Crypto Scams: Tactics and Methods Scammers Use to Trick Investors Out of Their Money

Crypto scams are on the rise with investors losing billions of dollars annually. Chainalysis reports around $40.9 billion was lost in crypto scams between 2020-2024.

Many of these scams exploit FOMO (fear of missing out), luring investors with promises of high returns and exclusive investment opportunities. Once the money is transferred, the scammers disappear, leaving investors with nothing.

One particularly troubling scheme is the pig butchering crypto scam, where fraudsters spend weeks or months building trust and relationships before convincing victims to invest in fake cryptocurrency platforms—only to steal their funds in the end.

But this is just one of many scams draining investors’ wallets. Pump-and-dump schemes, rug pulls, phishing attacks, and NFT fraud continue to cause massive losses.

In this guide, we’ll break down the most common crypto scams, how to identify red flags, verify identities using Social Catfish, and what to do if you’ve been scammed.

6 Common Tactics in Crypto Scams

Here are 6 common types of crypto scams that you should know:

1. Crypto Pump-and-Dump Schemes

In pump-and-dump schemes, scammers prey on the public’s eagerness to invest in cryptocurrency. 

The fraudsters artificially inflate a coin’s price through influencer hype and fake marketing. Some even coordinate with other wealthy individuals to manipulate the market. 

As more investors join, the value of the coin increases. Once the value peaks, scammers sell off their holdings, causing the market to collapse and leaving other investors with major financial losses.

Most meme coins are susceptible to pump-and-dump schemes due to their high volatility. For example, a 13-year-old streamer known as “$Kid” created a meme coin called “Quant” ($Quant). 

During a live stream on the platform “Pump.fun”, he promoted the coin, leading to a rapid increase in its value. Shortly after, he sold off his holdings, reportedly making $30,000, which caused the coin’s value to plummet and left investors with significant losses.

2. Rug Pull Scams

A rug pull is a crypto scam typically occurring at the organizational level. In this type of scam, the owners of a project start “pumping” the project to get people interested in investing in it.

Once investor interest is at its peak, they take all the money invested and disappear, effectively “pulling the rug” out from under investors.

One of the most well-known rug pulls in crypto history was the project known as “Onecoin.” Onecoin raised over $4 billion before the project’s founder pocketed the money and headed for the hills.

These scams can be devastating because investors lose everything they put into the project.

3. NFT Scams

NFT scams are one of the most common crypto scams out there. This is because of the nature of NFTs. Because the value of an NFT is based on people’s perceptions of it, it is vulnerable to manipulation and deception.

The old joke about “why would someone pay for NFTs when you can just screenshot them” doesn’t necessarily hold up when you consider how important a factor authenticity is.

A copy of the Mona Lisa is not nearly as valuable as the original, so some artists create fakes to deceive people.

For example, hackers hacked into famous graffiti artist Banksy’s website and posted an ad for his “first NFT.” This ad tricked people into purchasing the NFT project. Once the buyers bought the NFT, it became worthless. 

This is because an NFT’s authenticity is the only thing that makes it valuable.

4. Pig Butchering Crypto

In a pig butchering scam, scammers talk investors into letting them ‘invest’ some of their money for them. After the victim has trusted the scammer with their investment money, they see their investment account grow.

Thinking that they’re making a good return on their initial investment, many investors will decide to invest more, and when they do, the scammer pulls all of the money out of the account and disappears.

This crypto scam is called “pig butchering” because the scammer fattens the account before pulling all the funds, just as a butcher fattens a pig up before he butchers it to get its meat.

In 2024, pig butchering scams on the Ethereum blockchain accounted for $3.6 billion in reported losses, according to Web3 security firm Cyvers.

5. Crypto Phishing Scams

Phishing scams are among the most common crypto fraud tactics that exploit users’ trust in legitimate platforms. 

Scammers create fake trading platforms or send deceptive emails or messages that appear to come from trusted sources, such as cryptocurrency exchanges or wallet providers, tricking users into revealing their login credentials.

A well-known example of a phishing attack is when hackers hijacked OpenSea’s official Discord server and tricked users into clicking a fake NFT airdrop link, stealing over $18,000 worth of NFTs.

Coinbase is a commonly targeted platform where scammers send emails that closely resemble official Coinbase communications, urging users to log in via malicious links. Once users enter their credentials, attackers gain full control over their accounts, potentially wiping out their crypto holdings.

Since crypto transactions are irreversible, recovering stolen funds from phishing scams is incredibly difficult.

6. Crypto Romance Scams

Romance scams use emotional manipulation to trick investors into sending money. Scammers pretend to build a relationship, often using stolen photos from Instagram to seem more real. Scammers often use similar tactics for online deceptions beyond crypto. 

Once they establish trust, they fabricate an urgent crisis, such as legal trouble, medical emergencies, or threats of violence. They use psychological tactics to pressure victims into sending large sums of money. 

These payments are mostly in the form of cryptocurrency, particularly Bitcoin since it’s hard to trace or recover these transactions. 

Despite sounding unbelievable, romance scams are a common form of crypto fraud, according to the FBI, where victims have lost over $215M to these schemes in 2023.

5 Red Flags to Identify a Crypto Scam

Here are 5 red flags to help you identify a crypto scam before you get scammed:

1. Unrealistic promises: Anything guaranteeing high returns with no risk is a scam.
2. Anonymous or unverifiable teams: Scam projects often hide the founders’ identities.
3. No clear roadmap or whitepaper: Fake projects have vague, low-quality documentation.
4. Suspicious contract addresses: Use tools like Etherscan or BscScan to check legitimacy.
5. Fake social proof: Many scams buy fake followers and fake reviews to seem legitimate.

Social Catfish’s reverse search lookup lets you double-check a person’s identity using their name, phone number, image, or email address to avoid being scammed. 

How to Protect Yourself From Crypto Scams

Here are some precautionary measures you can take to protect yourself from scammers:

• Use a hardware wallet: Store your crypto in cold storage devices like Ledger or Trezor to prevent online hacks and phishing attacks. Never store large amounts of crypto on exchanges or hot wallets.
• Enable 2FA on all accounts: Two-factor authentication (2FA) adds an extra security layer, reducing the risk of unauthorized access. 
• Avoid clicking random links: Always verify URLs manually before entering login details. Take precautionary measures to avoid being scammed by fake websites.
• Double-check addresses before sending crypto: Scammers use clipboard hijacking malware to secretly replace copied wallet addresses with their own. Carefully verify that the recipient’s address is correct before sending.
• Monitor your wallet activity: Regularly check your transaction history and set up alerts to detect any suspicious movements in your account.
• Beware of fake customer support: Scammers often impersonate support agents from Binance, Coinbase, and MetaMask, asking for login credentials or private keys. Legit companies will never ask for this information.

How to Get Bitcoin Back From a Scammer

Cryptocurrencies like Bitcoin and Ethereum are decentralized, meaning once a transaction is made, it’s irreversible. So, if someone steals your crypto, there is little recourse to get it back.

But, you can try to track and recover your funds since Bitcoin runs on a public ledge system, where each transaction is recorded permanently in the form of a wallet address. 

Here are some steps you can take:

Report the Scam

You have two options to report a scam and potentially recover your Bitcoin.

1. Report to regulators such as FTC (Federal Trade Commission), FBI’s Internet Crime Complaint Center (IC3), or local law enforcement. 

2. Report to the support team if the scammer moves your Bitcoin to a centralized exchange (like Binance, Kraken, or Coinbase). The exchange may be able to freeze the funds if reported quickly.

Make sure to provide accurate transaction details such as wallet address, transaction ID, time, and amount). 

Alert the Crypto Community

If the scammer is reusing the same wallet address, reporting it can help prevent others from falling victim. 

Post the scammer’s wallet details on crypto fraud alert platforms, Reddit scam warning threads, or blockchain scam databases.

Some exchanges and blockchain forensics firms track and blacklist flagged wallets, making it harder for scammers to move stolen funds or cash out through legitimate platforms. 

What to Do If You’re the Victim of Crypto Scams

If you have been the victim of a crypto scam, Social Catfish is here to help. Or in-depth search specialists have special industry-leading tools to help you locate the money you sent.

In many cases, we can even help uncover the truth about the person you have been in contact with. Hire a search specialist to see what we can do about your lost money.