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10 Ways to Spot a Cryptocurrency Scam – Read These Before Investing

ways to spot a cryptocurrency scam

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ways to spot a cryptocurrency scamWhen it comes to the world of crypto you have to be very careful what you get involved with. There is a heck of a lot of opportunity to make money with the new cryptocurrency technologies but there is also a heck of a lot of opportunity to lose money.

Scam artists are capitalizing on the new popularity surrounding the industry and all the hype of being able to make insanely quick profits. They know that there are a lot of people investing in crypto related opportunities and they are taking advantage of this.

I’m definitely not saying that you should stay away from crypto. I’m heavily invested in the technology and think its one of the greatest investment opportunities there is. However, I am saying that you need to be careful.

In this post I’ll be going over some warning signs that the opportunity you are looking into may be a scam. These do not prove that a particular opportunity is a scam or not but they should definitely raise your eyebrow and make you suspicious.

Before I get into that I first want to go over the 2 main types of cryptocurrency scams that exist.

The 2 Most Common Types of Cryptocurrency Scams

From what I have seen there are 2 main types of cryptocurrency scams that exist. There are the crypto ponzi schemes and there are the crypto trading software scams.

Ponzi Schemes

These are investment opportunities that claim to provide high ROI’s, usually at fixed rates. They will tell you that they are making you money legitimately in one way or another but are hiding the fact that the money being paid out comes from the investments of newer members.

Basically these are just a big flow of money from new investors to older investors.

Trading Software Scams

These scams will try to get you to invest in some “amazing” new trading software that predicts the cryptocurrency market nearly perfectly and wins almost all trades. They are usually promoted as being free to use and you end up losing your money when you fund your trading account.

Signs of a Crypto Scam

#1 – Claims of Being Able to Get Rich

This one is pretty obvious but I think its worth going over.

If a program/system is making claims that you can “make $3,000” today or “earn up to 200% a day” then its likely a scam. There is not one legitimate cryptocurrency related opportunity that I know of that advertises itself as being a get rich quick opportunity.

#2 – Pyramid-like Referral Program

Crypto ponzi schemes like CryptoGain & BTC Global Team will have pyramid structured referral programs where you can earn money by referring people to invest, and from the people they refer in, and from the people they refer in, and so on.

This is how ponzi’s stay in business. They rely on the number of new investors increasing and increasing the further down the pyramid you get.

All goes well until the rate of new investors starts to slow and then they cannot pay the older investors as intended. This is guaranteed to happen in ponzi’s and that is why most people lose money with them.

#3 – Lending Platform

If the investment opportunity you are looking into is pushing people to use their “lending platform” then be wary. Opportunities like this will have their own cryptocurrency which you will have to buy. Then after buying, you will “lend” the cyrptocurrency back to the company where they claim they will trade it for you in the market or use their trading robot to make you profits with it.

Then when you go to get your money back and cash out you find out there is problems.

With the infamous Bitconnect and BitconnectX scam and their lending platform along with others like LendConnect, these are generally not a good idea to get involved with.

#4 – “Secret” Trading Algorithm

Crypto trading software scams often claim to run on some newly developed or secret algorithm that can somehow predict trades with insanely high accuracy. Now I’m not saying that this isn’t possible but usually these scams don’t go into any detail about how the algorithm is able to do this and leave things very vague.

#5 – Referring You to a Broker

You will see this with trading software scams. What they will do is get you to sign up (usually for free) and then they will direct you to a broker that you will be able to deposit your funds to so that they can start the trading.

However, in cryptocurrency trading there is NO need for a broker. If you are every directed to a broker then this is pretty much surely a scam. I trade crypto’s myself and there is absolutely no reason that a broker should ever be needed. It just makes no sense at all and I’ve never heard of a legit crypto trading opportunity that uses brokers.

Some crypto trading software scams that are doing this that you may have run into include Bit Bubble Tech & Crypto Magnet.

#6 – 100% Free!

The trading software scams are usually the ones that are advertised as being free to use. But of course you will have to fund your account to start making money and this is where you end up losing.

Usually scams like this will tell you that they are free because they “want to make you rich”, because its “time to give back to the community”, and other mumbo jumbo.

I’m not saying that nothing good is free, but what I am saying is that good things usually are not free.

#7 – No Information (or Fake Information) About the Creators/Founders

Scams like to remain hidden for obvious reasons. They end up making a lot of people really upset so its necessary for them to cover their faces.

With crypto scams, or any scams for that matter, the people behind it are usually not mentioned or they are fabricated. Before investing money in any opportunity you should always look into those behind it.

#8 – False Scarcity

This is more for the scam trading softwares out there. Many times you will see on the sales pages for these crypto trading softwares that there is “Only 2 Spots Left”, “1 Day Remaining!”, and things like this. Usually these are completely false and are just a way to get people to buy in as fast as possible without doing the proper research that they might do otherwise.

These are very easy to disprove. If they have a time limit then simply exit the page, wait a couple of minutes and go back. Then look at the time and see if things make sense. Usually they will not and the time limit will just reset.

#9 – No Contact Infomation

If there is no contact information so that you can get in touch with support if you have a problem then that is a big problem. But don’t think that just because a place does offer support that they are legit. I have seen many scams that offer support but are still scams.

This is just another red-flag that should get your attention and add some suspicion to it all.

#10 – Just Don’t Make Any Sense

Cryptocurrency technology can be extremely confusing so when you get into the technical details of things then many of the legitimate ones won’t even make sense. However, they should have a nice overview of what they do & how they work in simple words that anyone can understand.

If you can’t understand it then there is a chance its a scam. Many scams seem to actually try to confuse people into thinking they are some great new opportunity but legit opportunities will not do this.

Just Be Careful

Always do your own research before investing in something crypto related, especially if you are new to all of this.

Also, take few minutes to ask yourself if the opportunity you are looking at sounds too good to be true or not. You would be surprised how many scams you can spot by just taking a few extra minutes to think them over and see if everything fits together.

Anyways…. I hope you enjoyed this and I hope some of my tips help save you from falling victim to the scammers of the world. If you have any questions about a particular opportunity being a scam or not and want me to look into it then leave a comment below and I’ll get back to you.

About the Author

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I hope you found this article helpful! I'm Kyle, the creator of this site, which is probably pretty obvious after seeing the name. Like most, I've had my fair share of difficulties and a pretty bumpy road while trying to find success online, which is why I put togetherthis guide so that others can get started right the first time around.


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