Being in crypto is often compared to living in the wild west. Without clear regulations from certain three letter agencies, scammers are able to run rampant in crypto often with no repercussions. So how do we fight back?
To be frank, education. The more people who know about these scams, how they operate, what signs to look for and most importantly how to avoid them, the harder we make it for the scammers. So - let's begin! What ARE the most common crypto scams?
Here’s My Private Key, YOLO
Has anyone ever DMed you their private key before? The password into their crypto wallet? No?
Believe it or not, a common scam is when a scammer sets up a malicious wallet then gives out the private key in hopes that someone will take over the wallet and attempt to take what funds are in there. Here’s how it works:
A scammer will set up a crypto wallet with some money in it seemingly ready to be claimed. Then they send out the private key to the wallet to hundreds of people at a time, fishing for a victim. Once you go into the wallet, you’ll see the money and predictably try to send it to your own, valid wallet.
But the scam wallet has no gas for transactions.
“No biggie,” you think to yourself. “I’ll just send over like $25 for gas and do the deed!”
Little do you know that the wallet you just gained access to has a malicious bot attached to it. Every time you send it ETH for gas transactions, the ETH is immediately drained and sent to the scammer's actual wallet address. You don’t get the free money in the wallet nor do you get your ETH back.
How to avoid: NEVER USE A RANDOM PRIVATE KEY THAT WAS SENT TO YOU. If it sounds too good to be true, it probably is. Always question a person’s motive and stay skeptical of any offers that seem * off * .
Double Your Crypto Scam
The ole “duplication scam” as gamers call it. If you’ve been around video games, you know exactly what I’m talking about.
The double your crypto scam is when someone claims they will double whatever crypto you send them. Sounds easy enough right? Send them 1 ETH, receive 2. Send them 2 BTC, receive 4.
Wait… so the more I send the more I receive!!!11!1!
Except you never receive any crypto back. In the scenario I just played out, you send your crypto to a scammer, and get nothing in return but remorse and a lesson learned.
How to avoid: Never send crypto to an address claiming to double what you send. You will not see it again.
Winning Free Crypto
This one often starts with a DM that’s hard to ignore. Something along the lines of “FREE ETH! CLAIM NOW!!1!1!!”
All joking aside, these private messages will often one way or another convince victims that they’ve won a life-changing amount of Bitcoin or Ethereum. There’s just one catch. They need your private key. The scammers will basically send out thousands of DMs at a time saying that you’ve just won free crypto, and if they get just one or two victims - it’s a win in their books.
How to avoid: Nobody needs your keys to SEND you crypto. Nobody needs your keys to help you do something with your wallet. If you get asked for your key, you are talking to a scammer. If someone messages you saying that you’ve won a life changing amount of money, always be skeptical. Scammers prey on victims who are naive and often at their lowest. Never send your private key or mnemonic phrase to anyone.
Malicious Airdrops
Have you ever received an unexpected airdrop? Although airdrops are somewhat common in crypto, they’re sometimes used to scam unsuspecting users.
Malicious airdrops are deceivingly simple: The scammers will airdrop you a seemingly large amount of a token that you’ve never heard of before. If you ever swap the token into something with actual value, like $ETH or $USDC for example, the scammers now have access to your wallet. This is possible due to malicious coding either in the smart contract of the token you were airdropped, or in the DEX used to trade the ‘airdrop’. In both cases, your wallet will be drained almost instantaneously.
How to avoid: Never interact with suspicious tokens that a random address has sent you, or with an unfamiliar exchange website. Double check if an airdrop token has actual value by going to a website like CoinMarketCap or CoinGecko and searching for the token.
Being Rug Pulled
Having the rug pulled out from under you only to land flat on your face is never fun. While rugpulls aren’t your traditional scam where the scammer wins and everyone else loses, it is still one of the most common AND dangerous scams in crypto.
A rugpull is when the person or team that deployed a token ends up draining all of the liquidity for themselves, making off with investors' money. If you’ve made money in that project and no longer have any allocation - you were one of the lucky ones this time. But if you still have funds in the project when they rugpull, your funds are lost. They essentially stole it from you.
Rugpulls come in all shapes and sizes. Typically, they look like a low-market-cap token that can 100x at any moment. Sometimes a rug pull can even happen to a long-established project, like Terra Luna. At the end of the day, no matter how sophisticated an investor you are, you are at risk of being rugpulled if you’re trading alt coins. Think twice before selling the house for a get-rich-quick token!
How to avoid: Only ever trade with what you’re willing to lose. Always do research before buying into a narrative. Use tools like DEXScreener or DEX Tools to check the validity of contracts before interacting with them. Remember - even if you managed to make a quick gain, pump and dumps are bad for the space as a whole!
For more tips about avoiding scams, see Part 2 and Part 3 of this series:
Kealii Naluai
Kealii Naluai
