Unmasking Crypto Scams

Crypto is a relatively new Industry, most people are just beginning to learn the basics of how things really work. It is an industry that has the capacity to bear huge returns on investments. There are a lot of “rags-to-riches” stories when it comes to cryptocurrencies, everyone is in a rush to get a piece of the piece. There is also a worrisome trend in the crypto space – it has become attracted the worst of fraudsters, people who are out to get your money through illicit means.

In this article, we will highlight some of the red flags about crypto projects you should be aware of, things that will help you avoid falling prey to the activities of scammers.

What are Crypto Scams?

Crypto scams are projects or investments designed to defraud. They offer nothing of value but they do promise substantial rewards- usually at some time in the future. Sometimes it is difficult to tell from the onset if a project is a scam as it might not be very obvious what the intention of the founders of the projects are. It is therefore important to scrutinize the project based on a variety of other factors. We will consider some briefly.

There are a variety of Crypto scams, some of the more common examples are as follows

1. Initial Coin Offerings or ICOs

Initial Coin Offering ideally is a way for projects to legitimately raise funds from the public in order to execute a crypto project. Investors are given tokens or coins in exchange for cash. The tokens are designed to gain some market value as the project is being implemented. With the crypto space being grossly unregulated, fraudsters easily take advantage of this and launch fictitious projects.

2. Minting of Worthless NFTs

There was so much fuzz about NFTs in 2023. Many of these turned out to be worthless stock photos on the internet. Real Artistic works or expressions were lacking in many instances. Many NFTs never went beyond the initial minting and the founders abandoned the projects leaving investors with some worthless NFTs. Even some celebrity NFTs turned out to be a ploy to defraud fans. There was no buyback (as promised in many instances) or further project development. Others were mere copies of existing NFTs.

3. Crypto Ponzi

This is the traditional Ponzi scheme, the only difference is that the instrument used is cryptocurrency. It usually involves the promise of some guaranteed return on investment and a huge referral commission as an incentive to get more persons into the scheme. The problem is that the “interests” are unsustainable and the founders eventually cart away with investors’ funds. The most notable of these was Bitconnect in 2016-2018. According to the US Department of Justice, It defrauded investors over $2.4 billion. (

4. Multi-Layer Marketing Crypto Scams

There are legitimate Multi-Layers Markets providing a marketing solution for the sales of products but having them within the crypto space is rarely a legitimate deal. Multi-Layer Marketing Crypto scams will usually involve the sales or purchase of some crypto “packages” with a promise of some guaranteed return on investments. They thrive heavily on new recruitment through referrals and are built into some sort of pyramid. OneCoin, a typical example of this, was marketed as being better than bitcoin, it had no public and verifiable ledger(no blockchain), was never listed on a exchange,still managed to defraud investors $4 Billions.

5. Wallet Private Keys Request

Your Wallet Private Keys Should Stay Private

These are project that a designed to trick you to submit the private keys to your wallet and thereby compromise the security of funds in your wallet. Any project that demands for your private keys is an outright scam. The pretext is usually to set this as a condition to receive some airdrops. Private keys give access to the funds in a wallet.

6. Self Airdrops

This practice involve luring users to unlock some airdop tokens by paying for it. It involves the use of smart contracts -usually on the ethereum blockchain. Users actually get the airdrops, except that they tokens are worthless.Sometinmes, the guise is that they are using your money to pay for the gas fees for the airdrop. These are cheap scams for many scammers, often just promoted either through telegram channels, discord or twitter pages. Legitimate airdrops will often not require you to pay to receive them. They are free.

7. Fake Tokens and Contracts Addresses

These are tokens that bear same name and symbol with a existing crypto assets. Scammers create these tokens to bear same name as existing tokens and then sell the to unsuspecting buyers either through social media (telegram) deals or through listing them on decentralized exchanges. They are easy to identify – they bear a different contract address from the real tokens. You can get the authentic contract addresses from reputable crypto data sites like coinmarketcap and coingecko.

8. Crypto Mining Scams

Bitcoin mining investment is a buzz word often used by scammers to defraud people who are not familiar with the industry. The suppose investment is to buy mining equipment on your behalf, mount them in some undisclosed locations and then pay you returns from the bitcoin (or tokens) mined. Most legitimate mining companies will only pay a fraction of what most mining scams will claim.

Tips to Help you Identify Crypto Scams

These are some of the tips that will help you identify and avoid potential scams. They will demand some level of scrutiny from you.

1. Avoid Projects that Guarantee Huge Returns on Investment

Almost all crypto scams will promise guaranteed huge returns on Investments as an incentive to get as many victims as possible. The conditions in all markets make it nearly impossible to guarantee any returns. Beware of projects that gives such guarantees.

2. Avoid Projects With Anonymouse Team Members

While privacy is a good thing for you as an individuals, it is not in your best interests to have the team member of a crypto project remaining anonymous. Avoid any project with anonymous team member as they are not accountable for their actions. They can dissaper without a trace. For those with team members listed, check out the details of each members, social media profile, background checks, links with previous scams, skills and experience etc. The integrity of the team member should be heavily scrutinized as this is fundamental to the legitimacy of a crypto project.

3. Avoid Poorly Written or Plagiarized White Paper

Avoid projects with poorly written White Paper, spelling errors, or plagiarized contents. It is a sign that these are not original work and that they team are likely scammers. Scammers are always in a rush and will often ommit these details. You can check if a document is plagiarized using tools such as Grammarly plagiarism checker or other similar online tools.

4. Never submit your private keys

This is simple, your private key is your and yours only and should always stay private. Any project, airdrop or investment that uses anu ploy to get you to submit your wallet private keys is a scam and should be avoided. Also, avoid connecting your wallets to untrusted sites as this can also compromise the security of your assets.

5. Avoid Projects with Bogus claims

Scammers will always make bogus claims and interesting claims, the details of such claims are often obscure. Some examples will be something like providing solar panels in Africa or providing financial services in some remote part of the world. If such claims are to be made, there should be viable evidence to support it, otherwise, they are trying to defraud you.

6. Avoid Projects with New Social Media Accounts or a Poor History of Project Development

Good projects take time, from conception, planning and implementation. A new Social media account with bot-like subscribers, poor or empty Github repository and general lack of documentation on project development are redflags that the project is likely to be a scam. Be on the look out for such characteristics.


The crypto industry is a highly unregulated domain and investments in it carry significantly more risks than you would have in other industry. The prevalence of scammers make it even more risky. Always conduct some background checks on the team members and evaluate the projects for redflags. Be aware also that is impossible to completely remove the possibility of a project being a scam, so invest responsibly. Only a small portion of you total assets should be in any project.





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