7 Signs your cryptocurrency investment is a scam

We’ve seen increasing media coverage of cryptocurrencies filled with stories of people making enormous returns by getting in early on the next big thing. With these stories everywhere and the seeming legitimisation of crypto by celebrities such as Elon Musk, it’s no wonder cryptocurrency investment use as well as fraud is on the rise. The complexity of how it works and the lack of experience means that fraudsters find it easy to confuse people and trick them into parting with their cash. The range of scams are vast, so always be on your guard. We’ve set out 7 key signs your cryptocurrency investment could be a scam. It’s important to note that not all of these need to apply for it to be a scam. 

1. You came across the person or advert on social media or through a cold call

You will come across fraudulent companies in a number of ways on social media. Sometimes the person may have added you or called you out of the blue. Sometimes it might be a fake celebrity endorsement (always be wary of celebrity endorsements). Other times, it’s a little more subtle. You may have read a newsletter or article about investing in cryptocurrencies with quotes from an apparently legitimate broker. If you follow those links or fill in a form, it’s likely that you will be reaching out to a fraudster. Once you’ve provided your details you’ll usually find that you are relentlessly pursued by one or more fraudulent “companies”. 

2. You were encouraged to invest by “starting small” to test the investment

Often with these scams you’ll be asked to put in as little as £200 or £250 to see how it performs. Miraculously, you’ll see your investment perform remarkably well which will be used to encourage you to invest more. The fraudster may even send you a little bit of your profit back to try and convince you that this is real. What you are seeing is unfortunately all fake. While it may all look real and appear to track real life events, fraudsters are able to create extremely convincing looking platforms that they can manipulate to back up whatever story they want to tell you. They will create whatever elaborate story they need to convince you to invest more - sometimes this will be crippling losses you need to “save”, sometimes it will be once in a lifetime opportunities to invest. 

3. The investment is so good an opportunity, it isn’t clear why they are telling you

A great thing to do is to take a step back and consider whether, if what this person is telling you is true, why would they be telling you? I know for sure that if I had secret information about a great new coin that was certain to make profits or 800% returns, I’d be investing myself and telling all my friends and family rather than a stranger. Yes, some people have made lots of money investing in cryptocurrencies but that’s mostly because they bought coins many years ago and simply sat on them and got lucky. Many new coins turn out to be scam cryptocurrency such as the infamous Squid Coin. 

4. You’ve been asked to put your money into a crypto wallet first and then send it to the scammers wallet

Don’t do this! If someone asks you to set up a wallet to send the money to their wallet, it’s likely to be a cryptocurrency investment scam. Once the money is gone, there is virtually no way of getting it back via these unregulated platforms. Usually the platforms used are legitimate (e.g. Kraken, Coinbase, Binance, Crypto.com, Moonpay.)

You may have a case against your bank if there was a UK bank involved at some point. In these cases, you should speak to Refundee. 

Likewise, never give away your private key for your wallet to anyone else as they’ll be able to steal your funds if you do.

5. You’ve been asked to give remote access to your device via programmes like AnyDesk or TeamViewer

This is quite simply a huge red flag. No legitimate broker would ask you to give remote access to your device. They do this simply because it gives them the opportunity to click or hide any warnings and also because the process of actually transferring cryptocurrency from one wallet to another is confusing for someone without any crypto experience. 

6. You’ve been asked to send screenshots of your transfers to the “broker” 

This is not some kind of security measure, this is because the platform is fake and they need to be sure you’ve sent them money before they show the transfer appearing on their platform. Remember, they are carrying out these investment scams on thousands of people every day so it will be hard for them to spot your funds appearing. 

7. You’ve been asked to pay withdrawal fees or taxes

This is a last roll of the dice for fraudsters and is common across all investment scams such as the Group 500 or Genesis 11 scam we wrote about previously. While you won’t have been told about the fees or taxes before, the fees you are asked to pay will look reasonable in light of the overall “profit” that you’ve made which is a deliberate tactic used by the fraudsters to get you to invest more. Don’t pay these fees as you won’t get your money back and they’ll invent new fees or taxes after this. If fees need to be paid, why can't they just take the money from your account balance? There is no good answer to this other than that they are a scam.

How can I protect myself from an investment scam?

Follow these top tips to ensure you are protected:

• If someone asks you to set up a wallet in order to send them your cryptocurrency, they are probably trying to trick you

• Never send your cryptocurrency to an account controlled by someone else

• This is a highly volatile investment, so nobody can guarantee you returns

• Only a fraudster would ask for control of your device

• If you’re asked to pay taxes or fees that can’t be taken from your returns, you are probably being scammed.

What do I do if I’ve lost money to an investment scam?

If you have lost money to an investment scam, Refundee can help you get your money back from your bank and you can fill in our fraud claim form for a free consultation. Our fee is 15% plus VAT on anything that we get back, and we don't charge anything if we are not successful. For larger cases, the fee is subject to a maximum of £10k plus VAT per case.   

Remember you don’t need to use a company like Refundee, you could work your case yourself for free! If you’d like to get a refund yourself, you can do this by following our bank transfer refund guide.