How to Beat Bitcoin Scams and Stay Safe with Cryptocurrency

Bitcoin may be the new way to make money, but it's also become one of the fastest ways to lose money quickly, thanks to the rise of cryptocurrency scammers.
Updated 7 May 2021
How to Beat Bitcoin Scams and Stay Safe with Cryptocurrency

United States Scam & Fraud Statistics 2020

$3.3 billion total fraud losses
4.7 million fraud reports

1.4 million reports of identity theft

Source: 2019-20 Consumer Sentinel Report

Sections on this page
  1. How to Beat Bitcoin Scams
  2. Keep Your Account Safe from Bitcoin Scams
  3. What to Do If You’ve Fallen for Bitcoin Scams
  4. Common Bitcoin Scams To Watch Out For
  5. Frequently Asked Questions

If you are a Bitcoin user, you want to keep your Bitcoin funds safe, and with the number of Bitcoin scams happening every day, it can be hard to do so. This guide will help you understand Bitcoin scams so you can avoid them or know what to do if a scammer has already contacted you.

How to Beat Bitcoin Scams

If you think you are in the middle of a Bitcoin scam, there are a few things you can do before suffering a loss of your Bitcoin funds.

If you are in a situation that sounds too good to be true or feels like it could be a scam, remember that you cannot recover Bitcoin funds if you transfer them to a scammer. Here are some best practices to avoid these scams:

  • Contact your Bitcoin exchange provider to verify they have an app before downloading any apps tied to their name.
  • Only use reputable Bitcoin exchange providers.
  • Research any alternate investing options online before taking action.

If you doubt someone who is contacting you, stop communicating immediately and do not provide any of your personal information. Most importantly, do not transfer funds until you can verify the source or tools you are using are legitimate.

Keep Your Account Safe from Bitcoin Scams

Bitcoin scams can seem a bit intimidating, but there are several best practices that you can do to avoid falling victim.

Use Reputable Bitcoin Exchange Providers

To avoid fake Bitcoin exchanges, you should use a reputable Bitcoin exchange provider. Using well-known Bitcoin exchange providers is essential for any transactions that involve buying or selling Bitcoin. Bitcoin exchange providers vary by country, but you can find a list on the website. You can use a Bitcoin Wallet to help protect you from unauthorized access.

Avoid Reusing Your Passwords

If a scammer gets a hold of your old or current passwords, they may share it with you to prove that they have your personal information. If you reuse the same password for multiple accounts, it causes a few issues. Firstly, it will be hard for you to tell what source they used to get a hold of your password. In addition, you will need to update any account that uses the password. It also means that the scammer may have access to several of your accounts.

If you avoid reusing passwords, you can make it harder for scammers to access your financial information and other accounts. A good best practice is to use different passwords for financial accounts.

You should also avoid duplicating passwords across your social media accounts. If you only use one password for each account and a scammer gains access to your password information from one website, you will only have to update that one compromised account.

Check Websites that Have Been Reported as Bitcoin Scams

BitcoinAbuse lists Bitcoin addresses that have been reported as being used by scammers. If you're ever unsure about a particular site, check here first to see if it's a scam.

Don’t Take the Caller’s Word For It—Verify the Source

In general, it’s safer if you avoid sending money to someone who calls you asking for it. If the person calling states that they are contacting you on behalf of the government (e.g., the IRS) and needs immediate payment for the money owed, it is a good idea to end the call and contact the agency directly to verify the source.

This best practice also runs true if the caller states they represent a private company or any other agency. Scammers are posing as utilities, police, or government agencies to influence you into sending Bitcoins to them. Instead of moving forward, you can hang up and contact the organization to determine if they indeed reached out to you.

Set Up a Bitcoin Wallet

A Bitcoin wallet allows you to store your Bitcoin so you can participate in Bitcoin exchange transactions, and it also helps protect you from unauthorized access.

What to Do If You’ve Fallen for Bitcoin Scams

If you have fallen for a Bitcoin scam, you can file a report with:

You can also monitor stolen Bitcoin, which allows you to get alerts when scammers moved coins out of flagged Bitcoin addresses. If you are using a Bitcoin wallet, you can also notify your provider.

While reporting these scams doesn’t necessarily get you your money back, you will be helping authorities fight scammers and prevent future fraud.

Alternatively, you can contact companies that offer cybercriminal investigations services or hire a Bitcoin recovery expert that focuses on digital currency scams.

Keep Yourself Safe Online

To avoid future online scams, including Bitcoin scams, see our tips on how to stay safe online. With so many scammers targeting people online, you can never be too careful.

Common Bitcoin Scams To Watch Out For

As scammers are coming up with new ways to scam you out of your Bitcoin, it's important to be aware of what schemes currently running and how they work.

Bitcoin Scams Involving Blackmail

Bitcoin scammers may attempt to blackmail you to get you to send them Bitcoin. Typically, they will claim that they hacked your computer and have evidence of you doing something you may not want others to see. The scammer will ask you to send Bitcoin to them as a payment to prevent them from sharing the evidence to your email contacts and/or via social media.

Calls from the "IRS"

In an IRS Bitcoin scam, you will receive a call from a person impersonating the IRS. The IRS impersonator may tell you that you owe the IRS back taxes or other debt and urges you to settle this with them immediately over the phone. They provide a wallet address to transfer your Bitcoin funds; however, the IRS doesn’t even accept Bitcoin exchanges.

Fake Bitcoin Exchanges

In fake Bitcoin exchanges, scammers offer incredibly competitive market prices that seem like a deal for you to purchase cheap Bitcoin. Unfortunately, the scammers take your money and do not pay out in Bitcoin as promised.

WhatsApp Bitcoin Investment Scam

The WhatsApp Bitcoin investment scam is similar to fake Bitcoin exchanges. In this Bitcoin scam, scammers contact you on WhatsApp and encourage you to invest your Bitcoin and receive a profitable return on your investment. However, the scammers usually end up keeping any Bitcoin funds that you transfer.

In one scenario, scammers convinced an individual to invest $4,000 to return a Bitcoin profit. The impersonators used WhatsApp to show that the investment was growing profits but requested different amounts—as much as $10,000—to free the money from impoundment.

After scamming the victim out of nearly $200,000, the investment imposters continue sending WhatsApp messages to request a final payment to return the money.

Fake Bitcoin Cryptocurrency

In the Bitcoin world, scammers present a new cryptocurrency as an alternative to Bitcoin. They tell you that you need to invest in a different up-and-coming cryptocurrency because it is too late for you to invest in Bitcoin. The scammer takes your money but does not invest it as promised.

Fake App Scams

Scammers design fake mobile apps that make them look like genuine Bitcoin exchange providers.

Fake Bitcoin Wallet Apps

Posing as a Bitcoin wallet app, an iPhone app called “Trezor” was available for download in the Apple App Store. After iPhone users entered their credentials, however, the scammers poached their Bitcoin funds. One victim of this Bitcoin scam lost 17.1 Bitcoin, which was worth $600,000 at the time.

Bitcoin Exchange Provider Look-Alike Apps

In April 2021, an individual in Utah thought an unidentified fake app was made available by the actual Bitcoin exchange provider. After entering credentials, the scammers gained access to his account information, and he lost over $384,000.

Frequently Asked Questions

Is Bitcoin gold a scam?

No, Bitcoin itself is not a scam. Bitcoin is a digital currency that operates independently of a central bank. However, several scams target Bitcoin investors, and these are what you need to be wary of.

How do Bitcoin scams work?

Bitcoin scams work in different ways. Some are phishing attempts, while other use blackmail to scam you out of your bitcoin. There are also Ponzi schemes, and some scammers even pose as the IRS in an attempt to steal your bitcoin.

How do I report Bitcoin scams?

You can report Bitcoin scams to BitcoinAbuse or the Federal Trade Commission (or both). 


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