How to Spot a Scam is a series of weekly posts in which we look at common types of crypto scams.

Main conclusions

  • Binance's risk management team has compiled a list of the 12 most common types of crypto scams, including romance scams, impostors, hoaxes, and other scams.

  • Once a week, we'll look at different types of scams and how they operate in practice, as well as offer general advice on how to identify and protect yourself from bad actors.

Fraudsters use a variety of methods to deceive you: they can send you a message on Telegram pretending to be a Binance employee, call and pretend to be a distant relative in trouble, or even pretend to be in love, which will cost you dearly. Attackers act in different ways, but their goal is always the same - to take your money.

An urgent request to send money or an invitation to a Bitcoin raffle can be enough to gain the trust of users, especially if they are caught off guard.

This article is an introduction to a series of posts about fighting fraud. We will look at the most common types of scams in the crypto industry, and also give tips on protecting yourself from attackers. This important information will help users protect their funds, because the security of assets largely depends on their owner.

12 Common Types of Fraud

Our risk management team has identified and classified the most common types of crypto scams into 12 categories, and briefly described how each one works.

Once a week, we'll look at different types of scams and how they work in practice, as well as offering general advice on how to spot and protect yourself from bad actors. Let's look at these 12 categories.

1. Investment fraud

Investment fraud is a type of scam in which an attacker convinces you to invest money through a “reliable” site/app/cryptobroker and predicts huge profits. The criminal may even claim to be an expert and promise to increase the invested capital tenfold.

2. Employment fraud

Fake job postings may appear genuine and promise income well above the industry average. However, there is a catch to them. Upon receiving an application from a job seeker, scammers inform him of the conditions: in order to get a job, he must pay a commission.

3. Impersonating an influencer

Impostors will try to gain your trust by posing as an influential person, such as a police officer, government official, or tax official.

4. Impersonating a Binance Support Person

Unfortunately, impersonating a Binance support staff member is a common type of scam. Fraudsters often try to take advantage of the trust in our company in order to deceive users and steal their funds.

Please remember that Binance employees will never contact you directly or ask for personal information. If you receive a message from someone claiming to work for Binance, immediately block them and contact Binance support.

5. Romance scams

Romance scammers try to start relationships with victims online in hopes of stealing their money. These scams can last for years as the scammer asks for only small amounts at the beginning and then later tries to take over your entire savings.

6. Fake pranks

Scammers invite you to a Telegram group or Discord server to participate in a fake cryptocurrency giveaway or airdrop. They usually require payment of a participation fee or disclosure of confidential information in exchange for “winnings.”

7. Ponzi scheme

A Ponzi scheme, or pyramid scheme, is a type of scam in which early investors earn funds and commissions received from later investors. There is no real investment in this scheme. Essentially, the scammer simply takes money from one investor and gives it to another. People caught up in a Ponzi scheme are also encouraged to invite their friends and family.

8. Fake online stores

Fake online stores imitate official e-commerce sites - they even allow you to register as a seller or buyer. Such a site attracts buyers with favorable prices, which are significantly lower than average market prices. However, after placing an order, they refuse to deliver you or send you some useless item.

9. Money transfer fraud

The essence of this type of fraud is simple: the attacker claims to have sent money to your bank account. He will provide transaction documents and then cancel the transfer, return the funds, or even accuse you of falsifying the transfer details.

10. Scammer acquaintances

Sometimes even people you know can deceive you. The scammer could be your relative, close friend, or acquaintance whom your friends introduced you to. At the same time, scams often occur in familiar circumstances.

11. Rug pull patterns

In the crypto industry, the rug pull scheme implies that a team attracts investments into a project, after which it suddenly abandons it and deprives it of liquidity. This usually happens at the moment of maximum excitement around the project.

12. Others

This category includes unique cases of fraud that do not fit into any of the listed categories.

Three examples from life

Let's look at a few examples of how scammers can deceive you.

Example 1: Fake Investments

A certain user (let's call him Jack) himself sends a message to the scammer. Most likely, Jack found his contacts on a social network where the scammer was promoting his investment scheme with a guarantee of high profits.

Jack agrees to invest the money, but later discovers that an attacker has stolen all of his investments.

Example 2: Employment Fraud

A user (let's call him Mike) responded to a dubious vacancy with an attractive salary. The scammer promises that the company will pay Mike after completing several tasks. In reality, no company exists, and the scammer asks Mike to send a contribution as one of his tasks.

Example 3: Impersonating a Binance Support Person

A user (let's call her Lily) joins a Telegram group to connect with supposedly “Binance employees” who offer exclusive services with high returns. When Lily makes several deposits to the wallet addresses specified in the group, the organizers stop responding to her.

Conclusion

We hope that users can use this knowledge to make smart decisions in the crypto ecosystem. If you have even the slightest suspicion that you are being contacted by a scammer, stop responding to messages, cancel all money transfers, and contact Binance support immediately. We will do our best to assist based on the evidence and information you provide.

Additional Information

  • (FAQ) How to Report Fraud on the Binance App

  • (Academy) 8 Common Bitcoin Scams and How to Avoid Them

  • (Blog) How to Identify and Protect Against Impostor Scams

Risk Warning and Disclaimer: The following materials are provided “as is” without warranty of any kind for general reference and educational purposes only. This information should not be considered financial advice or a recommendation to purchase any specific product or service. The value of digital assets can be volatile. The value of the funds invested may go up and down. You may not get your invested funds back. You are solely responsible for your investment decisions. Binance is not responsible for your possible losses. This information does not constitute financial advice. For more information, please review our Terms of Use and Risk Disclosure.