How to Avoid Cryptocurrency Stock Scams Before You Lose Money!


Hand holding abstract bitcoin against purple background.

If you are considering investing in stocks of companies that tout high returns associated with cryptocurrency, be careful. Do your research and invest only the money you can afford to lose.

In an emerging industry like cryptocurrency, it’s not uncommon to see both legitimate start-ups and not-so-legitimate players. According to the 2019 BBB ScamTracker Risk Report, cryptocurrency scams are the second riskiest in the country in terms of the prevalence of victims and lost dollars.

These little reputable new companies often make glorified claims about new cryptocurrency-related products and services – including blockchain technologies and initial coin offerings – in an effort to increase the market price of their coins. actions. The buzz around cryptocurrency businesses allows crooks to launch fraudulent businesses that lack transparent financial reporting. In addition, the crooks will emulate the successful business models of legitimate companies in order to deceive investors and steal their money.

Beware of these common cryptocurrency scams:

  • Cryptocurrency exit scam: These scams trick consumers into investing in a new form of cryptocurrency. Scammers tell investors that they are guaranteed to make huge profits in order to generate as much funding as possible. Some fraudulently claim to be affiliated with famous investors or advertise online. Then they disappear with all the money.
  • Fake websites or apps: The internet is full of bogus websites and smartphone apps that purport to enable cryptocurrency exchange. They keep victims addicted by showing fake charts and exchange rates that make their investments appear to be increasing, often convincing victims to invest more. However, when users try to withdraw their money, they cannot do so.
  • Social media scams: Scammers use stolen social media accounts to pose as friends of their victims. They contact by direct message or post messages offering investment opportunities. Some even use video messages recorded by the original owner of the account to deceive victims. Before the supposed investment can be made, the crooks demand that their victims provide login information to their social media accounts as well as a video promoting cryptocurrency investing.
  • Phishing: Phishing emails and text messages trick recipients to click links or download attachments by promoting cryptocurrency investments. Some phishing attempts have even surfaced on Discord, a popular messaging platform among aspiring and active investors. These programs offer rewards like free investments to attract victims. Others are targeting current investors by claiming that their accounts have been hacked in an attempt to steal the login credentials of their cryptocurrency wallets.
  • Fake celebrity mentions: Many celebrities as well as tech and financial influencers are involved in investing in cryptocurrency, and some scammers advertise their services using fraudulent endorsements. Source: BBB of Greater Maryland

Don’t be fooled by unrealistic predictions of returns and complaints made through press releases, spam emails, and telemarketing calls or those posted online or in social media threads. These actions can be a sign of classic “pump and dump” type stock market fraud. To learn more, check out this infographic on the anatomy of a pump and dump.

Follow these tips to avoid crypto investment scams

If you are considering a crypto-related equity investment, here are six tips to help you avoid scams:

  • Don’t say ‘yes’ to cryptocurrency stock purchases from an aggressive cold call, although the claims seem plausible, especially if the recommended stocks are very low. Don’t feel guilty for hanging up. Not responding at all, or hanging up, are usually the best and safest responses to a cold call or anyone aggressively launching cheap stocks or other investment opportunities.
  • Beware of anyone who guarantees that an investment will work a certain way. Also beware of arrogant sales pitches that encourage you to “act now”.
  • Look for opportunities before investing. Use FINRA BrokerCheck® to check registration status and to get additional information about the people and companies promoting these opportunities.
  • Find out if a company is filing with the Securities and Exchange Commission or the Canadian Securities Administrators. In the United States, consult the EDGAR database of the SEC and, in Canada, consult the SEDAR database of the CSA. Read the reports and verify all the information you have heard about the company. But remember that just because a company has registered its securities or is filing reports with the SEC or CSA does not mean that the company will be a good investment in general or the right investment for you. .
  • Beware of stocks with huge price spikes. This could signal potential manipulation or fraud.
  • Know where the action is trading and pay attention to the caveats associated with the action. Most stock pump and dump programs tend to be listed on an over-the-counter (OTC) trading platform such as OTC Markets, which provides icons to alert investors to concerns associated with a business. given. These include a stop sign to indicate that the company cannot or will not provide important information to regulators, exchanges or over-the-counter markets, as well as a skull to warn that security , the company or a person who controls the company could be involved in a spam campaign, questionable marketing, regulatory action or more.

Sources:, BBB Institute for Marketplace Trust, FINRA, BBB of Greater Maryland

To learn more about investment scams, read the FINRA Investor Alert: Spam and Stock Scams. If you’ve been scammed, report it to BBB Scam Tracker. To find a business you can trust, check out


Comments are closed.