3 Common Crypto Scams & How to Avoid Falling Prey to Them

Common Crypto Scams in Singapore - Avoid them with Gemini, one of the safest crypto exchanges

This post was written in collaboration with Gemini. While we are financially compensated by them, we nonetheless strive to maintain our editorial integrity and review products with the same objective lens. We are committed to providing the best information in order for you to make personal financial decisions with confidence. You can view our Editorial Guidelines here.

Even though Singapore is one of the safest countries to live in, it’s not immune to cryptocurrency scams. Police here received almost 400 reports of crimes related to cryptocurrency investments in 2020, a shocking threefold increase from the previous year.

Using a trusted cryptocurrency exchange like Gemini is the first step to staying safe in the world of crypto. Whether you’re a crypto veteran or a newbie, you’ll need to brush up on your knowledge of the latest scams in order to avoid falling prey to one.


Scam #1: Phishing

In a crypto phishing scam, you might receive an email, text, or even a DM on social media that appears to be from your crypto exchange, crypto wallet, or a well-known figure in the crypto space. However, the link shared in this message will lead you to a scam site that resembles an official page in order to trick you into entering your information. Once the scammers get hold of your details, they will proceed to log into your account and steal your funds.

To protect yourself from phishing scams, always be careful whenever you receive communication from cryptocurrency-related services, individuals claiming to be figures of authority, or even celebrities.

Check the contact details of any entities sending you messages to make sure they’re legitimate, and scrutinise any links shared to ensure no characters have been replaced with similar-looking symbols or alphabets. For example, a scammer might replace a capital ‘I’ in a website link with a lowercase ‘L’ to mimic the official website, in hopes that you will not spot the difference.

And it goes without saying that you should never share your personal identification information, OTPs or passwords with anyone. No legitimate entity will ask you for this information.

You can lower your risk against phishing scams by using a secure and trusted crypto trading platform like Gemini. Gemini provides users the ability to pre-approve wallet addresses that their funds can be sent to. This means scammers will not be able to siphon funds out of your account should you have fallen victim to a phishing scam. 


Scam #2: Ponzi/Pyramid schemes

Ponzi or pyramid schemes are scams that masquerade as investment opportunities, promising investors astronomically high returns with a small investment. Crypto ponzi schemes work this way, too.

Scammers target crypto investors by encouraging them to invest in a new crypto project that is bound to “go to the moon”. The scammers rely on a continuous stream of new victims, lured in with the promise of easy profits or sizable returns, to entice participation and prop up the scheme.

Earlier victims are usually rewarded with what they think is a return on their investment. However, they are actually receiving the funds invested by the newer victims. This system usually perpetuates until either the scammers are satisfied with the funds they have received, or they are unable to attract enough new money to falsify as investment returns for newer victims. In both situations, the scammers will make a quick exit with their accrued funds, and victims are left without a way to get their money back.

Remember:if it sounds too good to be true, it probably is. All investments come with a certain level of risk, so those that guarantee high returns should be met with a healthy dose of scepticism. You should always be cautious before signing up for any investment scheme, and conduct your own due diligence instead of being swept up in a wave of excitement. Scrutinise the company closely by inspecting project whitepapers and verifying the identities and credentials of team members. And of course, avoid investing in anything you don’t have a clear understanding of.

If you’d like to learn more about crypto in order to understand the different projects out there, the best place to start is Gemini’s Cryptopedia. Here, you’ll find helpful articles to further your understanding of the space, as well as pieces from experts that provide a deeper level of knowledge about different crypto projects.


Scam #3: Pump & Dumps

Pump and dump schemes are a form of market manipulation in which the price of a cryptocurrency coin is artificially inflated in order to attract other investors. Once the price has been “pumped” up, the scammers then “dump” their initial investment at a higher price.

Scammers garner interest in the cryptocurrency they are targeting by shiling the coin on multiple social media platforms, forums, or messenger apps. This means that they will promote the coin as a good buy in order to encourage more people to invest in it. If successful, the price of the coin will spike due to the demand, and scammers will then be able to sell off all their holdings at the inflated price to make a sizable proft. This will also result in the price of the coin dropping tremendously, and victims being left with potentially worthless coins.

Unfortunately, pump and dump schemes are common in crypto as regulations that guard against such tactics have yet to be implemented.

While it might not always be easy to tell the difference between credible projects or fake coins, you should always take the time to examine all the projects you’re interested in closely, and not buy in based on pure online hype or because a friend or family member told you to.


Be safe, not sorry, when trading crypto

Such scam tactics are not only limited to crypto. For example, you might receive an email impersonating your bank, a “fake” failed delivery, or even a scammer pretending to be a member of the Customer Support team in order to gain your private information.

As the popularity of crypto increases, you can expect to see more such scams.. Crypto investors need to keep their guard up to avoid potential pitfalls.

That is why crypto investors around the world use Gemini as their cryptocurrency exchange. As one of the world’s first crypto exchanges with SOC 1 Type 2, SOC 2 Type 2, and ISO 27001 certification, the platform’s security-first mentality makes it one of the most credible crypto exchanges in the world. Read here to learn more about Gemini’s robust security.

The world of cryptocurrency is an exciting one, and you can navigate the space safely if you are equipped with the right knowledge and exchange to trade on.

Get started with Gemini and sign up for your account today!