Cryptocurrency Fraud Explained

crypto currency investigation, trade, exchange, scam, fraud, forex, blockchain EOS, Cardano, Tron and Bitcoin

What are cryptocurrencies?

Cryptocurrencies or digital currencies such as Bitcoin or Litecoin are a decentralised online currency, meaning there is no authority controlling the currencies. Cryptocurrencies work as a peer-to-peer trading system and are controlled by those who use the currencies. Cryptocurrencies are electronic tokens generated by networks of computers. They are essentially a digital currency which is able to replace traditional currencies and cut out the middleman, the banks.

Whilst to most people cryptocurrencies sound like a brand-new thing, the most popular cryptocurrency, Bitcoin has been around since 2009. Some of the most popular cryptocurrencies being used today are Bitcoin, Ethereum, XRP, Tether, Litecoin, EOA, Binance Coin and Stellar just to name a few. There are now almost 3,000 different types of cryptocurrencies currently in existence.

As with any new technology, it’s caught the attention of criminals and cryptocurrency platforms are rife with scammers and cryptocurrency fraud.

There are two main types of cryptocurrency scams we commonly see. The first type of scam is targeted to those who are just starting to learn about cryptocurrencies and are looking to start trading. No doubt they’ve heard of the success that a friend or family member has had trading cryptocurrencies and they want to give it a go. In this type of scam, it’s common that the scammers will pretend to be a cryptocurrency trader and will offer to trade cryptocurrencies on your behalf. However, no trades ever occur. These types of scams are incredibly well organised and it can be very difficult to tell whether the website or person you’re speaking with is legitimate.

CLICK HERE to read more about this type of scam.

The other type of cryptocurrency scam is usually targeted to those with some experience and understanding of cryptocurrencies.

To fund the start-up of a new cryptocurrency, often developers will offer investors “Initial Coin Offerings” (ICOs). This funds the development of the new cryptocurrencies by selling the new cryptocurrency or coin tokens to investors in exchange for traditional currencies (hard earned cash). This is a legitimate way people can develop new cryptocurrencies and source funding to continue the development. However, it also opens the gates for scammers to approach investors with the same offer, only instead of using the investors’ money to continue to develop the cryptocurrency, they simply steal their money and the investor is left with nothing. Or maybe they’re left holding a fake new cryptocurrency with no value. And as the scammers are launching a brand-new cryptocurrency, there is no proven track record and so even a savvy investor may find it hard to verify the legitimacy of the offer.

Of course, there are endless variations to cryptocurrency scams and fraud. Some scams may start with a cold call, offering investment opportunities and promising great returns. Other scams may impersonate a well-known and trusted trading website or platform. Others may begin with an email, commonly impersonating a legitimate and trusted company and will likely encourage you to click a link inside the email. (Never click links inside any emails unless you are 100{1b721e92262d4c7bdff7dbb636e420bd080e7b73df747cf6b545059e882fe08d} sure it’s safe. But even then, if you can, simply go direct to the website to eliminate any risk.)

If you’re in a situation where something is not feeling right and you suspect you may either be in a scam or have been scammed, do not let the trader or company know that you suspect something. Instead contact us to discuss your situation and we will be able to guide you to ensure you don’t lose any more money and if you have already been scammed, then we can give you the best chance of getting your money back! By acting on a scam you’ll likely be saving others from falling for the same scam.


More To Explore

NFT Scam Investigation

NFTs, or non-fungible tokens, have been all over the news in recent months. Whether it’s celebrities endorsing pictures of cartoon apes, California teenagers being arrested

Online Dating Investigations

Whether you want peace of mind or proof of wrongdoing, Cybertrace offers premium social media and online dating investigations. There are many scenarios where our

Scam IP address warning

Scam Website Alert Cybertrace investigators have identified an IP address of with a high number of confirmed scam websites. There are over 600 web