7 Common High-Profile Crypto Scams and How to Avoid Them

Crypto scams have become one of the biggest threats to digital investors, costing victims billions of dollars and damaging trust across the industry. In an environment shaped by limited regulation and fast-moving hype, both outsiders and insiders have found ways to exploit traders.

In this article, we examine six common crypto scams, look at several high-profile scams, and explain how to avoid them. You will see how these schemes work, why they keep happening, and what they mean for the future of crypto as it pushes toward mainstream acceptance.

What is a crypto scam and what are the most common types?

A crypto scam is a fraudulent scheme that tricks people into sending money, sharing sensitive data, or trusting fake investment opportunities involving digital assets. In 2024, cryptocurrency scams reached record levels, with illicit transactions estimated at $9.9 billion and expected to rise further as more fraudulent wallets are identified. Cases such as pig butchering scams also grew sharply, showing how widely these schemes are spreading.

AI-driven scams also skyrocketed, with generative AI fraud vendors reporting a 1,900% revenue growth, fueling deepfake identity theft and automated investment fraud. Authorities worldwide are ramping up enforcement, but the rising sophistication of scams poses an increasing challenge for regulators and fraud detection systems.

Shadowy criminals can phish traders’ passwords through malicious links, but AI has made these scams more sophisticated and believable.

Crypto scams can also be perpetrated from within, by the very crypto exchange insiders we know and trust. We will discuss a few of the most common types of scams.

1. Internal scams

Much like the “point spread” scam in FOREX trading, where a legitimate broker manipulates the spread between currencies to their advantage, internal crypto scams are perpetrated by the very broker you are meant to trust. In the FOREX “point spread” scam, brokerages deliberately code prices on their platform to generate profit for themselves without disclosing it to the trader. It is a breach of trust and abuse of position of the worst kind. 

In the crypto world, illicit crypto exchanges and brokerages are no less calculating. The first type of internal crypto scam is based along the lines of the Ponzi scheme. In this scam, traders are incentivized by large payouts if they can recruit other traders in their personal networks to buy a certain number of cryptocurrencies. The scam creates pyramids of participating traders who are keen to bring on board more traders under the expectation that they will be rewarded at a future point in time. Usually, some of the early crypto buyers are paid out, and they evangelize to other members of the scheme that their day is coming. It almost never does, as the Ponzi scheme collapses when traders realize that the deferred payouts are not coming.

Another type of internal scam is the investment scheme that involves crypto firms offering traders the chance to buy their in-house crypto for next to nothing, with the expectation that its value will increase in time. New crypto investment schemes are pushed by crypto platform senior managers who often promise a once-in-a-lifetime opportunity to invest in this new crypto with excellent returns. The crypto firm will often push new investors to buy as much as possible, claiming others will enter the market and erase the opportunity if they do not act fast. The unfortunate investors almost always find out later that the promised increase in value never happens. Naturally, if there was strong oversight of these activities by global regulators, it would be a much safer space.

2. AI scams

AI scamming is the use of artificial intelligence to facilitate fraudulent schemes, making deception more convincing, scalable, and difficult to detect. Cybercriminals use generative AI to create deepfake videos, clone voices, and produce persuasive phishing emails that trick victims into disclosing sensitive information or transferring funds. In 2025, AI-powered scam vendors saw a 1,900% surge in revenue, reflecting the widespread adoption of AI in fraudulent activities.

Fraudsters also use AI to automate investment scams, generate fake social media profiles, and manipulate financial markets through automated trading bots. Platforms like Huione Guarantee have become hubs for AI-driven scam tools, offering “face-changing” technology and deepfake identities for as little as $200 in cryptocurrency. As AI continues to evolve, regulators and security experts warn that the scale and sophistication of AI-powered scams will pose an increasingly severe challenge for fraud detection and law enforcement efforts.

3.  Crypto-only payment scams

In what is becoming an increasingly common occurrence, some parties are claiming they can only accept payment in cryptocurrencies. This is normally a scam. It is not likely that a credible entity only transacts in crypto, as it is not legal tender anywhere other than El Salvador at the time of writing.

These entities may be insisting on crypto payments so they can receive them in a low trading phase and take advantage of price swings in the future.

Also, some of the crypto world still lacks many of the essential Know Your Customer (KYC) safeguards of the mainstream financial industry. So, a shadowy entity can open a crypto wallet and process transactions for any type of service without having to present identification. To be fair, most of the established crypto exchanges do operate by stringent KYC rules, but there are outliers. While crypto is based on immutable blockchain records that can theoretically be traced to individuals, in practice, tracing someone via blockchain transactions is a difficult and often expensive exercise. You may be able to track their digital signature as transactions enter and exit crypto wallets, but locating the wallet holders in the physical world is extremely hard work. It is to help you avoid crypto scams like that we wrote an article on how to keep your crypto safe.

4. Fake identity scams

One benefit of cryptocurrencies is their decentralized nature, but that openness also leaves them vulnerable to abuse by bad actors. Investigations of several scams have proven that it is remarkably easy for one person to open multiple wallets under fake identities and use this to run scams. These scams might involve criminals hacking your hot wallets, stealing your private keys, and, in essence, your funds, and sending them to a wallet in the name of a fake identity.

Therefore, the tools and the compliance framework of those seeking to regulate the industry need to catch up with the way crypto works. Many crypto security experts recommend that newbies stick to well-known crypto exchanges and also stick to the two most popular cryptos — Bitcoin and Ethereum — as they have a longer track record of operation.

5. Game and collectible-based scams

After the runaway success of the 2021 Netflix show “Squid Game”, an unaffiliated cryptocurrency with the same name entered the market. The founders of the crypto took advantage of the global success of the show and created a surge in publicity and demand. The value of the crypto ballooned from $1 per coin to $2,861 in a matter of days. However, when new Squid Game investors tried to sell their assets, they were told they needed to enter a separate pay-for-play game to qualify to withdraw their funds. This created an administrative delay, during which time the scammers sold their holdings and disappeared, causing the coin’s value to crash back to below $1. 

The scam affected thousands of traders, some of them experienced investors who assumed the crypto was affiliated to its Netflix namesake. The scam was surprisingly simple to execute and resulted in a massive payoff for the scammers. Traders should be aware of scams like this. This case showed that traders chasing the next big thing can lose their discretion and fall for such scams.

6. "Pig butchering"

Not satisfied with the old crypto romance scams, criminals have developed a new type of scam with an unflattering name. Pig butchering is a sophisticated investment and romance scam that preys on victims through social media or dating apps, where fraudsters establish trust before luring targets into bogus financial opportunities.

The term originates from the scammers’ strategy of “fattening up” victims with flattery and fabricated emotional connections before ultimately defrauding them. In 2025, these scams generated nearly $9.9 billion in illicit crypto transactions, with revenues from pig butchering alone increasing by 40% year over year. The number of victims depositing funds into such schemes surged by 210%, highlighting a shift toward targeting a broader pool of individuals for smaller amounts rather than relying on fewer high-value victims.

Many of these operations are run from scam compounds in Southeast Asia, where trafficked individuals are forced to execute fraud under duress. Authorities are intensifying efforts to crack down on these networks, but as AI-driven deception techniques become more sophisticated, distinguishing real from fraudulent financial opportunities is increasingly challenging.

7. Phishing scams

This is a common scam that takes advantage of traders’ lack of knowledge. The playbook is the same. The scammer tries to get the trader’s attention by indicating that there is a golden opportunity waiting for them if only they would click on a link and share sensitive personal information. In the case of crypto, this could be a criminal asking for your private crypto keys.

For these scams to be effective, the scammers often manage to perform some level of social engineering on their victims so that their offers contain a reference to someone in the target’s network. It could come in the form of a link bearing the call to action, “Your friend John Smith wants you to take advantage of this amazing opportunity.” 

What are the most high-profile crypto scams?

The most high-profile crypto scams are major cases in which exchanges, founders, or firms misused customer funds or misled investors on a large scale. These scandals reflect weak industry controls and show how some CEOs and company founders were able to abuse positions of trust. The examples below highlight several of the biggest crypto fraud cases in recent times.

FTX, US

The collapse of FTX was one of the most dramatic financial scandals in recent history. In November 2022, FTX filed for bankruptcy after it was revealed that the company had misused customer funds to cover losses at its sister trading firm, Alameda Research. A leaked balance sheet exposed that much of FTX’s assets were tied up in its own token, FTT, leading to a loss of confidence. A bank run ensued, with customers withdrawing funds en masse, triggering a liquidity crisis.

FTX collapsed, leaving billions in customer funds missing. The founder, Sam Bankman-Fried, was arrested and later convicted on multiple fraud and conspiracy charges in 2023. His trial exposed reckless risk-taking, poor corporate governance, and misuse of investor and customer funds. The scandal severely damaged trust in the cryptocurrency industry, leading to increased regulatory scrutiny.

Thodex, Turkey

The founder of now-defunct Turkish crypto exchange Thodex went on the run in 2021 after the company defrauded investors and collapsed. Interpol issued a red notice and swooped on the firm’s headquarters, arresting 62 staff members. Faruk Fatih Ozer, founder and CEO of the exchange, along with 20 key colleagues, were eventually fingered for a cumulative 40,000 years in prison by Turkish prosecutors. It was alleged the accused used the crypto platform as a criminal organization where they fraudulently laundered proceeds from illicit activities.

Despite being hunted by Interpol, the former CEO went missing for a year. What was most egregious was that Thodex attracted investments from many young Turks who were seeking safe havens from high inflation and a volatile Turkish lira. After capturing up to 400,000 investors, the exchange went offline overnight. It is alleged that Ozer got away with $2 billion in investor money

Cryptsy, US

In 2022, Paul Vernon, CEO of the long-collapsed Cryptsy crypto exchange, was indicted for tax evasion, wire fraud, and money laundering. The US Department of Justice (DOJ) accused Vernon of stealing $1 million directly from wallets of customers. He was said to have removed the funds from wallets the exchange controlled and used his own crypto wallet to transfer the funds into his personal bank account.

The transgressions took place as far back as 2013, but Vernon did not make any disclosures to his customers. In fact, in 2014, he told his employees that a hacker had stolen $5 million in bitcoin and other cryptocurrencies. He did not disclose the event to his customers until November 2015.

Vernon left the US in 2016 and moved to China, from where he hacked the company’s servers, got hold of the database containing customers’ funds, and destroyed the database to cover his tracks. He was only successfully indicted this year, but authorities retain hopes that some 11,000 bitcoins that went missing can be tracked on blockchain if they are ever transferred.

Bitconnect, US

BitConnect Founder Satish Kumbhani was accused of running a $2.4 billion Ponzi scheme that defrauded investors. The Securities and Exchange Commission (SEC) litigated against Kumbhani in September 2021, citing fraudulent activities. He remains on the run today.

BitConnect was founded in 2016 and raised billions of dollars from global investors. What made the firm more attractive was that it offered investors a handsome 10% interest earnings on its coin if only they could successfully refer other investors. Facing scrutiny from authorities, the exchange shut down in 2018, causing the price of BCC coin to tank from $500 to $1 overnight.

Endpass Etherium, US

The CEO of crypto exchange Endpass Ethereum was accused and arrested for laundering $4.5 billion worth of bitcoin along with her husband. CEO Heather Morgan and her partner Ilya Lichtenstein were implicated in a 2016 hack, the proceeds of which the couple attempted to launder by investing almost $1 billion in non-fungible tokens (NFT). They employed other laundering methods, including using fictitious identities to set-up online accounts. 

What Is Different about CEO-Level Fraud?

CEO-level fraud is different because the people running a crypto company can directly abuse customer trust, access to funds, and decision-making power. In regulated finance, senior management is usually vetted for experience and background, but that level of scrutiny is often missing in the crypto space. As a result, almost anyone can move into positions of power without the same regulatory checks.

For example, the UK’s Financial Conduct Authority (FCA) performs what is known as a “fit and proper” test for anyone wishing to set up a trading brokerage. As cryptocurrencies are not generally regulated in the UK, these tests are not required for crypto companies. However, to evidence how hard it is to establish brokerage firms dealing in regulated financial assets, they must pass stringent tests. Anyone wishing to hold a senior management function (SMF) in a brokerage firm is thoroughly vetted by the FCA for: 

• Honesty, integrity and reputation
• Competence and capability
• Financial soundness

The regulator expects total honesty from the start. You are expected to disclose if you have ever been convicted of a crime. The regulator also calls for provable industry references for the last six years, qualification certificates, credit checks and criminal record checks. The FCA leaves no stone unturned in ensuring that only the most experienced and competent people make it through.

Many other tier-1 regulators around the world share this level of thoroughness. It is reasonable to conclude that none of the high-profile crypto scams discussed above would have happened if the founders and CEOs had faced such strict vetting. 

Why Is All This Crypto Fraud Happening?

Crypto fraud happens largely because much of the industry operates without the full regulation applied to traditional financial firms. Proper oversight goes beyond checking senior managers and includes rules on reporting, liquidity, and the way firms handle customer risk. Without those regulatory controls, it becomes easier for weak practices and fraudulent activity to spread.

With brokers dealing in other financial assets like stocks, commodities, and FOREX, regulators insist that broker capital is ring-fenced and kept separate from trader funds. There are also strong guidelines around important trading aspects, such as leverage and minimum balance protection, which must all be geared to allow traders to invest responsibly and safely. Regulators also frown upon many of the extravagant promotions that typically ensnare crypto investors. This point alone would stop many of the overly generous investment schemes that characterize many crypto fraud cases.

Finally, crypto firms are not compelled to offer compensation schemes to investors. If this were a requirement, they would surely conduct themselves with more diligence. In saying that, there are a great many crypto exchanges that operate responsibly and ethically and provide an essential service to the growing crypto market. Many crypto exchanges are well capitalized, have prestigious and well-known investors, and a voluntary list on prominent stock exchanges, subjecting themselves to all the layers of scrutiny required to be traded on a bourse. 

What are regulators saying about crypto fraud?

Regulators are saying that crypto fraud is a serious concern and that clearer oversight is needed across the industry. That process usually begins with national governments, which give regulators the authority to study and shape new rules. In the US and Europe, official reviews and policy moves have already pushed crypto regulation forward, while areas such as Bitcoin ETFs have started to gain more clarity.

However, government attitudes around the world differ on the matter of crypto classification and treatment. Also, different geographical regions are adopting crypto at differing rates, adding to the complexity. Countries like Australia, Canada, and Singapore have released tax guidelines for cryptocurrencies, while many others still debate whether crypto is a payment method or an “investment” type. This is to say nothing of what central banks must do about crypto.

Some significant global economies still treat cryptos with excessive mistrust. China has banned all cryptocurrencies from its monetary ecosystem, while India has made several negative pronouncements and threatened to ban them.

Regarding the race or slow walk, to regulation, the US is forging ahead. The country has already installed five important regulatory frameworks that cryptocurrency firms will have to navigate in the future, with some measures being in place already:

• Financial crimes-related regulations, such as the Bank Secrecy Act and others, must encompass cryptocurrencies.
• State banking departments must have input on regulating cryptocurrency in their states.
• The Securities Exchange Act oversight and control measures must encompass cryptocurrencies.
• The Commodity Futures Trading Commission (CFTC) must cater to cryptocurrencies.
• The Internal Revenue Service must finalize how taxation of crypto profits should work.

Clearly, achieving regulation will require concentrated work from many different interest groups, even in smaller economies. However, given the increasing rates of low-grade crypto crime, as reported by the FTC, never mind the high-profile scams, regulation will be key for the future viability of cryptocurrencies.

Crypto scams affect the perception of the asset

Major fraud cases are damaging to the entire industry, leading to drops in the valuation of cryptos and a damaging loss of confidence from would-be investors. Public perception suffers from constant negative media coverage. It influences the idea that crypto is a fad or a scam. 

Does this mean that cryptos have no future and will never be adopted? No, it does not. Most qualified observers admit that, by virtue of the technology underpinning blockchain, it is secure. This means that when you have coins locked safely away in an industry-approved storage format, they cannot be stolen, you also cannot double spend, and your coins will not disappear in a puff of smoke, as many crypto myths contend.

However, the security of the technology is not really what many traders are asking about. Investors want to know that crypto is not used for scams, and money laundering on the mysterious dark web. The sad truth is that crypto is definitely used for these purposes. Consumers want to know that these cases are in the minority and steps are being taken to close many of the gaps that make the industry vulnerable.

Market commentators expect crypto growth to be steady but not stellar. There are bound to be ups and downs, as we are seeing in the current down cycle. What the currency does not need is to be bedeviled by endless bad press and scandal. This will only complicate and lengthen the road to mainstream acceptance. 

All of this said, cryptocurrencies, especially in the US, are enjoying a recent boom in public acceptance and improved public perception as vested parties push for clear and permissive crypto regulation, with some success. The rest of the world looks on.

How can you protect yourself from crypto scams?

You can protect yourself from crypto scams by staying informed and treating every platform, offer, and contact with caution. Crypto fraud can come from hackers and cyber criminals, but it can also come from trusted-looking CEOs and founders. That is why strong due diligence matters before sending funds or relying on any crypto business.

Check for a stable ecosystem

Because oversight still varies widely across jurisdictions, investors should evaluate whether a crypto exchange operates within a market that has credible financial checks and balances. Therefore, we would encourage you to seek out the next best thing. In many of the high-profile cases listed above, better oversight at launch and during operations might have exposed warning signs before those businesses scaled. However, in the absence of firm regulation, we would encourage you to seek out crypto exchanges that operate in developed markets that function within an overall ecosystem of checks and balances.

To be more specific, you are better off working with highly visible crypto exchanges based in first-world countries that have a track record of success. You can never know a company’s inner workings, but a long trading record, satisfied customers, and visible leaders advocating mainstream crypto adoption offer some reassurance. Based on our analysis of exchange risk disclosures and public trust signals across multiple major platforms, the most reliable operators usually combine a multi-year operating history with clear leadership identities, transparent terms, and evidence that they respond publicly to compliance or withdrawal issues.

Be alert for common signs of scams

Remember, the fraudster could be the CEO of your crypto exchange. As a practical safeguard, country-level enforcement and transparency still matter, even though they cannot guarantee that a crypto exchange itself is trustworthy. We recognize the irony in this, as Cryptsy, BitConnect, and Endpass Ethereum all operated out of the US, the largest and one of the most regulated economies in the world.

There is comfort in the fact that the perpetrators of crimes in all these cases were indicted or arrested in a highly transparent and public fashion. This could be a deterrent for future criminals, if nothing else. Also, when you work in a market that has a strong culture of whistleblowers and complaint registrations, you are off to a better start.

When you are dealing with a crypto exchange or brokerage, our advice is to clearly understand the value proposition of your crypto partner. Pay attention to reviews and read the fine print that could disclose important details of concern, such as operating terms and conditions that disadvantage you.

In general, whether you are performing trading activities through your crypto exchange or reading an email that could be phishing, understand that whenever a deal is too good to be true, it is probably a scam. The financial world is a notorious place for bad actors preying on your emotional weakness and the powerful human desire to get rich quick. Think of the Squid Game scam, where even experienced investors lost money because they feared losing out.

What to do if you think you have been scammed

It may be too late already, but the first item in your playbook is to try to divest from the company if it is still operational. If the company closes overnight, you have no hope of recovering your funds. However, all is not lost. It may be cold comfort, but you should immediately report the matter to the consumer or financial watchdog in your country. 

Next, try to find out if there is a charter company for crypto firms that looks after the interests of these companies. You can make a complaint there. Some countries, like the UK, have a service known as the Broker Complaint Alert, a feature that offers practical advice and help to many thousands of disgruntled traders every year. 

Some other practical tips on how to rescue the situation could involve you requesting a chargeback from your bank. If you made a recent payment using a major debit card or credit card, your bank could reclaim the money if it is within the appropriate window. 

You could also hire a crypto recovery service, which is an emerging product that uses expert industry forensics backed by high computational power to trace stolen coins. These services can track the transactions of the wallet address that received your scammed funds. When scammers transfer funds from the wallet to cryptocurrency exchanges to sell for fiat currency, you can contact the exchange handling this traffic. The most established exchanges employ KYC best practices and try to gather customer names, addresses, and identifying information. If you are in luck, intervening in time could help the exchange report the scammers to the police.

Related to a crypto recovery service, but not quite the same thing, bounty hunters are people in the crypto ecosystem who will charge you for using their blockchain knowledge and experience to investigate theft and try to recover your money. Some sites allow you to post a bounty, which can be taken up by amateur crypto bounty hunters. 

Conclusion

Crypto scams remain a serious obstacle to the industry’s growth, but understanding the most common tactics is the first step toward staying protected. From insider abuse to fraudulent schemes that target inexperienced traders, the key takeaway is clear: awareness, caution, and stronger regulation are essential.

If the crypto sector wants to build public trust and achieve wider adoption, it must reduce abuse and improve accountability. For readers, the closing lesson is simple: stay informed, question bold promises, and protect your assets before you invest.