Understanding Cryptocurrency Scams: Protect Your Investments

Fraud Alerts

It's no secret that cryptocurrency is a popular topic, and with that, the prevalence of scams has followed suit. While TowneBank doesn’t offer cryptocurrency, we wanted to share some key insights with you about what it is and ways to protect yourself from scams.

A Primer on Cryptocurrency

Cryptocurrency is a virtual currency form operating on decentralized networks known as blockchains. This digital revolution was sparked in 2009 with the creation of Bitcoin. The success of Bitcoin led to the development of thousands of other cryptocurrencies. The allure of high returns, faster transactions, increased privacy, and cheaper transaction costs have drawn investors and enthusiasts alike into the cryptocurrency market. However, the volatile nature of this market also makes it a fertile ground for scams and frauds, making it crucial to understand what a crypto scam is and how to avoid it.

The Many Faces of Cryptocurrency Scams

Cryptocurrency scams take many forms, including phishing scams, where fraudsters impersonate legitimate cryptocurrency exchanges or wallet providers to steal personal information, and Ponzi schemes, which promise high returns at the expense of new investors' funds. 

Scammers also employ deceptive tactics such as creating fraudulent websites that mimic legitimate exchanges or using social engineering tactics to gain trust. They often target potential victims through social media, online forums, or direct messages, exploiting the fear of missing out and promising quick, substantial returns. It's critical to verify the legitimacy of any cryptocurrency exchange or wallet provider before sharing personal information or making investments to avoid falling victim to a crypto phishing scam.

Recently, there has been an increase in reports of Bitcoin ATM scams. In this scam, someone will call or text you pretending to be someone reputable and say they need a payment. They create a false sense of urgency and say the only way to pay is through a Bitcoin ATM. The scammers will help the victim deposit, convert, and send money through a Bitcoin ATM. Once the victim has deposited the money, it becomes very difficult to track or recover. Any problem that must be solved with money sent through a Bitcoin ATM is a scam!

Identifying and Avoiding Cryptocurrency Scams

Safeguard your money and learn how to recognize the red flags associated with cryptocurrency scams. 

Here are some telltale signs of a crypto scam:

  • Promises of unrealistic high returns with little to no risk.
  • Pressure to make quick decisions.
  • A lack of transparency about operations, team, and financials.

Here are some tips to verify the legitimacy of an investment opportunity:

  • Do thorough research: Look for reviews, news articles, and check their social media presence.
  • Verify regulatory compliance: Make sure the opportunity complies with relevant regulations and has necessary licenses.
  • Seek professional advice: Consult with a financial advisor or an expert in the field.

To protect your personal information from crypto phishing scams:

  • Never respond to unsolicited communications asking for personal or financial information.
  • If you do have a cryptocurrency account, which are not offered at TowneBank, we encourage you to enable two-factor authentication to add an extra layer of security.

Taking Action Against Cryptocurrency Scams

If you suspect a cryptocurrency scam, it's crucial to report it to the appropriate authorities. Follow these steps:

  • Gather all relevant information about the scam.
  • Report the scam to your local law enforcement agency.
  • File a complaint with the Federal Trade Commission (FTC).
  • Report the scam to the Internet Crime Complaint Center (IC3).
  • Inform your state's securities regulator if the scam involves securities or investment fraud.

If you've fallen victim to a cryptocurrency scam:

  • Contact your bank or financial institution.
  • Consult with an attorney specializing in cryptocurrency fraud.
  • Report the incident to the involved cryptocurrency exchange.

Recovering from Cryptocurrency Scams

If you've fallen victim to a cryptocurrency scam, you have options to recover your funds and take legal action against the scammers. Consult with an attorney who specializes in crypto fraud, work with law enforcement agencies, and contact your banker. Stay updated on common scam techniques and warning signs, and exercise caution when dealing with unfamiliar platforms or individuals to prevent future scams.


The information provided is not intended to be legal, tax, or financial advice or recommendations for any specific individual, business, or circumstance. TowneBank cannot guarantee that it is accurate, up to date, or appropriate for your situation. Financial calculators are provided for illustrative purposes only. You are encouraged to consult with a qualified attorney or financial advisor to understand how the law applies to your particular circumstances or for financial information specific to your personal or business situation.

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