Three-tiered Cryptocurrency Fraud Schemes: How to Recognize and Protect Your Assets

The cryptocurrency industry is rapidly evolving, but along with it, the number of scams is also increasing. Every newcomer and even experienced traders need to understand how scammers operate to avoid losing their funds. Let’s examine the three most common schemes of deception in the crypto sphere and identify the signs that should alert you.

Fake tokens on Telegram: simple scam mechanics

Telegram remains a popular platform for crypto communities, but it also hides many traps. In recent years, fake tokens have been actively spreading here, bringing scammers between $300,000 and $500,000 per scam.

How do criminals operate? They create a channel and start posting attractive ads about an unknown coin that supposedly will soon surge in price. It’s claimed to be a chance to buy the token before its official listing on major exchanges. Then, there’s a link to purchase through PancakeSwap or another decentralized exchange.

The trick lies in the smart contract code: it contains a restriction on selling. You can buy the tokens, but you will never be able to sell them. Your funds will simply be frozen, and scammers will keep them.

To verify a suspicious project, use BscScan or similar blockchain explorers. If information about the developers and the token system itself is completely hidden or obfuscated, it’s almost certainly a sign of fraud.

Pump & Dump: artificial price inflation and collapse

This classic speculative scheme has existed long before cryptocurrencies, but in the digital space, it has taken on new scale. The essence is simple: organizers create artificial hype around a little-known token through Telegram broadcasts, social media posts, and announcements about supposedly exclusive opportunities.

As the price rises and new investors start buying en masse, the organizers make their main move — they suddenly sell all their holdings. The influx of sellers causes a sharp drop in prices, the value crashes, and most participants are left holding devalued assets. The few who sold before the collapse are the scammers and their accomplices.

Crypto pyramids: an eternal cycle of deception

Crypto pyramid schemes operate on an ancient principle: early participants’ profits are paid from the funds of new investors. Pyramid organizers actively promote their project, promising huge annual returns and persuading people to invite friends and acquaintances.

The system works as long as the flow of new investments exceeds payout expenses. But when the inflow dries up — which is inevitable — the pyramid collapses. At this stage, organizers usually disappear along with the remaining funds.

Practical ways to protect yourself: how not to become a victim

Learn the main red flags of any scam. If a project promises unreasonably high returns (especially over 100% annually), it should raise suspicion. Such promises are incompatible with real economics.

Carefully research the development team. If they do not disclose their names, do not conduct transparent activities, and lack verified accounts on public networks, it’s a direct warning sign. Legitimate projects are always open to communication and ready to answer questions.

Check for complete documentation. Whitepapers, technical documentation, security audit reports — all should be accessible and clear. The absence of such materials is a loud indicator of fraudulent intentions.

Use analysis tools: verify smart contracts via BscScan, look for project information in independent sources, read reviews in crypto communities. These simple steps will help you distinguish promising projects from outright scams.

Don’t chase quick profits. Haste is the main ally of scammers. Real, sustainable investments require time, analysis, and caution.