Cryptocurrency Fraud: Everything you need to know

Written by Mike Boutwell

September 1, 2022

Cryptocurrency is a virtual currency, and it is not backed up by banks or governments. Instead, is it a digital asset that is exchanged among individuals and its validity is authenticated by a blockchain system. Now if you are into the world of cryptocurrency or even if you are thinking about getting into this virtual world of currency, there is a lot to be looked out for. The most important thing that you need to be alert of is cryptocurrency fraud! Yes, like any other money frauds your online assets can also be at the risk of some potential threats.

Here we have listed some of the main cryptocurrency frauds that you can come across.

Financial Crimes

Since cryptocurrency can be easily transacted, its portability and instant reach can be used in avoidance of tax, money laundering or bribery. Hence, it is really important for newcomers to learn about all these tactics that are being used by different dealers that might lead to criminal records.

Scam coin offers

There are Initial Coin Offering, also called ICO made for sale of cryptocurrency. It can be used as a source to target those individuals that have less knowledge about this field to scam them. These ICOs can be easily fabricated and can be used to gain trust of others. People who are not careful to see through these copied and fabricated currency are more likely to be the target of fraud.

Market Manipulation

There are frauds in which people manipulate the market. It might include front running, spoofing, churning and other frauds that are related to all improper marketing manipulation. People commonly fall into this trap and lose a lot of their assets which can not be later recovered. These fraudsters trade the cryptocurrency improperly and loot off people of their valuable assets.

Ponzi schemes

This is the type of fraud in which recent adopters are asked to give returns to the earlier adopters. Ponzi schemes can also include purported investments. The fraudster will pretend to provide profits which are basically the assets obtained from the new investors. Hence, in this case, there are no actual profits that are being made but the investors are made to believe that they are making the profit.


Traditional theft can be one possible way to steal online assets. Here, the thief hack the system of investors and steal the currency from their crypto wallets. They can also create fake wallets or different phony exchanges to steal the assets from the investor.

Like the above-mentioned frauds, there are many others too which are now being used as a way to steal the online assets of investors. For newcomers, especially, who do not know these frauds or have less knowledge in filtering the genuine from the fake investments, there is a high possibility that they fall into these traps. To counter such problems there are many regulatory controls too that are being set by SEC, IRS, and CFTC to create control on such frauds. Systems have thus been introduced to make such frauds or any related attempts lower. However, investors must equip themselves with adequate knowledge to avoid these threats.

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