Scam Hunting: How to Distinguish Cryptocurrency Fraudsters?

Jul 14, 2020 at 09:42 // News
Coin Idol
Beware of cryptocurrency scammers

Choosing cryptocurrency might sound a great idea for both short-term profits and long-term investments, however, there are a lot of scammers in the industry striving to take away one’s money. So one needs to take all precautions before putting in a penny.

2020 has seen a rapid surge in the overall interest in cryptocurrencies since the world has started switching to digital technologies and people have started seeking for digital money for cashless and contactless payments. 

A recent study by Tokeninsight on some 300 crypto exchanges showed that the world saw a record high surge in cryptocurrency transaction volumes in the first quarter of 2020, valued at $6.6 trillion, representing a 104% increase. The findings of this report only explain the persistence of cryptocurrencies even when economic situations are tough. Since the outbreak of COVID-19 and the subsequent lockdowns imposed by governments, cryptocurrency transactions still witnessed more activity.

Crypto is growing, but scams seem to grow faster

However, rapid cryptocurrency growth triggered the growth of scams. For instance, Binance, the largest crypto exchange by trade volume on April 30, 2020, was reported to be under a phishing attack on its Chinese domain, slowing down transactions. The same company was hacked several times in the past including the loss of  $40 million worth of crypto from user accounts on May 8. 

In fact, the frequent occurrence of crypto scams has left many personalities and company leaders wondering whether or not digital currencies can be used as assets. As per a recent report by CoinIdol, a world blockchain news outlet, Goldman Sachs, the largest multinational investment bank said digital currencies are “not assets,” due to their volatile nature and connection with illicit activities. All of these comments negatively influence people’s perception of crypto investments.

A close look at cryptocurrency scams

The crypto market as a whole is constantly under threat from scammers. The attacks take various dimensions ranging from conquering mining networks, to deliberately slowing down transactions and to stealing actual coins. 

Another popular fraudulent scheme involves fake investment opportunities. Such projects promise enormous returns for even the smallest investments. However, none of the trustful investors actually receives any profit at all. Some fraudsters even go ahead to use popular cryptocurrency exchange brand names and design fake websites with all the incredible customer testimonials. But all the positive customer comments usually come from zombies, used to arouse the interest of the general public. 

In other instances, fake tokens are sold for genuine dollar notes. Still can’t believe this? It all starts on the false website. Remember the Huobi scam in China two months ago? It harvested over 100 million yuan from trusting users. 

Some large-scale crypto scams involve attacks on crypto exchange sites that result in the loss of user funds or hijacking the entire network, slowing transactions or even shutting sites down.

Money is scarce, never get scammed!

While scams are rampant, many have failed to tell scams apart from authentic crypto projects, but the first thing to do if you are unsure about any crypto investment project is to post your issue on large social networking platforms and wait for comments. Alternatively, you can search for comments on the web. There are many websites able to help users tell whether the project is legit or scam.

Another way how a person can check the company one considers investing in is to verify its registration data, staff members and legal address. Scam projects are usually registered off-shore, in countries with weak regulations of the industry, and their developers and managers remain anonymous. Contrarily, legit companies usually disclose as much information as necessary, as they have nothing to hide.

The other thing a potential investor should look at is promised returns. If a project promises sky-high profits from small amounts, it is most likely a scam. However, many scammers promise quite reasonable returns to make it look reliable, but nevertheless, this fact can help you to tell obvious scams.  

Anyway, cryptocurrency investment bears certain risks even if you deal with legitimate companies and projects. However, the number of fraudsters in the industry, as well as their professionalism in disguising themselves as reliable projects, makes it difficult to distinguish them in the market. So the best way to protect your money from scammers is to start investing in any project you deal with for the first time from the amount you can afford losing. 

And if you happen to come across scammers, don’t keep silent, for your feedback is able to protect other people from getting tricked by criminals, just the same as someone’s feedback might save you. 

CoinIdol helps in combating scammers and fraudsters operating in the blockchain and cryptocurrency industry by investigating and exposing them. So, if you have got scammed by cryptocurrency criminals, email to

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