How to spot and avoid cryptocurrency scams

Bitcoin was launched more than 15 years ago, making the crypto market a full-fledged teenager—and like any teen, it can be complicated and volatile. This market also operates outside the traditional financial system, meaning it isn't fully regulated by any central bank or government authority. While this can be part of the appeal, it's also part of the danger: the "Cryptoverse" attracts tech enthusiasts and scam artists alike. So do your homework before you invest. Learn how cryptocurrencies work and make sure you know how to protect yourself against the most common scams. and make sure you know how to protect yourself against the most common scams.

Cryptocurrency scams can target your money, your financial data or the crypto assets you already own and hold in a digital wallet. Here are some of the most frequently reported schemes. 

At first glance, an "initial coin offering" or "ICO"—what it's called when a new cryptocurrency or nonfungible token (NFT) is launched—might look just as legitimate as a regular IPO. But cryptocurrency launches aren't governed by any authorities or regulators. Anyone can list a cryptocurrency on an exchange or crypto trading platform. All it takes is a few minutes of your time and an online tutorial. Creators can create a large number of assets at no cost and then sell them to investors.

This means scammers can create an investment product with minimal effort. And once a digital asset has been created, its value is essentially speculative. So it can be easily manipulated to attract potential victims, whether by artificially inflating demand or offering huge returns. Most crypto assets lose value immediately post-launch, once the excitement dies down.

Be wary of ads and influencers on social media that offer training and coaching to help you get rich quick with crypto. You should also be careful when you see a celebrity endorsement. More often than not, the celebrity's image was used without their knowledge or permission. If it was that easy to make money, everyone would already be doing it (and the market would eventually adapt and stabilize to reflect this environment). These kinds of ads are usually a trap. They're trying to get your personal information and prime you for the next step in their plan. 

In this scenario, scammers first ask you to buy cryptocurrencies or crypto assets on a legitimate trading platform. Then, once they've gained your trust, they tell you that you can earn better returns if you transfer your digital assets to a new platform. But that platform is fake. You'll keep receiving statements on how your assets are doing, but they're actually no longer in your possession—you've just handed them over to cybercriminals.   

You meet someone new on social media or a dating app. You have hobbies or interests in common, sparks fly, and your new relationship blossoms. A few days or weeks later, you start talking about money and they mention how well their investments have been doing. Your new "friend" offers to help you get the same high returns. But it's a scam—you could lose your assets on a fake crypto website or have your banking information compromised.  

Even if you've already lost your money or crypto, you can still fall prey to a new scam: websites offering to help recover what's been stolen from you. It's a ruse to collect your personal and financial information, which can be reused or sold on the dark web. You might also be charged in advance for the service—and these phony experts will disappear once your payment has been received. 

Cybercriminals are creative and determined. As soon as one scam gets uncovered, another ten appear to take its place. Instead of trying to identify every possible scenario, you should just be vigilant and take some basic precautions.

• Unsolicited investment offers can't be trusted—especially if they come from a stranger or someone you met online.
• Celebrities and influencers aren't necessarily reliable either, so if you see them backing a crypto asset, you should take their recommendations with a grain of salt. It could be a fake—like AI-generated content—or based on misinformation. Or it might just be an attempt to attract buyers and make a profit at their expense.
• If someone offers you an investment product, make sure they're registered with the Ontario Securities Commission, Autorité des marchés financiers du Québec, or the equivalent organization for your province or territory.
• Check all crypto trading platforms before you use them. Don't use any platforms that haven't been registered with a provincial or territorial authority. Investing is never risk-free, but if you stick with registered platforms, you can be sure that platform itself is safe.
• Crypto launches are especially suspicious. If you want to invest, check with the authorities listed above so you can make an informed decision.  

• Never share your passwords, and never give out the PINs for your credit and debit cards.
• Don't let anyone control your computer from a distance, even if they offer to help you with a trading platform.
• Make sure apps are secure before downloading them. They could contain malware that gives hackers access to your computer, phone or the digital wallet where your crypto is stored.
• Make sure you fully understand how your digital wallet works and never share the secret recovery phrase (a series of words).