How to Spot a Crypto Investment Scam

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Crypto is, sadly, still awash with scams, from fake ICOs to pump and dump schemes. One of the most damaging types of scam however is the crypto trader or trading fund that promises great returns and then either performs an exit scam once it has taken enough money, or loses a huge amount in one trade but pretends everything is fine until the truth comes out. Well known examples include Countinghouse and OneCoin.

Either way, investors bear the brunt of such activity, and usually have no recourse due to the anonymous nature of cryptocurrency. We run down the tell tale signs that a crypto investment fund is either an up front fraud or is about to turn into one.


The crypto space is well known for so-called star traders posting great gains on Twitter and then offering to trade on behalf of others for a fee or commission. However, the gains they post are unverifiable and may be completely made up. Reputable trading firms have much more of a presence online (often including the names of individuals who work there) and will usually state a physical address too.

It is impossible to research the identity of a cat avatar on Twitter, and if you find yourself being kept at arm’s length when trying to get more information about the trader or fund, that means you will have just as much luck getting hold of them if things go wrong.

High Returns/guaranteed Returns Advertised

Funds that advertise huge returns are not necessarily scams, but this depends on both the advertised gains and how they come up with them. Using past results to promote potential gains is a tactic commonly used by all sorts of funds, and is a legitimate way of showing what investors can expect to achieve. Reputable funds will have such data ready to send to investors, which you should request and verify before you invest.

Funds that advertise outsize gains or offer guaranteed returns should be avoided completely, as they are likely Ponzi schemes looking to entice new investors to pay off existing ones. Examples of these include Dunamiscoin and Bitcoin Wallet.

Constant Gains

Even the best traders and algorithms in the world have off days. If you have invested in a fund and the gains are continually positive, then it is time to start questioning if they are legitimate. This is tricky because fund owners will only ever defend the performance and will cry FUD, leaving you to decide yourself whether this is cause for concern. However, bear in mind that the longer a fund goes on posting positive results the closer it gets to being a scam, which is what we saw with Countinghouse.

Communication Problems

This may not seem like a huge problem, but it is usually symptomatic of a bigger one. A fund that regularly communicates with investors and then becomes unresponsive or withholds previously offered information should be viewed with suspicion, as they could well be covering up for a mistake or slowly cutting ties. Either way, it suggests they care less about investors.

A complete cessation of communications however is a very big problem. If you find that your fund or trader suddenly ceases to offer previously offered updates or respond to queries, get the hell out of there.

Withdrawal Issues

Withdrawal issues are a huge red flag, and should be the point where you end your association with the fund or trader. The fact is that this is your money and it should be ready for you to access in accordance with the withdrawal rules stated at the start.

The moment a fund or trader begins to place restrictions on when you can withdraw your money then you can be almost certain they don’t have the funds there to honor them.

Funds and traders will come up with all sorts of excuses why they can’t honor withdrawals, but the bottom line is that something has happened to cause them to run out of money. If this happens and you can still get out with even some of your money, raise hell until you get your hands on as much as you can, then get out.

Shark Infested Waters

Hopefully this guide has helped you get a better idea of what to look out for when it comes to someone else looking after your crypto, and how to spot a scam developing in time to save yourself. Be careful out there – don’t get eaten!