The Most Common Types of Crypto Fraud

The Most Common Types of Crypto Fraud


In the world of cryptocurrencies, there are several ways that will ”help” a beginner to become a victim of fraud. Although, there have been cases when experienced crypto investors “pecked” at the bait of scammers.

We will take a detailed look at the three most common types of fraud. But first let’s figure out why people create such a crypto project. The answer, of course, is obvious: to make money quickly and easily. Today, according to, there are more than 17,500 cryptocurrencies, against which it is very easy to get lost. It is easier for a fraudster to remain anonymous on the Internet today. That’s why we often see them communicating via Discord and Telegram. These online platforms help them remain anonymous, and therefore they are difficult to track.

And so, let’s get started.

  • Fraud with the distribution of money

One of the infamous scams, which is especially often used through social networks, is the token distribution scam. People often try to impersonate celebrities, or influencers on Twitter or YouTube to appear trustworthy. Discord and Telegram are also platforms where distribution fraud is carried out.

The distribution works as follows: scammers report that if you transfer a certain crypto coin to a certain crypto wallet, they will send twice the number of coins back to your crypto wallet. It sounds too good to be true, but nevertheless, enough people fall for it, and scammers earn a lot of money.

Scammers send a private message to Discord and Telegram. This is often done from a fake account, for example, for Cardano or Ethereum. They imitate an account in such a way that it is often difficult to understand that it is a fake account. On YouTube, scammers post a video that often includes a recorded conversation with the founders of cryptocurrencies. In it, they place their personal wallet with the text that if you send, for example, 4000 ADA (Cardano token) to this wallet, you will receive 8000 ADA in response.

  • Pulling the mat

Another common model of income generation by dubious crypto projects is “rug pull”. You can talk about rug pull when the price drops by almost 100% in a short period, and the developers of the project are responsible for this. The growth of decentralized exchanges (DEX) has made it easier for scammers to develop a crypto project in order to seize your money with the help of rug pull. Today it is easy for scammers to create a coin and place it on DEX. These coins can often be found on DEX platforms such as Uniswap and Panecakeswap. Since there is no central control checking new coins, it is easy to create something for the purpose of “pulling the mat”.

This scam works as follows:

Coin trading becomes possible due to the liquidity that the coin possesses. The greater the liquidity, the easier it is to buy and sell cryptocurrency. In order to provide liquidity, both assets of a trading pair must have a value. Liquidity pools are often created to ensure liquidity, and in the case of “rug pull” we see that the developers of the coin own more than 90% of the liquidity.

As an example, we use a coin built on the Ethereum blockchain. Scammers create a hype around cryptocurrency. Often they do this by creating a simple website containing a roadmap. These coins are (usually) “marketing”, and the coin adds nothing to the world of cryptocurrencies, except creating a fuss around the coin without any long-term strategy. Famous people such as influencers and YouTubers are often used to create hype. Sometimes these people, like scammers, pursue only the goal of earning quick and easy money, but this is not always the case. Influencers and YouTubers often don’t even know about the scammers’ plans. Thus, scammers use the status of YouTubers and influencers.

When enough funds are invested in a currency, scammers deprive it of liquidity, withdrawing all Ethereum from the project. The value of the currency often drops by 100%, and investors can no longer sell their coins.

  • NFT-fraud

Currently, there are also scams with non-interchangeable tokens – NFT. NFTs are very popular, and we hear a lot of success stories about how they sell for tons of dollars in the crypt. Therefore, it is very tempting to trade NFT yourself. Youtubers say that it is wisest to participate in the project before its launch. You can do this by joining the Discord project group and being active, which will give you a chance to get on the whitelist.

When you are whitelisted, you will get the opportunity to “release” the NFT of the project during launch. This is exactly the part that scammers are trying to use. We know two ways of cheating with NFT, namely: “pulling the mat” of NFT, and fraud in Discord, when very dishonest people pose as part of the project.

  • The Discord Scam

In case of fraud in Discord, scammers participate in the project and know that you are also a participant in it. They send you information about the project in a DM (personal message). Often the message says that you have been whitelisted or that a pre-sale has started and they are trying to send you to a fake website that looks like an official one. They tell you that you can connect your personal wallet here and start mining NFT, but in fact, when you accept a “smart contract“, you send a mining fee to scammers.

  • Pulling the NFT mat

NFT “rug pull” can be compared to a scam on the DEX platform, but it works a little differently, and has different characteristics. What they actually do with the NFT “rug pull” is announce the project and try to promote it, eventually deceiving investors. Often these projects have big plans, and are very similar to official and reliable projects. Therefore, it is important to pay attention to various aspects before investing in a project.

When can you consider an NFT project a scam:

  • When you never get an NFT after release.
  • When the NFT is never revealed (becomes recognizable).

The third option:

  • When the community in Discord and Twitter has many more members than the number of NFTs that can be created as a whole. But, there is a fine line between fraud and bad marketing, so it is important to do good research.

There are a number of characteristics that may indicate that the project is a scam:

  • When the creators of the project are anonymous and communication takes place only on Twitter.
  • When there are a lot of active followers on Twitter (often these are fake profiles), but the engagement in the message is low in proportion to the number of subscribers.
  • When a project has many participants in Discord (often fake profiles), but few active participants.
  • When they promise a lot of impossible ambitions or when the roadmap is vague or absent altogether.

Examples of Dubious Crypto Projects

In the past, there have been several “successful” projects in which investors have lost their money due to scammers.

Xpose Protocol (XP)

Although many people have earned on Xpose Protocol, we can conclude that Xpose Protocol is an example of a classic coin for “pump-and-dump” (pump-and-dump). Xpose Protocol calls itself a marketing-oriented coin, and in the summer of 2021 there was a lot of talk about it, especially in the Netherlands.

Famous Dutch rappers, influential people and a football manager are said to have invested in this coin. Later it turned out that these influential people did participate in the project, but, in all likelihood, they benefited from pumping and dumping. Therefore, we saw a sharp drop in the price in a short period of time.

Doge, Moon and INU variants

Another example of typical cryptocurrencies that have caused a stir are the numerous variants of Doge, Moon and INU, which try to emulate successful coins such as Dogecoin, Safemoon and Shiba INU. We often see people forging tokens similar in name to meme coins, such as Shiba INU and Dogecoin. They hope to create a buzz around them. There is not necessarily malicious intent behind this. However, the coins that caused the hype are very risky, because they do not have clear and ambitious strategies and plans behind them.

“Squid Game”

One of the most popular TV series of 2021 was the Korean Netflix series “Squid Game”. At the end of 2021, a hype arose around the series, which was used by clever scammers. The scammers created a cryptocurrency called Squid Game, and performed a typical reverse operation. There is a whole video on YouTube that shows how quickly and efficiently the operation was performed. At first, we see how the price has risen sharply, and investors have not been able to withdraw their money, but the scammers have withdrawn all the liquidity.


There are many good stories in the world of cryptocurrencies, but unfortunately we also have to conclude that the world of cryptocurrencies can be a gold mine for scammers. In particular, distribution fraud, rug fraud and NFT fraud are currently common. Therefore, it is important for crypto investors to be vigilant and conduct sufficient research before investing.

Fortunately, most of the characteristics of fraud are often easy to recognize. Especially if you know what to pay attention to. As a result, your investments are at a much lower risk of falling into the hands of intruders.