Dealing With Crypto Fraud

By Boris Dzhingarov

Dealing with cryptocurrency fraud can be a daunting challenge. To be successful, you need to be aware of the most common scams and what warning signs to look out for so that you don’t get taken advantage of.

Cryptocurrency has become a prime target for criminals due to its infancy and lack of transparency, making it ideal for tax evasion and money laundering activities.


Decentralization is the practice of taking authority away from a central government or entity and placing it at the local level. This usually happens when the central government restructures administrative, financial, or service delivery functions to smaller governments or groups of autonomous government entities.

Decentralization takes on many forms, each with its own characteristics and policy implications. Nonetheless, certain universal principles can be used to recognize decentralization at any level within a system.

Physical Decentralization – Physical decentralization refers to systems distributed so that if one part fails, others remain functional. This type of decentralization, also referred to as horizontal scaling, can be seen in Web2 and Web3.

Governance Decentralization – Decentralized governance takes place when one stakeholder or company is not accountable for the entire system and multiple parties work together to maintain and manage it. As seen in Web3, this type of decentralization allows people to make proposals and vote on them, ultimately improving the system.

Immutability – Blockchain networks possess the unique capability of keeping track of their data in an immutable manner, making it impossible for anyone to alter it. To do this, each node in a network must verify the authenticity of each new block before adding it to the chain.

The more nodes connected to a blockchain, the safer it is for users. If someone attempted to corrupt or alter a block, they would need to hack every node in the network – an impossible feat.

Transparency – Decentralized blockchains are accessible to the public, meaning anyone can inspect them. This gives them insight into what’s going on inside the network and who owns it.

Working Groups – These are temporary teams formed to solve specific problems. They usually delegate responsibilities from larger groups and make them more efficient.

Long Tail – Long tail refers to groups of individuals that are not owned by a few elites and compete to create value. These networks, often referred to as “peer to peer,” can be highly effective at providing services.

Inflating the price of a crypto

Inflation is a phenomenon in which the cost of goods and services increases faster than their purchasing power can bear. Typically, inflation is measured by comparing the current price to what it was one year prior; The Consumer Price Index (CPI), published by the US Bureau of Labor Statistics, serves as the most widely-used metric to measure this trend.

The CPI measures the variety of goods and services urban consumers purchase out-of-pocket, such as food, housing, transportation, and healthcare. It is calculated using data sourced from government surveys as well as business surveys.

Cryptocurrency is a technology that uses cryptographic proof to store and verify information on a blockchain. It works similarly to how money is recorded in banks, only much more secure and efficient.

Cryptocurrencies utilize a lot of computer power to process transactions faster than any individual could. In fact, some of the most advanced cryptocurrencies can handle millions of transactions per second!

Cryptocurrency boasts many impressive capabilities, but it also has some inherent drawbacks and vulnerabilities. Unfortunately, there have been a few well-known scams within the industry; therefore, crypto users should always exercise extreme caution when working with unfamiliar technologies.

Another major issue involves whales. These are wealthy traders with the power to influence crypto markets. They frequently employ pump and dump techniques in an effort to control the price of a particular coin or token.

Whales often place large buy orders and then sell off a portion of their holdings when the value of cryptocurrency starts to soar. By creating the illusion that there is an immense demand for the token, these investors can make substantial profits.

Avoiding these scams requires doing your due diligence and seeking professional financial advice before risking your money. To do this, research all cryptocurrencies that interest you and read reviews about them from independent sources.


Scams can have a devastating effect on someone’s financial security. They may involve theft of money, using stolen crypto or convincing people to transfer their digital assets as payment for an illicit transaction.

Scammers are targeting both those investing in cryptocurrency, as well as anyone thinking of purchasing them. They use various tactics to deceive people, such as phishing webpages, impersonating financial advisers, job seekers and even celebrities.

Crypto scams often involve a website or app that appears to be legitimate trading platform or application that victims can download onto their phones. The scammer controls the site and deceives victims into believing they can make substantial gains with an initial “investment.” Once a victim makes a large investment, malicious smart contracts use malicious codes to lock their funds in an account and prevent access.

Another type of crypto scam involves a person claiming to be from government agency or law enforcement and asking for your assistance. These messages are typically text-based and may be sent directly to your phone or email address, stating there is an issue with your bank or that you must update your personal information.

This type of scam may be difficult to detect, as it often involves strangers. Additionally, recovering from such losses of cryptocurrency could prove challenging if you have suffered any.

Avoiding these scams requires doing your due diligence. Check the domain name of a website to make sure it has HTTPS, according to Dan Leinweber of Cohn & Conway – a law firm dedicated to financial fraud cases. A website with HTTPS is secure and encrypted, he adds.

Other tips for protecting yourself from crypto scams include avoiding cold calls and never disclosing personal information. Scammers often target people through social media ads, so be wary of these and do your due diligence before clicking any buttons.

Cryptocurrency-based investments are becoming a growing source of fraudulence, particularly with the rise of non-fungible tokens (NFTs) and initial coin offerings (ICOs). These unique digital assets can be difficult to audit, making them prime targets for fraudsters since they can be created quickly and listed on DEXs.

Reporting a crypto scam

Crypto scams are fraudulent activities that involve the theft of cryptocurrencies through various methods like phishing, blackmail and Ponzi schemes. These crimes can be difficult to detect and have a devastating impact on your finances; however, reporting them promptly increases your chances for recovering your funds.

Scammers often impersonate legitimate companies or people on social media or dating websites, offering to assist you with investing in cryptocurrency or providing investment advice. They might also request that you send them your digital coins via bank transfer. If in doubt, report the incident to either the exchange platform or law enforcement authorities.

Scammers frequently employ social engineering techniques to trick victims into providing them with sensitive information. This could be done through sending text messages or emails, calling your phone, or placing a pop-up alert on your computer.

Crypto scammers frequently employ fake investment accounts and Ponzi schemes. These promises of huge guaranteed returns from investments in a crypto project are usually unreal, serving as an indication that the investment is fraudulent.

Another common crypto scam is a free coin or token offer. These schemes can be risky since they lead you to believe your coins are secure and without risk, when in reality the coins may have been obtained through fraudulent means and sent directly to a wallet in the scammer’s name.

You can verify if a cryptocurrency project is legitimate by checking its documentation and verifying its purpose, such as helping secure the blockchain or making payments easier. Most trustworthy projects won’t post updates about their progress on social media with claims of raising millions in funding.

Phishing scams are a frequent form of crypto fraud and they can be especially tricky for those without prior experience using digital currencies. To commit this type of offense, victims must provide personal information like their passwords and bank account numbers.

One way to spot a scam is by paying attention to warning signs. Make sure the person you’re dealing with is credible by checking their background, experience and reputation. Furthermore, always use an established exchange or wallet in order to prevent being taken advantage of. Furthermore, do your due diligence before investing in any digital asset – don’t let anyone pressure you into making a decision.