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Generally speaking, cryptocurrency scams fall into two categories:

Initiatives aiming to obtain access to a target’s digital wallet or authentication credentials. This means scammers try to get information that gives them access to a digital wallet or other types of private information, such as security codes. In some cases, it can include access to physical hardware, such as a computer or smartphone.

Schemes that involve transferring your cryptocurrency directly to a scammer, prompted by impersonation, fraudulent investment or business opportunities, or other malicious means.

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Crypto scams cost Britons nearly £200m in the past year

The total value of cryptocurrency scams nudged close to £200million in the past year, new data shows.

In total, 9,850 individuals were scammed out of £186million by crypto scammers in the year to 31 October, analysis by communications consultancy Mattison shows.

The number scammed ticked up from a year earlier and is likely to have ballooned further as interest in bitcoin and alternative coins ride another wave thanks to the price recently hitting record highs.

The so-called 'Trump-trade' saw bitcoin surpass $100,000 for the first time.

Scammers are capitalising on the increase in interest, advertising fraudulent investment schemes, many of which use false celebrity endorsements to ensnare unsuspecting victims.

This is Money was previously contacted by a reader who was duped by a scam supposedly endorsed by Amanda Holden, and also highlighted the use of the image of England football player Harry Kane as part of a crypto scam.

Unlike scams where fraudsters manipulate victims into sending them money, crypto scams are not protected by new rules on authorised push payment scams that require banks to reimburse victims. 

This is because victims will be asked to transfer money themselves to their own crypto wallet, before it is stolen by scammers.

Scammers increasingly employ the use of cryptocurrency as it is more difficult for transactions to be traced than traditional money transfers.

Many of these scams utilise sophisticated investment platform websites, which are in fact a front for scam activity. 

While victims can see their investment rising and falling over long periods of time, the reality is that none of the money they have committed is ever invested, but is stolen instantly by scammers.

Scammers are also using AI in order to generate convincing advertisements and to optimise their scamming activities.

Nick Mattison, partner of Mattison, said: 'Technology has made the job for fraudsters of accessing potential victims through social media easier than ever.

'This has also made it far harder for regulators and social media platforms to keep these scams in check.

'Meta alone shut down two million accounts suspected of scam activity in the past year.

'Crypto fraud is still running at a worryingly high level and there is no certainty that regulation of the sector by the FCA will make a major dent in that level of fraud.'

The FCA flags websites that are acting fraudulently. 

However, these sites spring up constantly, so an absence of an FCA listing shouldn't be taken as confirmation that an investment is safe.

Nick adds: 'Considering the profits enjoyed by the crypto industry they should do the right thing and sponsor more advertising and education aimed at warning the public of the risks of crypto fraud.'

Mattison agues that DrinkAware, GambleAware and The Portman Group are all partially funded by the industries in which they operate, and that the crypto industry should take a similar approach to education.

'One of the reasons why regulators are so wary of cryptocurrencies is that the sector seems to be a magnet for fraud. 

'Proper investment from the industry to counter the threat of fraud would benefit it as it struggles to gain more political and regulatory support in the UK.'

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Fast Fact

Phishing scams are the most common attacks on consumers. According to the FBI, more than 300,000 people fell victim to phishing scams in 2022 and 298,000 in 2023. Collectively, those people turned over $52.1 million to scammers in 2022 and more than $18.7 million in 2023

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Important

Sometimes, fraud may not be obvious until you conduct your due diligence or think critically about an opportunity. Many investors fell victim to FTX, a popular cryptocurrency exchange founded by Sam Bankman-Fried, also known as SBF. SBF was found guilty of wire fraud, conspiracy to commit wire fraud, conspiracy to commit securities fraud, conspiracy to commit money laundering, and conspiracy to commit commodities fraud. He and his staff at FTX used billions of customer funds to live a lavish lifestyle and defraud investors.

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So aped..

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Rug Pulls

A so-called rug pull occurs when project members raise capital or crypto to fund a project and then suddenly remove all the liquidity—and they themselves disappear and become unreachable. Scammers abandon the project, and investors lose all they have contributed.

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Frauds Using Romance

Scammers often use dating websites to make unsuspecting individuals believe they are in a real relationship, whether a new or long-term one. Once the individual trusts the scammer, conversations often shift to supposedly lucrative cryptocurrency opportunities and the eventual transfer of either coins or account authentication credentials or helping a loved one in a financial bind with cryptocurrency.

The FBI found that in 2022, over $735.8 million was lost in romance scams, and in 2023, more than $652.5 million was stolen

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Imposter and Giveaway Scams

Changing the sphere of influence, scammers may also try to pose as celebrities, successful businesspeople, or cryptocurrency influencers. To capture the attention of potential targets, many scammers promise to match or multiply the cryptocurrency sent to them in what is known as a "giveaway scam."

Well-crafted messaging from what often looks like an existing social media account can create and spark a sense of validity and urgency. This mythical "once-in-a-lifetime" opportunity can lead people to transfer funds quickly in hopes of receiving an instant return. Often, impersonators claiming to be from a cryptocurrency exchange's support or security teams contact crypto owners to trick them out of funds.

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Social Engineering Fraud

For social engineering scams, the perpetrators use psychological manipulation and deceit to gain control of vital information relating to user accounts. Successful scammers condition people to think they are dealing with a trusted entity, such as a government agency, a well-known business, tech support, a community member, a work colleague, or a friend. Scammers will take as much time as necessary to gain the trust of a potential victim. Then, they may eventually ask the individual to reveal private keys or send money to their digital wallet. When one of these "trusted" entities demands cryptocurrency for any reason, it is a sign that something's amiss.

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Phishing

This is the most common scam, not even in crypto, just as a whole. You would get a weird random message / email out of nowhere asking for crypto or your seed phrase. There will be mimics of fake websites too, like a fake Pancakeswap, a fake Exodus wallet, etc. etc. Pretty simple to avoid if you proceed with caution and do your own research

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Phishing

Within the cryptocurrency industry, phishing scams target people using crypto software wallets. Specifically, scammers need a crypto wallet's private keys—a string of letters and numbers that act like a password and are required to access cryptocurrency. Their method follows the playbook of many standard scams: They send an email with links that lead holders to a specially created website and ask them to enter private keys. Once the hackers have this information, they steal the victim's cryptocurrency.

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Fraud Involving Investment or Business Opportunities

The adage "if something sounds too good to be true, then it probably is" is one to remember for anyone venturing into investing in general. This is especially true for cryptocurrencies. Countless profit-seeking speculators turn to misleading websites offering "guaranteed returns" or other setups for which investors must invest large sums of money for even larger "guaranteed" returns. Unfortunately, these bogus guarantees often lead to financial disaster when individuals find they can't get their money back.

The most common type of crypto investing fraud is convincing an investor to transfer cryptocurrency to a new exchange or platform, claiming it has very high returns. Once the investor transfers crypto to the platform, the scammers continue to build trust by publishing false high returns on the platform, allowing them to withdraw and use funds, and encouraging more investment. Once the investor reaches a certain point, the scammer locks the account and asks for taxes or fees. Once those are paid, they take the cryptocurrency and shut down the platform. In 2023, a reported $3.9 billion was lost to crypto investing fraud.

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Blackmail and Extortion Schemes

Blackmail is another popular social engineering method scammers use. Blackmailers make the claim to potential victims that they have a record of adult websites or other illicit web pages they claim the user frequents. The blackmailers then threaten to expose the individuals unless they share their private keys or cryptocurrency with them. Such cases represent a criminal extortion attempt and should be reported to a law enforcement agency.

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Zaki Farooq’s Financial Exploits

PayFuture is a platform ‘providing local payment acceptance, pay-outs and crossborder settlements in multiple emerging markets’ as per their Instagram platform. A story in media claims that Zaki Ahmad Farooq, a British entrepreneur previously involved in financial malpractices and banned from conducting business in Britain is a part of this fintech company now.

Though he is not listed as a Director or Co-Founder in the company’s registration documents, Farooq claims to be the co-founder of the company in various interviews and social media posts. The company has already raised eyebrows by declaring a share capital of just £2. This, along with other concerning facts, has brought attention to Farooq’s business practices and history.

The article states that Farooq’s previous company COMPUTRAD (EUROPE) LIMITED collapsed and it owes £3 million to its creditors still.

An article in Forbes with Manpreet Haer, who is the registered director of the company in UK, published in 2022, portrays a good success story. PayFuture operates across 40 countries and handling transactions worth billions of dollars, according to this article.

“PayFuture’s ability to resolve that issue has seen it grow remarkably quickly since its launch in 2019 – despite raising no finance from external investors, with the founders of the fintech bootstrapping its development themselves.” according to the Forbes article.

Questions arise regarding PayFuture’s legitimacy, particularly due to Farooq’s absence from official registers associated with the platform in Britain. His dubious track record, including his involvement in the collapse of COMPUTRAD (EUROPE) LIMITED, raises concerns about his transparency and credibility.

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Tradorax, KayaFX, and LibraMarkets Scams Exposed

The Tradorax, KayaFX, and LibraMarkets criminal network was clearly destroyed by the German law enforcement team in Koblenz, with assistance from Europol, Eurojust, and other authorities in Spain, Bulgaria, and Israel. While reporting the action, Europol did not disclose the targets. As discovered that this cybercrime network’s boiler rooms, unauthorised payment processors, and beneficial owners had been the targets. Although we have not yet received confirmation, we believe that our insider knowledge is accurate.

Large-Scale Fraud Enterprise

Press sources from Europol state that 11 persons were taken into custody in Israel, Spain, and Bulgaria. As of right now, the investigation’s findings indicate that the cybercrime network may have received deposits totaling up to €150 million globally. It is estimated that European investors lost over €30 million.

The Network of Cybercrime

In December 2019, the Estonian company Yield Enterprise Currency Software OÜ and the fraudulent website LibraMarkets (www.libramarkets.com) were both flagged by BaFin. Petar Borislavov Zlatkov, a Bulgarian, served as the company’s director for a while. BaFin issued a Cease and Desist Order against the company on June 8, 2020, directing it to cease operating the broker scam ProuFX (www.proufx.com), also known as UProFX, immediately.

Previously, Petar Borislavov Zlatkov held the position of director at Estonian GammaTech Services OÜ, the company that ran the massive binary options fraud KayaFX. An Israeli named Avi Itzkovich (also known as Avi Itzkovic or Avi Itzkovitz) was a certified beneficial owner of the KayaFX scheme. Through Mercure Group EOOD (previously RAX Media EOOD), he has attacked small EU investors and run illicit boiler rooms in Bulgaria.

It is not yet apparent which of the several scam brands run by this network and its boiler rooms the Koblenz Law Enforcement Team will look into. Still, we’re hoping to find out more soon.

LibraMarkets

Compared to rigorously regulated dealers like the FCA in the UK and CySEC in Cyprus, Libra Markets is currently an unregulated brokerage platform, meaning that the security of its clients’ money and trading activities are not as well safeguarded.

KayaFX (As claimed)

A broker for forex is KayaFX. Top platforms for trading forex online are MetaTrader 4 and Mobile, both provided by Kaya FX. More than 50 forex pairs, indexes, equities, commodities, gold, silver, and CFDs are available for your personal trading and investment needs on KayaFX.com.

Tradorax

Alpha Capital House Ltd. is the owner and operator of Tradorax.com. combines trading for binary options and forex on a one platform. The site offers 30 FX pairs, 24 indices, 9 commodities, 3 pairs based on commodities, and stocks. provides a 75–80% return. AM Capital Ltd. is the business behind the Marshall Islands-based website Tradorax. Although the website is unregulated, this broker goes beyond a simple white label clone that provides the essentials of trading.

Let’s dive more.

Tradorax: After inciting users to place “fraudulent” bets on markets, the binary trading website shuts down

Thousands of people could fall for binary options scams, according to a victim’s attorney, but many of them are too ashamed to come out and acknowledge they were duped.

It looks like a website that was suspected of defrauding savers out of thousands of pounds by luring them into “fraudulent” internet trading schemes has shut down.

Until recently, the website Tradorax had encouraged savers to place seemingly straightforward wagers on the value of stocks or currencies.

Lawyers and savers claimed to The Independent earlier this year that hundreds of people, mostly seniors, were not receiving returns for their investments on websites like Tradorax, and that dozens of people’s accounts were being frozen.

Although a growing percentage of these sites, also referred to as binary options trading platforms, are fraudulent, many of them are genuine.

Speaking to The Independent in July, attorneys and personal finance specialists claimed that even the lawful platforms are not under the Financial Conduct Authority’s (FCA) oversight, making it impossible for the government to manage the sector.

The UK gaming Commission regulates some binary options trading sites, but only if the company has gaming equipment situated in the nation.

Numerous people with contact addresses provided on the website that were outside of the UK included Tradorax.

James Hellis, a pensioner and former independent IT contractor, stated that he had invested around £60,000 with Tradorax in total. He claimed that over the course of several months, a person posing as a “broker” had been assigned to trade on his behalf and make a number of investments.

He said that he submitted a withdrawal request to the site in December, citing his pension fund as the source of the majority of his funds. He asserts that his account thereafter seems to have been blocked after the request was turned down.

Mr. Hellis filed a chargeback dispute with his banks since he had used credit cards to pay for some of the investments, but they were unwilling to assist him.

In addition, he claimed to have reported the issue to the Financial Ombudsman Service (FOS), which was established by Parliament to address issues with financial services, and Action Fraud Police, the national reporting centre for fraud and cybercrime that works in tandem with the NFIB within the City of London Police. Neither could provide him assistance.

The most recent data available for the period ending in May 2016 shows that the City of London Police’s National Fraud Intelligence Bureau (NFIB) received 305 reports of binary options frauds, or 27 per month.

However, a victim’s attorney told The Independent that since victims are usually too ashamed to come forward and admit to being duped, the real figure is probably far higher and probably runs into the thousands per year. “Perhaps the biggest financial scam in the world,” he said.

Experts have also stated that because of regulatory changes made in April 2015 that make it easier to access funds, pensioners would be more inclined to try trading.

Pensioners can now withdraw their entire pension as a lump sum under the new regulations, which also remove the requirement for them to purchase an annuity. The idea of trading binary options can be alluring, especially when one finds themselves suddenly in possession of large sums of money and other investing options offer relatively modest returns.

“Pension freedoms have opened up a can of worms,” remarks Kate Smith, Aegon’s head of pensions. According to her, some con artists target seniors in particular.

“They are taking advantage of people’s weaknesses.”

Data released by the Financial Conduct Authority (FCA) in July indicates that 53% of pension pots accessed since the implementation of the new regulations had been fully withdrawn. Furthermore, the watchdog has expressed a number of concerns recently regarding the use of the money by individuals.

The next year will see the publication of a comprehensive report on the problems with pension freedom.

Tradorax “ceased all activities due to regulatory issues and no longer provides its services to clients,” according to a message posted on the company’s website on Wednesday.

Wind-Up- Detection and Prevention of Enterprise Fraud

More than ever, enterprise fraud control is crucial. Let’s examine typical problems, fixes, and features that will safeguard your business.

The PwC Global Economic Crime and Fraud Survey 2020 estimates that fraud costs organisations $42 billion globally. That’s a lot of earnings that businesses can’t afford to see disappear into thin air in a business environment that is changing more quickly and fiercely than before.

Furthermore, fraud shows no signs of abating. The availability of fraud technologies and economic uncertainty have created a perfect storm. All that is required for dishonest people to target businesses is a computer, an Internet connection, and malicious desire.

Enterprise Fraud Management (EFM): What is it?

The set of procedures called enterprise fraud management (EFM) is intended to keep an organisation safe from both external and internal fraud. EFM gathers information about users, accounts, and devices in order to spot illegal activity, fraud, and corruption. 

How is Enterprise Fraud Management (EFM) Determined?

Large-scale companies can handle every facet of the fraud ecosystem with EFM, from monitoring and investigative tools to data gathering and analysis.

EFM systems are frequently divided into five main layers:

The goal of the endpoint-centric layer is to secure the user’s point of access using geolocation, 3DS, and other authentication methods.

The navigation-centric layer assesses the probability of, say, an account takeover (ATO) by comparing historical data with present behavioural patterns.

Layer that is focused on a specific channel and keeps track of an account’s activities within it by comparing them to past actions and the established rules.

Cross-channel layer: this examines how a user behaves in several channels, such as payment and product.

Relationships between users and transactions are directly compared via the entity link analysis layer.

How to Spot and Avoid Business Fraud

Data analysis and interpretation have made fraud detection easier than ever before, but since scammers will always find new ways to commit fraud, it’s critical to have an EFM system that targets the main misuse vectors that your sector deals with.

Your company may choose to operate with a whole end-to-end EFM system or develop a more specialised multi-layered strategy made up of various products, depending on what is needed. Among the most crucial components of any EFM system are the following:

Team Roles and Responsibilities 

Real-time Transaction Monitoring

Machine Learning 

Behavioural Analytics

Decision Making

Access to Alternative Data

Fraud Risk Assessment / Scoring

Reporting Procedures 

Investigation Process 

Multi-factor Authentication

Important Lessons: Tools for Enterprise Fraud Management Protection

It’s time to invest in a cutting-edge fraud prevention system if your business is losing too much money and resources as a result of fraud.

The good news is that contemporary solutions can be seamlessly integrated, are flexible, and nimble. You can observe a decrease in fraud rates in a matter of days without having to slow down your business operations thanks to the ease with which you can use technologies like chargeback prevention and transaction monitoring.

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Cloud Mining

Platforms market to retail buyers and investors to get them to contribute upfront capital to secure an ongoing stream of mining power and rewards. These platforms don't own the hash rate they claim to and don't deliver the rewards after receiving your down payment. While cloud mining isn't always a scam, to keep your money, you must conduct rigorous due diligence on the platform before investing.

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How to Spot Cryptocurrency Scams

Cryptocurrency scams are easy to spot when you know what to look for. Legitimate cryptocurrencies have readily available disclosures with detailed information about the blockchain and associated tokens.

Read the White Paper

Cryptocurrencies go through a development process. Before this process, there is generally a document published, called a white paper, for the public to read. If it's a legitimate white paper, it clearly describes the protocols and blockchain, outlines the formulas, and explains how the entire network functions. Fake cryptocurrencies don't produce thoroughly written and researched white papers. The fakes are poorly written, with figures that don't add up.

If the whitepaper reads like a pitchbook and outlines how the funds will be used in a project, it is likely a scam or an ICO that should be registered with the Securities and Exchange Commission. If it isn't registered, it's best to ignore it and move on.

Identify Team Members

White papers should always spotlight the members and developers behind the cryptocurrency. There are cases in which an open-source crypto project might not have named developers, which is typical for open-source projects. Still, you can view most coding, comments, and discussions on GitHub or GitLab. Some projects use forums and applications, like Discord or Slack, for discussion. If you can't find any of these elements, and the white paper is rife with errors, stand down—it's likely a scam

Beware of "Free" Items

Many cryptocurrency scams offer free coins or promise to “drop” coins into your wallet. Remind yourself that nothing is ever free, especially money and cryptocurrencies.

Scrutinize the Marketing

Legitimate blockchains and cryptocurrency projects tend to have humble beginnings and don't have the money to advertise and market themselves. Additionally, they won't post on social media pumping themselves up as the next best crypto—they'll talk about the legitimate issues they are trying to solve.

You might see cryptocurrency updates about blockchain developments or new security measures taken, but you should be wary of updates like "millions raised" or communications that appear to be more about money than about advances in the technology behind the crypto.

Legitimate businesses exist that use blockchain technology to provide services. They might have tokens used within their blockchains to pay transaction fees, but the advertising and marketing should appear professional-looking. Scammers also spend on celebrity endorsements and appearances and have all the information readily available on their websites. Legitimate businesses won't ask everyone to buy their crypto; they will advertise their blockchain-based services.

Where there is a lot of hype, there is usually something to be cautious of.