Scams in Crypto: Recognizing Fraudulent Schemes

Scam is a scheme to scam people for money or cryptocurrency.

What is scam?

Cryptocurrency scams have become increasingly threatening in recent times and have become a popular way for fraudsters to defraud cryptocurrency investors.

Cryptocurrency fraud can take many forms - including blackmail, bogus investment schemes and fake business opportunities. Ponzi schemes and fake initial coin offerings have also been common in the past. Scammers can send text messages or emails to users asking them to pay in bitcoin.

Ponzi schemes are a type of investment fraud that can use BTC and other virtual currencies when existing investors are paid off funds collected from later investors.
In SEC v. Shavers, the organizer of the alleged Ponzi scheme advertised an investment opportunity that falsely promised investors returns of up to 7% per week. In addition, the scheme promised investors that the funds would be used to buy more BTC. Chainalysis estimates that in 2019 alone, the Ponzi scheme alone generated approximately $2 billion in BTC and Ethereum.