Sometimes it’s obvious that a scheme is a scam. In other cases, it’s a grey area. For example, are copycat coins, pyramid schemes, and vaporware coins necessarily scams? In crypto, it could be argued that there is a spectrum from obviously legitimate to obviously scam schemes, with the exact divide being a gray area.
Common Categories of Cryptocurrency/Defi Scams
- Fake investment platform/honeypot: a fake trading service that takes your money with the promise of high returns from “trading.” However, it’s impossible to withdraw your “profits.”
- Phishing: a service that collects your logins and/or personal information, then uses that to steal your money
- Advance-fee scam: a platform promises to return a multiple of whatever you invested, but disappears
- Celebrity impersonation: a variety of advance-fee scam where the scammer pretends to be a celebrity
- Rug pull: a DeFi scam where a coin is released, and promoted, then all the value is stolen from the liquidity pool
- Exit scam: a project sells a coin in an ICO, but instead of using the funds to build a project, the promoters take the money and disappear
- Ponzi scheme: project promises high returns, then pays investors with funds from new deposits
- Crypto wallet “validation“: a type of phishing attack that impersonates a real wallet and asks for your seed words.
- Counterfeit coin: a Defi scam where promoters sell a fake and worthless copy of a real coin.
- Wallet dusting: scammers airdrop a token with a URL in the name of your wallet. When you visit the URL, it tries to steal your money
- Giveaway scam/fake airdrop: to claim “free” coins you must turn over credentials that allow scammers to steal your coins.
- Scam coins: A catch-all category for projects that don’t have a legitimate business model and whose promoters simply try to collect as much money as possible without delivering anything of value.
Note: these categories aren’t mutually exclusive.