30% a year: Scammers flock to the crypto market

A man looks at his Bitcoin wallet on his phone.
Crime rates with cryptocurrency have rocketed (Source: Getty)

Cryptocurrency crime rates have been increasing exponentially as digital currency has become more popular.

In Australia in 2018 there were 5,011 reports of cryptocurrency crimes, which had risen 67 per cent by 2020 to 9,689.

Bitcoin has the most crime-related reports, which the report said is unsurprising as it is by far the world’s most used cryptocurrency, according to new research from Crypto Head.

Here’s how cryptocurrency scams are targeting Aussies, and how to avoid getting caught in their trap.

Most popular types of crypto scams

Pump and dump schemes

The Crypto Head report said a pump and dump scheme is a scam that has been around long before the cryptocurrency boom.

“It is where a small group of investors pump money into a low market capitalisation. They then convince private investors to pump money in and create an artificial initial price jump,” the report said.

“At this point, the initial investors sell their substantial shares in the company for a profit before the share price drops back down to its true value and leaves other investors out of profit.”

Essentially, with crypto the same principles apply except the investors artificially inflate the price of the low-value coin.

“To spot a pump and dump, often a coin will have risen a lot in value without any clear reason why. If it remains a mystery why the price is skyrocketing it is probably not a sound investment,” Crypto Head said.

Crypto theft

Cryptocurrency is not immune to old school theft, however crypto wallets can be heavily protected so it will take a skilled hacker to pull it off.

“Hackers can get into crypto wallets to directly steal your funds and they can also set up phony crypto exchanges where you put your money believing it is legitimate, only to find your coins have been stolen,” the report said.

“To avoid this, make sure you do not trade on new exchanges without verifying their legitimacy and security, and make sure you keep your cryptocurrency in an offline hardware wallet with a unique password that you change regularly.”

The most common means used for crypto scams

Imposter websites

There are a number of websites purporting to provide access to the world of cryptocurrency, but you need to beware of fakes.

“While some tips websites are genuine, others will be completely fake and look very authentic, often telling you to pay money into an account that promises great returns and instead stealing this investment,” the report said.

“Check for the padlock sign in your browser to ensure that the site is secure and always be careful if you get redirected to another site when it comes to processing payment.”

Social media bots

There are a number of social media accounts out there that offer crypto investing opportunities that are legitimate, but you should be aware of some accounts on platforms such as Twitter and Facebook that also have fake accounts and bots.

“The bots will post links to fake news articles, often accompanied by a celebrity endorsement to appear more convincing, telling people how much money they have made and what a great money-making opportunity it is,” the report warns.

“These fake articles often link to websites that tell you to invest in an account that ultimately steals your money. Never part with cash via social media and always remain vigilant when browsing social platforms.”


Email is also a very popular means for non-crypto scammers to contact their victims, so it’s no surprise digital currency scammers are no different.

“Try to verify that an email address is actually affiliated to the company that you think it is before transferring any funds, and feel free to either reply to the email or reach out to someone else at the company to make sure that the email that you’re dealing with is legitimate,” the report said.

“While the data shows that across the board cryptocurrency scams are on the rise, this shouldn’t deter you from trading and investing.”

Remember to do your research and stick to reliable platforms to avoid getting caught up in scams.

“If ever something appears too good to be true, check and check again.”

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