How To Avoid Scams in Crypto

Like in any industry, there are scammers in the crypto space. And if you are new, it is very easy to fall for a scam. In this guide, we are going to show you how to avoid common scams, as well as how to stay safe in the crypto world.

Important: this list is not complete. Scammers are very creative people when it comes to stealing other people's hard-earned money.

Never Share Your Wallet Seed

This is by far the most important rule for avoiding scams. If anybody asks you for you wallet seed, it is a scam. Period. There is no legitimate reason for anybody to ever ask you for your seed.

Your wallet seed is a backup which allows you to access your funds on any device. In fact, wallet seeds are not even exclusive to the wallet software they were created for. If you created a Metamask wallet seed, you can use the same seed in a different wallet software and restore your funds.

Your wallet seed is the key to the lock of your cryptocurrency wallet.

We strongly recommend writing your wallet seed on paper and storing it in a safe place. In the event that you lose your computer or phone, you will be able to restore your wallet on a new device with your seed phrase.

However, this also means that anybody who has your seed can restore your wallet on their device and steal all your money.

This is why scammers hang around Telegram groups preying on newbies. When they spot an obviously new crypto trader, they open a private chat and offer their help. At some point, they will ask you for your wallet seed. If you give it to them, your money will most likely disappear within minutes. If anyone approaches you first in Telegram, be extremely cautious! Legitimate admins will never need to message you directly.

This isn't the only way scammers operate though. Sometimes you will be on an official looking website that will ask for your seed. In reality, it's a fake website, and the second you paste in your seed, your money is gone.

There is never any legitimate reason to hand your wallet seed over to anybody. So DO NOT DO IT.

Contract Addresses

If you've checked out our guide on using Pancakeswap, you will have learned about contract addresses and how to use them.

Contract addresses allow you to buy cryptos that are not listed by default on DeFi exchanges, like Pancakeswap and Uniswap. However, it's easy for a scammer to create a contract address - all it takes is a little time and less than $5 to post the contract to the blockchain.

What can they do with a contract address?

A common scam is to go into the Telegram group for a newly launching crypto and spam the fake contract address in the chat. A lot of newbies who are excited to buy the new crypto will copy and paste the first contract address they see, not knowing that they are buying a fake scam crypto. The creator of the fake contract can then take all of the money and run.

As a rule of thumb, never blindly copy and paste a contract address. You need to be 100% sure that a contract address is legitimate before buying.

There are a few ways you can do this:

Telegram Safety

When a new coin is launching, the best place to get the contract number for the coin quickly is the crypto's official Telegram channel. However, being in a public Telegram channel can be a minefield. Generally speaking, you only want to get contract numbers from the admin of a Telegram channel. You can identify an admin by looking for an admin tag, like so:

Admins may sometimes have custom tags, like George does in the Lunr Crypto Telegram.

Another way to be safe is to avoid the crypto's public Telegram channel all together. Most newly releasing cryptos will have an open Telegram channel where everybody is free to chat. They will typically have a separate announcements channel where only important notifications are posted.

For example, Lunr Crypto has a public channel, Lunr Crypto Telegram and an announcement channel, Lunr Crypto Announcements. Most announcement channels will have a little megaphone icon before the name as you see below.

Just tracking the announcements channel will get you the essential information you'll need.

Contract Addresses From Websites

Scammers are very creative, so you need to be extremely careful when getting a contract address from a website. At the time of writing this guide, there is a popular upcoming project called Solstarter. A lot of people want to buy the Solstarter crypto, but it isn't released yet. Now, let's look what happens when we Google "Solstarter":

Scammers pay for Google ads with the keyword "Solstarter" and they actually appear at the top of Google's search results, above the official website!

Once you get onto the scam site, they will usually try to trigger your fear of missing out by having a countdown timer or saying they are almost sold out. This usually leads to feeling rushed and blind buying of cryptocurrency.

There are a few ways to confirm you are on a real site though.

Most projects, even if new, are listed on either CoinMarketCap or CoinGecko.

Both of the sites above do their due diligence and ensure that a crypto is both legitimate, and that they link to the correct website and social media for the crypto. If you follow a link from CoinMarketCap or CoinGecko, it can be trusted. Below you can see where to find links

Don't Let Typos Cost You Money

This trick is as old as the internet. Type in a URL wrong, and you could be going to a scam website. Here is a quick example, if you want to visit the crypto launchpad BSC Station, you would type in "bscstation.org" and it will take you to their site:

But what happens if you make a small typo and type "bcs" instead of "bsc". Well then you land on this website:

Looks very similar, aside from the fact that they ask you to send money to a wallet owned by the scammers who put the site up.

How do you avoid this?

Easy, triple check a URL when you type it in. Then bookmark it and only use your bookmark to get to the site in the future.

Be careful when sending your crypto direct

As shown above, most scams involve you sending your crypto directly to a wallet. Be mindful that, in most cases, a legitimate crypto project will never ask you to directly send crypto to their wallet. The vast majority of legitimate projects will require you to interact with their website or interface in the form of a smart contract and you will be asked to approve the transaction.

Scammers try to get you to send your money directly to them because there's no way for you to be able to get it back. Think of it like a bank account - you wouldn't just send money directly to a stranger that asked you. If you were purchasing something you would likely be doing it through a website and checkout using PayPal etc. The same is true for crypto. If some person or website wants you to send them money directly, they're probably trying to scam you.

Only connect your wallet to legitimate websites

Make sure that you only connect your wallet to legitimate websites or apps. More advanced scams have been known to steal your crypto when you connect your wallet to their website or app. You should always check when connecting your wallet what it's asking you to approve. For instance, a scam website might automatically ask you to approve a transaction to send them your crypto. You may be in a rush and just approve everything without realising what it is you're actually approving - so always check! If in doubt, don't connect your wallet and do some research before proceeding with connecting your wallet.

Below is the process for connecting to a legitimate and popular decentralised exchange called Pancakeswap. When connecting to a website, always make sure to check what it's asking you to approve. In this example, we can see Pancakeswap is asking my wallet for permission to "View the addresses of your permitted accounts (required)". This type of connection to a legitimate website like Pancakeswap is safe. Pancakeswap needs to connect to my wallet to see the tokens I have so I can exchange them for other cryptos. When making a purchase, each transaction requires additional approval:

Don't Let FOMO Take Control

The most important rule is to not let FOMO (fear of missing out) control your decision-making. If you think you are going to miss out on a big opportunity, it is very easy to rush and fall into a scam.

Most times I would say "if it sounds too good to be true, it probably is". However, in crypto, a lot of stuff that sounds too good to be true actually is true. So using the "too good to be true" rule will mean you miss out on some amazing opportunities.

So, the best rules for crypto trading are:

  1. NEVER SHARE YOUR WALLET SEED.
  2. Stay calm and do not rush into buying things.
  3. Triple check everything before you buy.
  4. If something feels dodgy, it's better to stay out.
  5. Don't follow links from unofficial sources or people.