How to Avoid Cryptocurrency Scams

Cryptocurrency (Bitcoin, Doge, XRP, etc.) is a digital or virtual currency that uses cryptography for security. It is not controlled by a single entity like a bank or government, making it an attractive target for scammers.

Common types of cryptocurrency scams include: Ponzi and pyramid schemes that promise guaranteed returns, fake investment platforms, and phishing attacks through emails, texts, or social media.

These phishing attacks can take many forms: a pop-up, or e-mail warning you about a virus on your computer, phone or tablet; a “friend” or “loved one” in need of bail money; the claim of fraudulent charges found in your bank account or on your credit card statement. These scams often rely on urgency and emotional manipulation to pressure you into acting quickly without verification.

Follow these tips to protect yourself from crypto-related scams.

• Be careful trusting someone you meet online, especially if they are offering investment opportunities
• Conduct thorough research before investing or sending funds
• Never trust unsolicited messages, or offers that sound too good to be true
• Use strong security practices like secure internet connections, and avoid sharing sensitive information online
• Look for red flags such as missing registration with FinCEN or state regulators, no physical address or customer service phone number, recently created domains, and unrealistic promises of guaranteed profits
• Verify companies and platforms through official sources such as state regulators or the SEC.
• Since cryptocurrency is highly volatile and uninsured, only invest money you can afford to lose

Finally, remember that crypto transactions cannot be reversed, making prevention your best defense against scammers. Stay informed by following credible financial resources and reporting suspicious activity to regulatory agencies like the Department of Financial Protection and Innovation (DFPI), or your state consumer protection office. By recognizing red flags and being cautious, you can significantly reduce the risk of falling victim to cryptocurrency scams.

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