Crypto scams are on the rise, and considering the relatively unregulated nature of cryptocurrency, it’s easy to see why.
Fortunately, there are a range of prevention tactics you can use to help spot suspicious content and protect your personal information. We’ll run through them below in our official crypto scam checklist.
10-Step checklist for potential crypto scams
This checklist will explain how to avoid cryptocurrency scams. However, it’s by no means exhaustive, so if you’re unsure about a potential crypto opportunity, you should always proceed with caution.
Remember, you should only ever accept a potential investment opportunity if you’re certain it’s legitimate. Now let’s explore how to avoid crypto scams step by step.
1. Check the website URLs carefully
One of the best ways to check for scams is to examine the source website URL carefully.
Look for misspellings or unusual domains such as .info or .xyz. You should also confirm whether the site is secure by checking that it has a https:// marker at the start of the URL.
Avoid websites with urgent pop-ups or claims of “guaranteed returns” as they’ll almost certainly be fraudulent.
2. Research the company or token name
Another way to avoid crypto scams is researching the company or token’s name for legitimacy.
Search the name of the prospective company or coin along with terms like “scam”, “review”, “FCA warning”, in a search engine like Google.
You should also see if the name appears on the FCA’s Scam Smart list. If there’s no footprint of the coin or the company’s name, it’s more than likely a scam.
3. Verify regulatory status
Any firm offering financial services in the UK should be FCA registered. If you’re approached about a potential investment opportunity, check that the company is on the FCA crypto asset register.
Some scammers will claim to be regulated but be sure to verify these claims before proceeding.
4. Avoid “too good to be true” promises
Successful fraud detection in cryptocurrency often depends on being vigilant and spotting unusual messaging. That said, you should be skeptical of claims that are too good to be true.
These include:
- “Guaranteed returns”
- “Daily profits”
- “Limited-time offers”
Real crypto is volatile, and no investment opportunity is guaranteed. Any bold claim that guarantees growth or a significant return on investment (ROI) is fraudulent.
5. Research the team behind It
Researching the team or company behind the crypto project is an effective way of spotting potential fraud. You can verify if the founders are real by using Google to search ‘their names + LinkedIn’.
If you carry out a background search and there’s no team listed, it’s usually a red flag. It’s also worth noting that fake projects, crypto provider profiles, or websites often use stock photos or impersonate real people.
6. Check the whitepaper
Most legitimate crypto projects publish official whitepapers explaining:
- What it does
- What it aims to achieve
- The tech behind the project or token
- Context around the Tokenomics model
If the whitepaper exists but is difficult to read, is vague, or makes sweeping statements that offer little informational value, it may not be legitimate.
7. Inspect their social media and community
You can check for scammers by seeing whether they have a social media or a wider online presence.
If a crypto company or representative does have a presence, vet their social media communications for signs of:
- Suspicious forms of engagement (these are typically signs of AI ‘bots’).
- Fake or suspicious looking “celebrity” endorsements.
- Telegram or Discord groups where there’s pressure to invest quickly.
You should also check trusted review platforms such as Trustpilot. Victims of scams will often leave negative reviews on these platforms to help make others aware of the scam. However, always be cautious of floods of generic “positive” reviews; scammers are known to write false good reviews to appear more legitimate.
If you spot any of these red flags, it’s almost certainly a scam, and you should avoid engaging with it in any way.
8. Be cautious of cold approaches
Many crypto scam messages start with seemingly random messages received through these channels:
- DMs on social media.
- WhatsApp messages.
- Fake “investment mentors”.
- Cold phone calls (note from WRS: this method is becoming more common).
If you receive a message out of the blue about a potentially rewarding crypto investment opportunity, it’s likely a scam.
9. Be wary of requests to hand over wallet keys or remote access
No legitimate crypto investment ever requires you to share your private wallet keys or any similar form of sensitive information. If someone asks you to do so, you should see it as a serious red flag.
You should also be highly cautious with screen-sharing or remote-control requests (e.g. AnyDesk or TeamViewer).
10. Always consult FCA register if you’re unsure
Last in our practical tips on crypto scams and how to avoid them, you should consult the FCA if you’re unsure about a potential investment.
When in doubt, stop and check the FCA register or warnings list. You can treat this highly respected authority as a source of truth on legitimate financial organisations.
It’s one of the UK’s most effective crypto scam detectors.
Recommended resources for checking potential crypto scams
If you’d like additional advice on how to detect a crypto scam, there are some resources we can recommend. These Include:
- The official FCA Scam Smart list and checker.
- The FCA Register.
- Action Fraud for reporting a crypto scam.
- Token Sniffer, which acts as a crypto coin scam checker.
Have you been the victim of a crypto scam?
Now that you have actionable tips on how to protect yourself from crypto scams, you can assess investment opportunities with confidence.
Use this checklist to inform your crypto investment decisions and share it with others who may find it valuable.
If you’re the victim of a crypto scam, Wealth Recovery Solicitors can help you build a solid case for recovery with our trusted tracing services.
As an SRA-regulated firm, our in-house specialists can maximise your chances of reclaiming any crypto funds taken from you. It’s why we’ve recovered more than £50,000,000 for fraud victims in the past three years.
Talk to our team of solicitors today, and take the first step towards reclaiming your lost funds.