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How to Identify Cryptocurrency Scams And Avoid Falling for Them
By Jide Williams,
The number of cryptocurrencies on the market is on a steady rise. Every year, dozens of new cryptocurrencies enter the market and these are often followed by a series of Initial Coin Offerings (ICOs) (Source), which are a major source of funding for new cryptocurrency projects.
Unfortunately, there are many potential pitfalls laying ambush for new and even more experienced investors. The rabid rave around cryptocurrencies, especially fueled by the false notion that cryptocurrencies are an avenue to get rich quickly, has made many people susceptible to cryptocurrency scams.
Many people have made a lot of money from cryptocurrencies. But cryptocurrencies are by no means a get-rich-quick scheme. There is a significant amount of profit to be made in cryptocurrency, but losses also exist. Knowing the real deal from the cubic zirconias can be the difference between gaining and losing.
Before investing in cryptocurrencies, it is important to know exactly what to look out for. While some cryptocurrency scams are so well-thought-out that it is hard to spot them, many are sloppy and the telltale signs are always there. This article explores both the glaring and the less obvious signs of a cryptocurrency scam.
Types of Scams
Cryptocurrency scams come in different forms. The most common types of cryptocurrency scams are:
Bogus ICOs
A 2017 study revealed that over 80% of ICOs were fraudulent, Centra being one of the most well-known ones. This project raised about $32 million and was endorsed by DJ Khaled. Centra turned out to be a scam and the founders were arrested. One of the telltale signs of a bogus ICO is that the promised rewards are often too good to be true. In the case of Centra, investors would join the Centra ICO telegram group and get contacted by someone who appears to be the administrator. Investors would then get offered private bonuses for sale, sometimes receiving offers to buy the token at a third of its current value.
Once an investor falls for the trick and sends the money (usually in cryptocurrency) to the “special address” they are given, the scammers vanish.
Cloud Mining Scams
Because mining cryptocurrencies often requires copious amounts of processing power and electricity, which many people do not have access to, the option of cloud mining exists to expand inclusivity in cryptocurrency mining. Scammers recognise that this is a viable market and have infiltrated the cloud mining space as well.
MiningMax was a fraudulent cloud mining service. It offered daily returns on investments of $3,200 to investors, with a $200 referral bonus for investors who bring other investors on board. This company ran for two years, and in that time, duped investors of roughly $250 million.
Clone Websites
Some scammers go to the lengths of creating fake websites that are strikingly similar to the original website they intend to replicate. These replica websites are often so well done that a cursory glance through them will not reveal their dubious nature to the average eye.
These clone sites are often created in an attempt to carry out an act called phishing. Unsuspecting visitors who visit these phishing sites would unwittingly give out sensitive information about themselves like their wallet seed or key phrases, or passcodes to these attackers.
These phishing sites are usually registered under domain names similar to the original site as well. For example, using an “m” in the place of an “n,” a “0” in the place of an “o,” etc. Always double check the URL of websites that you are not entirely familiar or comfortable with before saving any sensitive information on such sites.
Cryptocurrency Ponzis
Before cryptocurrencies even existed, Ponzi schemes had been a common fraudulent tactic. As cryptocurrencies gained mainstream popularity, scammers capitalised on the public interest to set up cryptocurrency Ponzi schemes. These work like regular Ponzi schemes, but with cryptocurrencies as the medium of exchange rather than fiat currency.
Bitconnect is perhaps the most notorious cryptocurrency Ponzi scheme. It lasted for over a year and had a market cap of $2 billion. On the day the scheme fell apart, its unit value dropped from $320 to $6 in less than 24 hours, and its market cap to $40 million (Source).
Three men were arrested last year, in 2019, for defrauding investors of $722 million. They ran a Ponzi scheme named BitClub Network for years.
Fake Cryptocurrencies
Some scammers sell the idea that it is too late to cash in on Bitcoin to investors and try to convince them to invest in a new fast-rising cryptocurrency (a fake one) instead. One notable instance of this happening was with a fake cryptocurrency called My Big Coin. Fraudsters robbed investors of over $6 million via this scheme before they were finally caught and shut down.
Fake cryptocurrency projects would usually set up an ICO and convince investors to buy these tokens at a pre-sale price with promises of exponential rewards upon its launch. Investors put their money into these coins and the team behind the projects vanishes, never to be seen again.
Pump-and-Dumps
If you’re into traditional investing (i.e. investing in the stock market), then you may be familiar with pump-and-dump schemes. In the golden years of the stock market (think Jordan Belfort from the Wolf of Wall Street times), a group of scammers would pool money to buy penny stocks (low-quality stocks), thereby driving the prices of these stocks up. Investors are then encouraged to invest in these seemingly fast-rising stocks with promises of easy big-money returns. These stocks eventually turn out to be worthless and investors lose a lot of money in the process.
Scammers have been clever enough to apply the same principle to cryptocurrency trading. These scams are often hidden behind a facade of legitimacy with fake celebrity endorsements and fake news articles.
How To Avoid Falling For Cryptocurrency Scams
The importance of knowing how to spot and void cryptocurrency scams cannot be overemphasised. Below are some precautions you should take to minimise your chances of getting scammed.
Know the Team
Every industry has its superstars. Hollywood has Angelina Jolie and Denzel Washington, and a song from Beyonce is likely to pique your interest. In the same way, there are known names in the cryptocurrency industry. Before investing in any cryptocurrency, be sure to research the individual team members thoroughly.
One of such figures is Vitalik Buterin, the creator of Ethereum, which is the second most valuable cryptocurrency in the world. He is one of the most well-known figures in the world of cryptocurrency and has been actively involved in the industry for ten years.
Try to find out who the names listed on a cryptocurrency project are, and check the names listed on platforms like LinkedIn and other social media to vet their legitimacy. Check their followers, their posts, and how well they engage and interact with their followers. Many scammers make up fake founders and even create fake social media pages for them. Check when these accounts were created and how active they are.’
Peruse the Whitepaper
A whitepaper is an official document that details the strategies, goals, and timeline for a cryptocurrency project. Whitepapers are supposed to be incredibly detailed and include information like the financial model of the project, the legal concerns, SWOT analysis, and an implementation roadmap (Source).
Read whitepapers thoroughly. The real juice about a cryptocurrency project is in its whitepaper and you would be doing yourself a disservice if you only skim through it.
There have been rare cases where a fraudulent cryptocurrency project presented a whitepaper that was so good, they were able to pull in millions of dollars in investments. This was the case with PlexCoin. The company had raised over $15 million in investments before the scam was unravelled and the United States Securities and Exchange Commission (SEC) had to step in and close it down.
Monitor the Initial Coin Offering
Also known as the token sale, the ICO drives the initial crowdfunding process on a new cryptocurrency project. A legitimate company will make its token sale process transparent, such that investors can monitor its progress (Source).
Any establishment that is being coy about its token sales should not be trusted. Some fraudulent companies hide the progress of their token sale under the pretext of individual funding addresses. Under such circumstances, it becomes impossible for potential investors to track the progress of the token sale. If the amount a cryptocurrency project has raised and how much time is left on the sale isn’t visible to potential investors, that is a red flag, and you should avoid investing in such projects.
Look Before Leaping
The temptation to jump in on cryptocurrency projects with ambitions of getting rich quickly is pretty high. Even after reading through the whitepaper carefully, do not be quick to hop on a cryptocurrency project without doing your due diligence on all fronts.
A good place to start might be cryptocurrency and ICO spaces. These are popular on platforms like Reddit and Quora. Follow credible cryptocurrency accounts on social media and immerse yourself in the world of blockchain projects. And in all you do, ensure that you keep both your eyes peeled, not just for scams, but also for potential pitfalls inherent in projects before investing your money in them.
This brings me to my final point.
Evaluate the Project’s Feasibility
As a cryptocurrency investor, you need to know the markers to look out for when deciding what ICOs to take. This is why studying a project’s whitepaper like a manual is important. You need to understand what a project’s aims are and whether or not they are feasible (Source). Projects with overly-optimistic projections and shady timelines are best avoided. If it looks too good to be true, it probably is.
Final Thoughts
If you are going to invest in cryptocurrencies, it is imperative that you go into it equipped with as much knowledge as you can. There are many avenues to make profits from cryptocurrency trading, but there are also many ways to lose money. The more you know about the market and the latest trends and schemes, the less likely you are to get defrauded of your money. If you are patient, keep a cool head, have realistic expectations, and eschew greed, you significantly improve your chances of getting the most out of the good deals and you avoid falling prey to the bad ones.
Jide Williams, a Tech Professional with a Product Development Background
Federal government has abolished the five per cent excise duty on telecommunications services, a levy that had long sparked public concern over rising costs for subscribers.
Pic credit… Itedgenews
Aminu Maida, executive vice chairman, Nigerian Communications Commission (NCC), announced the development during an interactive session with journalists in Abuja on Tuesday.
Maida explained that the duty, which was earlier suspended, had now been completely removed by President Bola Tinubu under the new tax legislation.
“The excise duty, it was the 5 per cent or so, that is no longer there. Before it was suspended, but now the president has been magnanimous to remove it entirely. I was in a room when it was raised, and he said, No, no, no, we cannot put this on Nigerians. I was very pleased when the bills came out and we saw his words were followed through,” he disclosed.
Maida stressed that eliminating the charge would ease cost pressures on subscribers and enable wider industry growth.
He added that reforms within the sector were now guided by principles of transparency, accountability, and stronger consumer protection.
The EVC revealed that the regulator was moving beyond traditional rule-based supervision to incorporate behavioural economics, which includes providing more information for consumers and operators to make informed choices.
According to him, one key initiative is a nationwide public map of network performance, expected in September, that will provide independent data on download speeds, latency, and other service indicators.
“There will also be a quarterly network performance report based on user data. It extends accountability beyond mobile operators to also include infrastructure providers who play a critical role in reliability,” he said.
The NCC boss further emphasised the importance of corporate governance as a tool to attract investment and improve industry efficiency. He noted that the ultimate goal is to nurture a telecom company that is wholly Nigerian-owned, well-structured, and globally competitive.
He listed some of the NCC’s recent achievements, including the conclusion of the NIN-SIM audit, settlement of USSD debt disputes, transition to end-user billing, and the launch of a Major Incident Reporting Portal.
On call tariffs, he pointed out that competition had helped keep rates low, with the highest in the market today at about N18 or N19 per minute, compared to N50 per minute two decades ago.
Addressing frequent consumer complaints, he disclosed that the NCC and Central Bank of Nigeria (CBN) had developed a new framework to standardise electronic recharge processes. In addition, Tier-1 audit firms were hired to investigate billing systems after reports of unexplained data depletion.
The results, he said, showed no systemic manipulation. Instead, factors such as background applications, device settings, and complex tariff plans contributed to user dissatisfaction.
“We are not trying to punish anyone. We want the industry to grow, so consumers are happier, operators perform better, and the government benefits from a broader tax base,” Maida added.
In a strategic move to propel the Nigerian blockchain ecosystem, Roqqu, a prominent digital finance and blockchain solutions provider, has officially partnered with the Stakeholders in Blockchain Technology Association of Nigeria (SiBAN).
This new alliance will leverage the combined expertise and resources of both organizations to foster innovation, drive development, and accelerate the adoption of blockchain technology across Nigeria.
The partnership comes shortly after Roqqu was welcomed into the SiBAN network as a corporate member, solidifying a joint commitment to building a more credible, transparent, and sustainable digital asset ecosystem.
The collaboration is designed to bridge the gap between rapid technological innovation and responsible adoption, while prioritizing user protection and ethical standards.
In a statement, the organizations detailed a range of initiatives to be launched as part of this collaboration, all aimed at promoting financial inclusion and responsible innovation.
Key initiatives to be carried out by the two organisations include jointly hosting events to educate both the public and industry professionals on blockchain technology, developing training programs to equip developers and the public with the skills needed to thrive in the blockchain space and actively engaging with regulators and policymakers to help shape a more informed and compliant blockchain community in Nigeria.
“We are delighted to have this collaboration. Our collective strength lies in the diversity and commitment that we both bring to the table and ultimately, contribute to the growth of the blockchain ecosystem,” said Obinna Iwuno, President of SiBAN in the statement.
Roqqu has seen remarkable growth in recent years, establishing itself as a leading force in making cryptocurrency and digital finance accessible. With a focus on providing fast, reliable, and user-friendly services, the company has expanded its footprint beyond Nigeria into other key African markets, including Ghana, Kenya, and South Africa. This expansion, along with a virtual currency license to operate in the European Economic Area (EEA), positions Roqqu as a truly international fintech company.
Reacting to the partnership, the Chief Compliance Officer of Roqqu, Roimot Ajiboye-Ibitoye, said partnering with SiBAN is a natural step to make blockchain technology and digital finance accessible, safe, and beneficial for everyone, insisting that together, the two organisations are not just talking about blockchain adoption. Rather, actively building the frameworks, trust, and education needed for it to thrive responsibly in Nigeria.
“This collaboration represents a united front between innovators and industry advocates to create a credible, transparent, and sustainable digital asset ecosystem. By combining our expertise with SiBAN’s strong advocacy and regulatory engagement, we are setting the stage for a future where blockchain becomes a trusted driver of financial inclusion and economic growth across the globe,” he said.
This partnership highlights a shared vision between Roqqu and associations like SiBAN that play a crucial role in bridging the gap between industry innovation and responsible adoption to ensure the benefits of blockchain are accessible to a wider audience, creating a safer and more robust future for digital finance in Nigeria.
SiBAN as a body provides a platform where stakeholders can share knowledge and experiences, where companies can engage in constructive policy discussions with regulators, where communities can learn about safe, responsible participation in the blockchain space and where businesses can collaborate on solutions that serve both economic and social development goals.
Industry watchers believe that this partnership highlights a shared vision of creating a credible, transparent, and sustainable digital asset ecosystem. By working together, Roqqu and SiBAN aim to bridge the gap between rapid technological innovation and responsible adoption, ensuring that the benefits of blockchain are accessible to a wider audience while prioritizing user protection and ethical standards.
Nigerian Communications Commission (NCC) has said that it has successfully eliminated users of unregistered subscriber identity modules (SIM), from the Nigerian telecommunication network, a development that can boost national and cyber security.
Eng. Aminu Maida, executive vice chairman of NCC,
Eng. Aminu Maida, executive vice chairman of NCC, who disclosed the information at a media briefing in Abuja on Monday, said, however, that it was beyond the scope of the agency to control the names with which some customers used in registered their SIMs.
The NCC CEO pointed out that while the commission had successfully removed unregistered SIMs from its network, some strange names being attached to some of the subscribers reflect what the owners used while registering with their operators.
“No unregistered SIM is operating on the network as of today, but there may be people using names they did not register with, apparently to mask their identities. We cannot control the names attached to each SIM, as they reflect what the owners used at the time of registration with their respective operators,” the EVC said.
“While NCC cannot control that behaviour, it is to be noted that it is an offence to use fake names to make or receive calls in Nigeria,” Maida warned.
The EVC, however, said that the commission has put necessary measures in place to ensure sanity and stability in the industry so that every user can determine the best network operator to patronise based on performance, service delivery and charges.
He said the commission would, in September this year, launch a public map to show subscribers which of the telecoms networks provides the best service and tariff plan to determine which to patronise based on their locations.
Mr. Maida said for the industry to make the required progress and serve the interests of the people, there is a need for a fresh injection of capital from outside the industry, adding that the commission had already revised a series of good governance guidelines to guide operators in the industry.
According to him, the guidelines are aimed at promoting transparency, accountability and boosting investors’ confidence and customers’ trust in the industry.
He said, “The need for good corporate governance guidelines requires that operators in the industry must provide audited reports to boost investors’ confidence and earn the trust and confidence of their customers”.
The ECV explained that the commission approved the recent tariff hike for the industry due to the fact that there had not been any cost-reflective tariff adjustment for a decade, adding that the commission was mindful of the need to protect the interests of both the operators and Nigerian subscribers.
On the issue of threats to telecoms infrastructure nationwide, the EVC announced that he would soon meet with governors to discuss the need for them to team up with NCC to protect telecoms infrastructure in their domains and to also eliminate multiple taxes on the operators so as to improve service delivery and ensure national security.
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