Like all financial assets, investing in crypto involves market-related risks. However, the bigger risk concerns scams and other exploits targeting novice and seasoned traders alike. Sadly, as technology advances, scammers develop newer, harder-to-detect methods of fraud.
In such a market, how can you stay safe and avoid bad actors that could potentially drain your funds? While there is no single foolproof solution, precaution and awareness, along with following some of the time-tested security practices, can help you navigate the crypto market safely. Let’s discuss some of the potential crypto scams in 2025 and how to avoid them.
Crypto scams to watch out for in 2025
As the crypto market evolves rapidly, giving traditional financial products a run for their money, scammers devise smarter ways to dupe investors. Let’s look at some of the crypto scams to watch out for in 2025:
1. Rug pulls & honeypots
Rug pulls and honeypot scams are some of the most common scams in the crypto market. While they are often used in correlative scenarios, they are actually different. For starters, rug pulls involve developers creating a new token, making it popular to attract crypto investors. Once the value of the token goes up, they cash out, leaving investors with worthless coins. On the other hand, honeypots involve deceiving investors by making them buy crypto that they can never sell via smart contract restrictions.
How to avoid:
- Ensure that the project you are interested in is transparent about the founders, goals, and future roadmap.
- Verify that the team behind the project is credible.
- Read the project’s whitepaper thoroughly.
2. Airdrops or giveaway scams
Giveaways, like airdrops, are genuine practices in the crypto industry, but scammers have made their presence felt here as well. Fraudulent giveaways that mimic popular crypto giveaways are a common crypto scam. Gullible investors who fall for giveaway scams often have their wallets compromised and drained.
How to avoid:
- Participate only in airdrops announced on official project websites and social media.
- Never click on unknown links that promise getaway airdrops.
- Maintain a separate crypto wallet to participate in airdrops.
3. AI and deepfake scams
Another innovative yet malicious way scammers drain investor funds is by leveraging AI or artificial intelligence technology. Using AI, scammers create genuine-looking websites, social media profiles, and deepfake videos that are difficult to detect. Scams range from fraudulent videos promoting new cryptos by famous people to fake listings and websites. For instance, during the launch of the iPhone 16 in September 2024, scammers pulled off a malicious exploit wherein a deepfake video of Tim Cook was used to trick investors.
How to avoid:
- Be skeptical of projects that offer unrealistic returns.
- Never download software from unknown sources.
- Thoroughly inspect deepfake videos and look for red flags, such as lip movements that do not sync with the audio and unnatural blinking of eyes.
4. Phishing attack
Phishing scams are among the most common crypto scams faced by crypto investors. They usually involve fraudulent emails, calls, and messages designed to trick individuals into parting with sensitive information.
How to avoid:
- Look out for spelling errors in the URLs.
- Using public email domains instead of the official company name is a big red flag.
- Always verify the sender of an email.
5. Pump-and-dump schemes
Pump-and-dump crypto schemes are quite common. In these schemes, a group of people come together to inflate the price of a particular crypto, attracting new investors. They do this by buying the crypto promptly and endorsing it on social media to lure new investors. Once the crypto price is pumped up to a certain level, the scammers sell their crypto, driving prices down. Several popular crypto projects have been accused of orchestrating pump-and-dump schemes.
How to avoid:
- Be cautious of sudden spikes in the price of a particular crypto. Analyze the price chart history.
- Check market cap, as a low market cap with high trading volume could indicate foul play.
- Over-the-top hype and social media buzz over a specific project are tell-tale signs of pump-and-dump schemes.
How to avoid falling victim to crypto scams
We have highlighted the top crypto scams to watch out for in 2025. However, these are the common ones. Scammers employ several other scamming methods and tricks that can impact almost anyone. Thankfully, there are ways to avoid crypto scams. Here are some that can come in handy.
Protect your crypto with cold storage
Investing in cryptos is the first step in your investment journey. Storing the cryptos safely is crucial. Investors can store them in a crypto wallet, like a cold storage. Cold storage is an external hardware device where you keep the purchased crypto.
Ignore unsolicited communications
One of the oldest scamming tricks is the phishing attack, usually executed via unsolicited communications like emails, phone calls, and text messages. If you receive any of these, it is best to ignore them completely. Don’t get swayed by offers like free crypto giveaways, as these are often scams.
Verify contact information
Scammers often reach out to individuals pretending to be someone familiar to them, like a bank official, colleagues, or even celebrities. So, if you ever get a call where the person is pretending to be someone you know, always verify their contact information. If the scammer claims to be from a crypto trading company or platform, check the company’s website to verify the credentials.
Move carefully before you invest
Compared to traditional investments, crypto investments are relatively new. Therefore, ensure you invest in the crypto market after thorough research and due diligence. Money once lost in the crypto market is extremely difficult to track or get back, so tread carefully. Remember, the market’s bad actors often use FOMO (Fear Of Missing Out) to rush investors into investing.
Don’t get lured by guaranteed profits or impossibly high returns.
How to report crypto scams in India
While it is best to avoid getting involved in a crypto fraud, if you do find yourself in the unfortunate scenario, here’s how you can report it:
Step 1: The first step is to file a complaint with the local police station, specifically the cyber crime department, as they handle online fraud, including crypto scams.
Step 2: Provide authorities with details of the fraud, like transaction details, messages/call logs with fraudsters, and any other information that might be useful to the police in their investigation.
Step 3: Notify the platform’s support team if the scam happened within the trading platform or exchange.
Step 4: If you are unfamiliar with the procedure, seek legal advice. You can also contact consumer protection agencies for help.
Step 5: The final step is to track your complaint after filing it. You can do this online or by regularly following up with the authorities.
