4 common bitcoin scams you should know about | finder.com

How to spot and avoid a bitcoin scam

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What bitcoin scams look like and how to stay safe online.

Scammers have been fleecing people since the invention of money, and every new generation of technology sees scammers taking full advantage.

And bitcoin in particular is a scammer’s dream for several reasons:

  • Very few people really understand it. This makes it easier to make false promises and unusual moves without getting caught.
  • It’s mostly anonymous. It’s a lot easier for scammers to cover their tracks. Once bitcoin or other cryptocurrencies have been stolen, they are probably never coming back to their rightful owners.
  • It’s largely unregulated. There are ways for scammers to steal bitcoin without breaking the law, and there are few authorities that will ever go after them.

Fortunately, most of the same rules apply. A bit of common sense will keep you safe from most scams, and a bit of know-how can keep you safe from bad actors looking to scam you.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

What do you need to look out for?

There are some common scams to watch out for. Most are rehashed versions of age-old tricks, but there are also a few new risks to watch out for.

  • Your everyday scam attempts
  • Virus and malware downloads
  • Ponzi schemes
  • Fake and imitation wallets and exchanges

Let’s review each of those in turn.

Your everyday scam attempts

If a Nigerian prince emails you to say that he just inherited a fortune in bitcoin and wants to share it, it’s a scam.

If someone claims to be with the IRS and threatens you with legal action unless you send them some bitcoin right away, it’s a scam.

Watch for these kinds of attempts to get at your money. Don’t send money or bitcoin anywhere unless you know exactly who you’re sending it to.

Malware downloads

The Internet age brought a lot of viruses, malware and other nasties into the world.

Unfortunately, the value, anonymity and entire digital nature of cryptocurrency means scammers can now make money a lot easier with dangerous downloads.

As always, you shouldn’t click on unknown email attachments or potentially dangerous links.

You should also be very aware of bitcoin being used as bait. For example, a post on social media where someone says you can mine bitcoin just by downloading a program or a link to a supposed bitcoin exchange that offers freebies to get you started should always be treated with suspicion.

There are plenty of safe, legitimate and secure cryptocurrency exchanges, but you probably won’t get to them by following strange links.

Instead, do your own research. Do your homework with Google or sites you know you can trust, and seek out your own services rather than trusting the ones that come to you.

The following are two ways to help ensure your security, even if you do get malware:

  • Use 2-factor authentication every time.
  • Use a “cold” offline wallet. A “hot” wallet is one that’s connected to the Internet, while a “cold” wallet is one that’s held offline. Having multiple physical cold wallets in separate locations is usually considered best practice. This is often how exchanges, traders and other people secure the most valuable wallets.

These easy security measures, plus some common sense, can give you the upper hand over malware even if you’re not particularly tech savvy.

To steal from people, malware usually needs to be subtle and sophisticated. For example, the “Cryptoshuffler” trojan.


This trojan has been around since 2016, according to Kaspersky. It infects computers and then sits almost invisibly in the background until the right time.

The right time is when the user copies and pastes a string of characters and digits that look like a cryptocurrency wallet address. When that happens, it simply replaces that address with the Cryptoshuffler’s own wallet address.

Unless the user spots the difference in the address, he or she will end up sending coins to the Cryptoshuffler wallet rather than the intended one.

At the time of writing at the beginning of November 2017, about 23 bitcoin (over $180,000) in total has been reportedly sent to the Cryptoshuffler wallet address.

Fake initial coin offerings (ICOs), Ponzi schemes and other get-rich-quick scams

Scammers use many ways to get at your cryptocoins, so let’s shine a spotlight on some of them:

Fake ICOs

Fake ICOs invite people to get in on a newly created coin that’s going to take off and be the next big thing. These can be tricky because sometimes the creators themselves might not even know that they’re peddling junk.

Avoid ICO scams by knowing exactly what you’re getting into each time. You need to decide for yourself whether a new coin has the potential to take off and whether the developers know what they’re doing. If you don’t have the know-how to make a judgment, you should probably avoid all ICOs.

How bitcoin Ponzi schemes work

Someone offers an opportunity that promises an incredible return on their money thanks to the magic of bitcoin. A lot of people buy into it, and then someone runs off with all their money.

At first, it might look as though it actually works. The numbers in your account might be increasing as promised, and occasionally someone might come out to talk about “how it really works” and how it changed their life.

But when you actually try to get those funds back, you might find that the “customer service” isn’t very responsive, there are technical issues, the money will be returned soon or a number of other excuses. Then one day the company simply disappears, and the money is never seen again.

Ponzi schemes can be nefarious in the world of cryptocurrency. Most people know very little about cryptocurrencies, other than that it’s making millionaires. This makes selling big promises easier than ever.


BitPetite claimed to be a bitcoin tumbling service. Tumbling is a real service that mixes up coins to hide their origins, much like a kind of blockchain money laundering operation, but BitPetite wasn’t really a tumbler.

It promised an incredible 4%-per-day return on people’s money, explaining that it needed a flow of fresh bitcoin to tumble, and in return, it gave you the 4% commission that it charged for the service.

Like most Ponzi schemes, there was an explanation for how it all worked, and it made some sense.

The scammers organized a social media and advertising campaign to attract new users, and they even seemed to actually offer tumbling services and provide different professional-looking investment packages.

Eventually word got out that it resembled a textbook Ponzi scheme, and the flow of new “traders” slowed down. That was its cue to take the money and run.

So one day it announced some routine downtime for maintenance and never came back online again. Everyone who was trading there at the time lost their money.

How to avoid falling for a cryptocurrency Ponzi scheme
  • Beware of too-good-to-be-true offers. Think about whether the promised returns are really sustainable and what the numbers actually mean. If it seems too good to be true, it probably is.
  • Do your homework. If it resembles a Ponzi scheme, you might be best off avoiding it – especially if there are hundreds of people who agree. Some legitimate services might be accused of being a scam, while some scams might go undetected for a while. When in doubt, don’t spend any money that you can’t afford to lose.
  • Check for the signs of legitimacy. Check whether the company is a registered corporation and whether you can identify the owners. Scammers probably value their anonymity.
Pyramid schemes

Pyramid schemes are popular because they work. Even before cryptocurrency, they could still take in millions of dollars for the operators at the expense of everyone else who got sucked in.

And there are still plenty of pyramid schemes out in the world, operating in a legal grey area under the guise of legitimate businesses.

Fake and imitation wallets and exchanges

The No. 1 way to avoid the fakers might be to stay on the well-trodden path and use only the biggest and best-known services.

Better-known services are generally safer, but they’re also more likely to attract imitators. These imitations try to trick people into logging on, at which point they’ll take the account details and use that to try accessing your real account.

This used to be a fairly common online banking scam. People would receive an email claiming to be from their bank, inviting them to follow an included link. But the link would instead take them to an imitation site. At a glance, it would look like the real bank website, but if an unsuspecting customer logged in, the scammer would get their real online banking username and password.

The same scam can now be found in the world of cryptocurrencies.

Whether you’re looking at a wallet or a bitcoin exchange, the safest practice might be to:

  • Avoid the new. Let the early adopters take the risks, and don’t get involved until you can be sure it’s legitimate.
  • Use the most popular. There’s safety in numbers.
  • Make sure you know what to expect. Once you know what to expect from an exchange or a service, you can more easily spot problems and imitators.
  • Always use 2-factor authentication. This usually involves having a unique code sent to your phone whenever you need to log in. It can be a hassle but offers significantly increased protection.
  • Check the URL before you sign in. If nothing else, get in the habit of scanning the URL bar to look for the “https” and “secure” lock symbol, and checking that the URL is correct.

Poloniex is a large, prominent and legitimate crypto exchange. On one hand, this makes it safer. On the other hand, this also makes it more of a target. One day, some Poloniex users discovered that people were sharing links to the Poloniex mobile app.

The only problem was that Poloniex didn’t have a mobile app. By logging into the imitation app, Poloniex users handed scammers their account details.

Those who used 2-factor authentication as a matter of practice might have been fine, but those who didn’t would have lost everything in their accounts.

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24 Responses

  1. Default Gravatar
    StephenOctober 19, 2018

    Is bitcoin evolution a scam? I see articles on Yahoo stating what great returns it offers. Is this true?

    • finder Customer Care
      JoshuaOctober 20, 2018Staff

      Hi Stephen,

      Thanks for getting in touch with finder. I hope all is well with you. :)

      We currently don’t have an article about bitcoin evolution. For the meantime, what you should do is check the legitimacy of this coin. Check as well what other people say about it and examine their website. Usually, the level of professionalism of their website would tell you if they are legit or not.

      Like any investment, before you purchase a coin, gather as much information as possible to ensure you are making the right decision.

      I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.

      Have a wonderful day!


  2. Default Gravatar
    FrancesOctober 16, 2018

    Hi, I joined up with bit coin in September, paid through credit card, I changed my mind overnight as I didnt think I would be computer wise enough and thought I had a cooling off period, however they told me I had still to give all identification documents first and then withdraw. Did all this and applied and was told accounting dept says no as there was no voice approval.Keep on emailing, phone numbers ring out, do I have any chance of getting my deposit back, have I been duped. Credit card Company say cant help. Thank you.

    • finder Customer Care
      JoshuaOctober 20, 2018Staff

      Hi Frances,

      Thanks for getting in touch with finder. I hope all is well with you. :)

      Getting your deposit could be difficult especially if your communication is only limited online. What I can suggest is for you to check the terms and conditions of the seller of the bitcoin. Check whether they have specified in their website how you can obtain your initial deposit. Generally, once you have made a purchase, you won’t be able to get back your money. What you can do is simply sell the bitcoin you purchased so you can at least get your money.

      Please continue getting in touch with the seller. If you are still unsatisfied with the response of your seller, you might want to seek the help of the proper authority.

      I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.

      Have a wonderful day!


  3. Default Gravatar
    GeoffreyOctober 15, 2018

    Please I need you guys to me find out if the company ‘crypto-block.org’ is genuine or not? And if its worth investing into. Thanks

    • finder Customer Care
      nikkiangcoOctober 16, 2018Staff

      Hi Geoffrey,

      Thanks for reaching out.

      As of the moment, our page doesn’t have a dedicated review page for crypto-block.org hence we cannot give information if this is genuine or not.
      Just the same, we’ll have our team review this and check if we can get this topic on our pages in the future.

      Sorry, we couldn’t be of help at the moment. Feel free to come back to our page if you have other questions about cryptocurrency.


  4. Default Gravatar
    TaylorOctober 9, 2018

    Hi, I was just wanting to know cause I’ve bee speaking to someone on Facebook who wants me to invest $50 in bitcoin and send it to another wallet address? Does anyone know if it’s a scam?

    • finder Customer Care
      nikkiangcoOctober 12, 2018Staff

      Hi Taylor,

      Thanks for your inquiry and for visiting our page.

      Facebook is a very convenient way to buy and sell anything including bitcoins however there are marketplaces to buy and sell bitcoins. Here is our guide on how to buy bitcoin in the US. Please read through the page and message us again should you need further assistance.



  5. Default Gravatar
    RickyOctober 4, 2018

    I am talking with someone online that promises that if I buy Bitcoins and they give me an address to their mining machine and it will connect my wallet with his mining rig and it will get me a gain of 30% per day and he will be paid 50% of the profit for doing so?

    • finder Customer Care
      JoshuaOctober 8, 2018Staff

      Hi Ricky,

      Thanks for getting in touch with finder. I hope all is well with you. :)

      I can’t provide a personalized and direct advice for your situation. However, it is important to be careful when transacting with people online especially those whom you don’t personally know. Please remember as well that it is not that easy to earn from mining. It is designed in such a way that adding a new block to the blockchain requires a lot of work. I would suggest that you read our guide on crypto mining to get an idea of what that person is talking about.

      Do your own research and gather as much information as possible before you make a decision.

      I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.

      Have a wonderful day!


  6. Default Gravatar
    ToniSeptember 28, 2018

    I have a guy whom I have conversations with for over a year. He wants to send me loney via Arab bitcon. I do not want to fall into a trap and have myself hacked.
    How can I know it is legit?

    • finder Customer Care
      JoshuaOctober 1, 2018Staff

      Hi Toni,

      Thanks for getting in touch with finder. I hope all is well with you. :)

      There’s no straightforward answer to your question. However, you would need to ensure that your transaction won’t put you at great risk. Before sending your coins or money to this person, make sure that you are not in a disadvantaged position. Think if this person won’t do his part of the deal, what can you do to get your money back? If the risk is too high or the other person won’t give you some kind of security, then it would be better to avoid the transaction.

      Of course, the decision is up to you. Just be careful when dealing with people whom you don’t personally know.

      I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.

      Have a wonderful day!


  7. Default Gravatar
    DehoSeptember 26, 2018

    So I was asked to download xapo app and the bitcoin wallet then I was told to verify it then send the him the login details.. well I need to know if this is a scam. Now however I’m not gonna do any of this but I need to know to report the perp.

    • finder Customer Care
      JoshuaOctober 1, 2018Staff

      Hi Deho,

      Thanks for getting in touch with finder. I hope all is well with you. :)

      It is important not to share your login details to anyone especially those whom you don’t know. If you believe that it was a scam, you may report it to the proper authority.

      I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.

      Have a wonderful day!


  8. Default Gravatar
    ArthurSeptember 17, 2018

    I recently enter a crypto mining acvpunt and see alot of money how ever do I have to pay the fees and taxes to get that money or does it come out of the account that’s has profited

    • finder Customer Care
      JoshuaSeptember 19, 2018Staff

      Hi Arthur,

      Thanks for getting in touch with finder. I hope all is well with you. :)

      As a general rule, as long as you made an income from crypto mining, you would need to pay tax for that. We have a comprehensive guide on how to calculate your tax on your crypto profit here.

      Basically, you can already obtain your bitcoin earning and then, pay the tax afterward.

      I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.

      Have a wonderful day!


  9. Default Gravatar
    LadySeptember 8, 2018

    What is the current scam regarding bitcoins and cellular carriers such as AT & T or T Mobile…..please explain how it works.

    • finder Customer Care
      JoshuaSeptember 10, 2018Staff

      Hi Lady Linda,

      Thanks for getting in touch with finder. I hope all is well with you. :)

      I’m not too sure which scam you are referring to. However, one of the most common scams which involve cellular carriers is impersonation scams. A sender tries to convince you that they are a representative of a company and asks money from you to get something in return.

      The bottom line is that if a person is trying to get money from you and offers you too good to be true promises, then it is more likely to be a scam. Do your research and gather as much information as possible to prevent getting scammed.

      I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.

      Have a wonderful day!


  10. Default Gravatar
    $martAugust 9, 2018

    Hi. Please I am new with the cryptocurrency and I am looking for a real and cheap website even good games to start mining . I have heard about scam a lot so I need help to stay clean of them..

    • finder Customer Care
      JoshuaAugust 20, 2018Staff

      Hi Smart,

      Thanks for getting in touch with finder. I hope all is well with you. :)

      There are just so many things you need to learn to help you make better decisions when it comes to dealing with cryptocurrencies. For this reason, please be sure to read this page. It includes helpful tips and information to help you get started.

      Cryptocurrency 101: The Complete Beginner’s Guide

      While we don’t have a list of websites or games where you can trade crypto, you might want to check our list of exchanges. On that page, you will read, “Exchanges are where you buy and sell cryptocurrencies, so they’re an integral part of the market. But no two are alike, and it’s worth doing your research before picking one.”

      Regarding mining, you might want to read, “A simple step-by-step guide to mining bitcoin (BTC).”

      Yes, scams have undoubtedly plagued the crypto market today. To be sure that you are making the right decision, please review this page. You may also read other resources to learn more about bitcoin scams.

      I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.

      Have a wonderful day!


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