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Spotting the Scheme: Recognizing Common Cryptocurrency Scams PIs May Encounter

Posted on by Joe

As cryptocurrency becomes more mainstream, it’s also become the new playground for scammers. What once required complicated bank transfers and offshore accounts can now be executed with a few taps on a smartphone and a crypto wallet. For private investigators, this shift presents new challenges—and opportunities.

Whether you’re investigating fraud, supporting a romance scam victim, or conducting due diligence for a client, understanding how cryptocurrency is used in scams is crucial. In this article, we’ll explore the most common crypto-related schemes PIs are likely to encounter, the red flags to watch for, and investigative strategies to spot them early.

Why Crypto Scams Are on the Rise

Scammers love cryptocurrency because it:

  • Offers fast, borderless transactions
  • Provides a degree of pseudonymity
  • Is poorly understood by the average person
  • Is often difficult to recover once transferred

For investigators, these same features make tracing stolen assets tricky—but not impossible. The first step? Knowing how the scams work.

1. Investment Scams & “Pump-and-Dump” Coins

These scams promise enormous returns through new or “secret” cryptocurrency investment opportunities. Victims are lured into buying coins or tokens that either:

  • Don’t exist
  • Are intentionally inflated by coordinated groups
  • Disappear after the scammer cashes out (aka a “rug pull”)

Red Flags:

  • Promises of guaranteed returns or “insider” opportunities
  • Urgency or pressure to invest quickly
  • Unknown or unverifiable coin names
  • Referral rewards for recruiting others

Investigator’s Tip: Ask clients for screenshots, emails, or transaction histories. Use blockchain explorers like Etherscan or BSCScan to look up token activity and wallet flows.

2. Romance Scams Involving Crypto

In crypto romance scams (also called “pig butchering”), a scammer develops an emotional relationship with the victim online—often over weeks or months—and eventually convinces them to invest in fake cryptocurrency platforms.

Victims are shown fake dashboards displaying growing profits and are sometimes even allowed to “withdraw” small amounts—until they invest more and the entire platform vanishes.

Red Flags:

  • Sudden introduction of crypto into the relationship
  • The subject is overseas, “traveling for work,” or avoids in-person meetings
  • Victim is given instructions to download unfamiliar apps or register on obscure platforms
  • Increasing pressure to “invest more to unlock funds”

Investigator’s Tip: Verify the legitimacy of the crypto platform involved. If it lacks transparency, customer service, or exists only in one language, it may be fake.

3. Phishing Scams and Seed Phrase Theft

Some scammers trick victims into giving up their seed phrase—a string of words that gives full access to their crypto wallet. This often happens through:

  • Fake technical support
  • Impersonated wallet apps
  • Malicious browser extensions

Once the phrase is given, all funds are immediately drained.

Red Flags:

  • Requests for seed phrases or private keys
  • Redirects to unofficial apps or websites
  • Messages claiming urgent wallet issues

Investigator’s Tip: Ask if the victim shared a seed phrase or downloaded any apps. Check their browser history and email logs for phishing attempts.

4. Ponzi and Pyramid Crypto Schemes

These scams promise high returns by recruiting others to invest in a cryptocurrency program or platform. Early investors are paid with the funds from new ones, not actual profits.

Red Flags:

  • Emphasis on “referrals” or “team building”
  • Lack of transparency about how the investment works
  • No proof of underlying business or token utility
  • Leaders flaunting wealth on social media

Investigator’s Tip: Search for the company or coin name in scam reports, Reddit threads, or watchdog sites. Many Ponzi coins have already been flagged by the crypto community.

5. Fake Crypto Giveaways and Impersonation Scams

These usually involve scammers impersonating celebrities, influencers, or well-known crypto companies. Victims are told they’ve won a giveaway or need to send a small amount of crypto to receive more in return.

Red Flags:

  • Requests to send crypto “to verify your wallet”
  • Unverified social media accounts or copycat websites
  • Time-sensitive “offers” that require immediate action

Investigator’s Tip: Look up the associated wallet address. Scam wallets are often blacklisted or tracked on public lists. Compare URLs and social handles to official sources.

Signs Your Case May Involve a Crypto Scam

During a client intake or initial investigation, pay attention if:

  • They mention sending money through apps like Coinbase, Binance, or MetaMask
  • They reference unfamiliar digital currencies
  • They say they can no longer access an “investment” platform
  • They report someone they’ve never met in person handling large sums of their money

Even if the client isn’t fully aware a scam has occurred, these signals can help you frame the right questions and pursue the right leads.

How PIs Can Investigate Crypto Scams

You don’t need to be a blockchain expert to get started. Here are basic steps:

  • Collect wallet addresses and transaction IDs
  • Trace funds using blockchain explorers like:
  • Review email headers and domain WHOIS info to track down fake websites
  • Search for connected social media accounts, phone numbers, and usernames through OSINT methods
  • Use cryptocurrency tracing software or partner with a crypto forensic expert for complex cases

At PI Mall, we provide guides, training resources, and tools tailored to cyber and crypto investigations—whether you’re just starting or deepening your expertise.

Investigating a possible crypto scam? Explore our selection of cyber investigation tools and educational resources at www.pimall.com.

Joe

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