties” appear.

cryptocurrency fraud

As a rule, only producers of equipment for cryptocurrency mining can provide a quality and transparent service of cloud mining (for example, Bitmain). This is their side business, and they do have the spare capacity for rent. But even so, Bitcoin mining scams create clones of the Bitmain website and cash in on the victims.

Street Scammers

Cryptocurrency hype is so great that even street offline scammers use it to steal money. In October 2017, in one small Russian town, a local resident bought two “Bitcoins” paying $17 for them. The sellers told the credulous client that Bitcoin is constantly becoming more expensive and it’s possible to earn several thousand on the growth rate in the next month.

We are sure you know that there are no physical equivalents of Bitcoin now. It is only possible to buy souvenir or collectible coins with the image of its logo. However, last year, enthusiasts tried to create physical Bitcoins. They have found Casascius, that is, a coin in which a piece of paper contains a cryptographic key. This code allowed access to the cryptowallet. However, a little later after the launch, the creators faced with legal problems and closed the project.

Extortion and Kidnapping

Hunting for a cryptocurrency turns into an open racket. In mid-December, in the center of Moscow (the capital of Russia), two men stole Bitcoins worth about $300 thousand. After the Bitcoin’s owner transferred it from his e-wallet to the buyer’s account, the participants of the meeting waited for confirmation of the transfer, and the seller was going to get the cash. Suddenly six men came into the office and, threatening with violence, took the package with the money.

cryptocurrency fraud

Another case of the cryptocurrency criminal activity took place in Kiev, the capital of Ukraine on December 26, 2017. Attackers kidnapped Pavel Lerner, the founder and CEO of UK-based company called EXMO, one of the largest cryptoexchanges (daily turnover is more than $50 million). The unknowns dragged Pavel into the car when he left his office. The 40-year-old cryptoman bought out his freedom in exchange for transferring Bitcoins to the kidnappers’wallet in an amount equivalent to $1 million (according to other sources, equivalent to $2 million).

On February 24, in Moscow, Russia, four unknown men kidnapped Yury Mayorov, the creator of a PRIZM cryptocurrency. Mayorov was robbed of $ 20,000, or 300 bitcoins (BTC), and three iPhones. Unfortunately, these are just some of the bitcoin crime cases as cryptocurrency kidnapping is just gaining momentum.

Be Mindful of Your Crypto

Of course, most often the victims of frauds are beginners. They do not remember the domain names of official sites and do not know that large cryptoexchange platforms do not send emails about bonus programs or AirDrops. The risk for experienced and cautious investors is much less. But we should not forget that fraudsters constantly update their scam tools. Even an experienced investor may not always notice the dot instead of a hyphen in the domain name. It is still the wild west out there – so be careful and watch your money!

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