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Beware of Crypto Fraud: Recognizing the Red Flags 🚩

Jun 13, 2023
byNDAX Labs


As the popularity of crypto assets continues to rise, so does the prevalence of fraud. Scammers are constantly devising new tactics to deceive unsuspecting investors and make off with their hard-earned money. To avoid falling victim to scammers, being aware of the red flags signaling fraudulent activities is crucial. Here, we will explore common red flags and share stories of individuals who have been scammed by fraudsters.

🚩 High-Pressure Sales Tactics

One prominent red flag is the use of urgency and high-pressure sales tactics. Fraudsters often inundate potential victims with multiple phone calls, urging them to act immediately or risk missing a "once-in-a-lifetime opportunity". These aggressive tactics are designed to push you into making hasty decisions without conducting proper due diligence—or taking the time to think about what you are being asked to do.

Story: John, a retiree with limited knowledge of cryptocurrencies, received a message on Facebook from a company claiming to be a reputable crypto investment firm. The representative introduced him to an exclusive opportunity, emphasizing the potential for massive returns within a brief period. The representative continuously emphasized that time was running out, and John needed to act immediately to secure his place in the investment program.

Caught up in the excitement and fear of missing a lucrative opportunity, John decided to invest a sizable portion of his retirement savings without conducting thorough research. The company assured him his investment would yield substantial profits in weeks.

Unfortunately, after John invested, communication with the company became increasingly difficult. His calls, Facebook messages and emails went unanswered. Days turned into weeks, and he realized he had fallen victim to a fraudulent scheme. The company had disappeared, leaving John devastated and facing significant financial losses.

This cautionary tale highlights the importance of recognizing the red flags associated with high-pressure sales tactics. Such tactics can often cloud our judgment and lead us to make impulsive decisions without thoroughly evaluating the legitimacy and credibility of the investment opportunity.

🚩 Trojan Horse

Trojan Horse is a deceptive tactic used by fraudsters to gain unauthorized access to a victim's device or sensitive information. The scam derives its name from the ancient Greek myth of the Trojan Horse, where a harmless gift concealed a group of soldiers who later wreaked havoc. In the context of modern technology, a Trojan Horse scam involves disguising malicious software or applications as legitimate ones, such as helpful tools or software updates. Once the victim unwittingly installs the disguised software, the fraudsters gain unrestricted access to their device, enabling them to manipulate accounts, steal personal information, or carry out unauthorized transactions without the victim's knowledge. This scam preys on the victim's trust and can lead to severe financial loss, compromised security and, in many cases, may result in identity theft and additional exposure to fraud that may not be identified instantly.

Fraudsters will often request victims to download remote access software such as AnyDesk, TeamViewer or Zoom, just to name a few. Their main goal is to gain access to your personal information, identity documentation, passwords and other credentials and to take control of your device.

Story: Cindy, who was also interested in exploring the world of cryptocurrencies, one day came across an online company that seemed reputable, with a professional-looking website and positive testimonials from supposed clients. Intrigued by the promises of high returns, Cindy took a chance and contacted the company for more information about their investment options.

To her surprise, the representative she spoke to, who introduced himself as David, was extremely friendly and helpful. He patiently answered all her questions and seemed genuinely interested in assisting her. Sensing Cindy's lack of technical expertise, David offered to guide her through setting up her investment account.

David explained that Cindy needed to download a specific application called AnyDesk for a seamless and efficient account setup. He assured her that this app was necessary to facilitate communication with her assigned account manager and grant them access to assist her remotely.

Cindy eagerly followed his instructions, trusting David's advice and believing she was in safe hands. She downloaded AnyDesk onto her computer, thinking it was a tool to enhance her investing experience.

However, unbeknownst to Cindy, the friendly representative she had entrusted her faith in was, in fact, a skilled fraudster. The harmless app she had innocently installed granted the fraudster unrestricted access to her computer, exposing her to significant risks.

With control over Cindy's device, the fraudster now had the power to manipulate her accounts, compromise her personal information, and exploit her financial assets. Silently and covertly, the fraudster began siphoning off Cindy's hard-earned money while leaving no trace of their malicious activities.

It was not until Cindy noticed discrepancies in her accounts and experienced difficulties accessing her funds that she grew suspicious. Alarmed by the situation, she contacted the company for assistance, only to discover that David, the representative she had trusted, did not exist. The company did not know about her interactions, and she realized she had been duped by sophisticated criminals.  

The aftermath of this heartbreaking ordeal was devastating for Cindy. Not only had she lost her invested funds, but she also had to face the consequences of her compromised personal information.

This cautionary tale reminds others to exercise extreme caution when downloading applications or software recommended by unknown entities. Verifying the legitimacy of such requests and considering the potential risks before granting remote access to your device is crucial. By staying informed and adopting a skeptical approach, individuals can better protect themselves from falling victim to fraudulent schemes that exploit harmless remote access software downloads like AnyDesk.

🚩 Too Good to Be True

One of the most common red flags is an opportunity that feels too good to be true. Fraudsters often present fake online profiles showing extraordinary opportunities and/or rapid growth to entice investors into pouring money into the scheme. Twitter, Instagram and Facebook are replete with fraudsters and bots promoting these scams.

Story: Mark, a hopeful romantic, received a message on a popular social media platform from a beautiful woman who seemed charming and genuinely interested in getting to know him. Intrigued by the seemingly perfect match, Mark cautiously engaged in conversation.

Mark discovered that they shared numerous common interests and hobbies as they chatted. Over time, their connection deepened, and they developed a sense of trust and intimacy.

Mark willingly shared personal details and even sensitive information as their relationship progressed. The fraudster, hiding behind a fake profile, exploited this trust and manipulated the relationship for their own gain.

Eventually, the fraudster presented an enticing opportunity for Mark to invest in a blockchain project that would 300x his returns, claiming that the money would bring them closer together and secure their future. Caught up in the whirlwind of emotions and the illusion of love, Mark agreed to invest a significant amount of money.

However, when the time came to reap the rewards of their investment, Mark's attempts to withdraw the funds were met with excuses, delays, and, eventually, complete silence. The fraudster vanished, leaving Mark heartbroken and financially devastated.

This cautionary tale serves as a stark reminder of the dangers of online scams and the importance of remaining vigilant and skeptical, especially when presented with opportunities that seem too good to be true. It highlights the vulnerability of individuals who may be swayed by emotions and personal connections, only to fall victim to fraudulent schemes.

🚩 Guarantee of High Returns

The guarantee of high returns is a common tactic employed by fraudsters to lure unsuspecting individuals into investment scams. These fraudsters prey on the desires for financial success and security, promising extraordinary profits with minimal risk. They create an illusion of credibility and expertise, often using impressive-sounding investment strategies or cutting-edge technologies to support their claims.

These scams can take various forms, such as Ponzi schemes, pyramid schemes, or fraudulent investment programs. They typically target individuals who are seeking quick and substantial gains without fully understanding the associated risks. The fraudsters may present themselves as seasoned professionals or use fake testimonials and success stories to establish credibility.

Story: Lisa, an aspiring investor, was captivated by the prospect of making substantial profits from her cryptocurrency investments. One day, she received a persuasive sales pitch from a company that guaranteed exceptional returns. The salesperson painted a picture of rapid and unprecedented growth, tempting Lisa with the promise of massive profits.

Caught up in the excitement and driven by the fear of missing out, Lisa invested a significant amount believing that she had found a golden opportunity to achieve financial success quickly and easily.

However, as time went on, Lisa's enthusiasm began to wane. The promised returns never materialized, and she discovered that the company had misled her with their inflated claims. The reality of the situation hit her hard as she realized that her funds were irretrievably lost.

Lisa had become a victim of a common tactic employed by fraudsters: the guarantee of high returns. These unscrupulous individuals preyed on her desire for financial prosperity, using the allure of massive profits to manipulate her into investing. Their promises created a false sense of urgency and played on her fears of missing out on a lucrative opportunity.

Lisa's story serves as a cautionary tale for anyone considering investment opportunities that seem too good to be true. It highlights the importance of conducting thorough research, seeking advice from trusted sources, and being skeptical of guarantees of high returns. It is crucial to approach investment decisions with a realistic mindset and to avoid succumbing to the FOMO tactics employed by fraudsters. By doing so, individuals can protect themselves from falling victim to deceitful schemes and ensure a more secure financial future.

🚩 Deceptive Good Looks

Fraudsters are known to employ deceptive tactics, including creating slick and professional-looking websites, to give the appearance of legitimacy. However, it's important to remember that looks can be deceiving, and one should not be fooled by appearances alone. A visually appealing website does not necessarily indicate the trustworthiness or authenticity of the business or investment opportunity being presented.

In some instances, fraudsters may go a step further and use the image of a celebrity on their promotional materials in an attempt to gain credibility. It is crucial to understand that the presence of a celebrity's photo does not guarantee their endorsement or involvement with the company or project. Fraudsters may exploit the popularity and recognition of celebrities to deceive unsuspecting individuals into believing that the venture is legitimate.

Story: Michael, a new investor, stumbled upon a captivating website that seemed to offer a lucrative crypto investment platform. The website was impeccably designed, exuding professionalism and sophistication. What caught Michael's attention were the testimonials prominently displayed on the site, featuring well-known personalities endorsing the platform.

Intrigued by the idea of investing in a venture that seemingly had the support of celebrities, Michael was convinced that he had found a golden opportunity. He believed that the endorsements from these well-known figures lent credibility and authenticity to the platform. Without conducting further due diligence, he decided to invest a significant sum of money.

However, as time passed, Michael's optimism gradually turned into suspicion. He began to question the legitimacy of the endorsements and the website itself. His doubts intensified when he discovered that the testimonials were nothing but fabrications. The individuals portrayed as endorsing the platform had no actual involvement or knowledge of the company.

It became apparent to Michael that he had fallen victim to the deceptive tactics employed by fraudsters. These individuals had meticulously crafted a slick and professional-looking website to deceive unsuspecting investors. By associating the platform with well-known personalities, they aimed to create a false sense of trust and credibility.

Michael's experience serves as a cautionary tale, highlighting that it is crucial to conduct thorough research, verify the legitimacy of endorsements, and seek advice from trusted sources. Skepticism and due diligence are essential when evaluating investment opportunities, especially those that seem too good to be true.

🚩 Paying More to Get Less

One of the warning signs of a potential scam is when you are required to provide additional funds before being able to make any withdrawals. Fraudsters often employ this tactic, requesting extra money under various pretexts such as processing fees, taxes, or administrative costs. They use these excuses to convince you that paying more is necessary to access your returns or unlock certain benefits.

However, the intention behind such requests is not to facilitate legitimate transactions but rather to drain your funds without ever allowing you to make a withdrawal. By continuously demanding additional payments, fraudsters create a situation where you end up paying more and more while receiving less and less in return or not receiving anything back at all.

Story: Emma, a hopeful investor, experienced the thrill of seeing her initial investment of $250 on a crypto trading platform generate impressive gains on paper. Filled with excitement, she invested more and more, but when she decided it was time to cash out and withdraw her profits, she received an unexpected demand.

Upon submitting her withdrawal request, Emma received an unexpected message from the platform's customer support. They informed her that, before her withdrawal could be processed, she would need to pay a substantial fee for "processing" or "transaction" purposes. The reason provided was that the fee covered administrative costs, taxes, or other supposed expenses.

Caught off guard by this unexpected demand, Emma hesitated but eventually succumbed to the pressure. She believed that paying the requested fee would ensure a smooth and timely withdrawal of her funds. With the hope of receiving her profits soon, Emma dutifully deposited the additional funds as requested.

Days turned into weeks, and Emma's withdrawal remained in a perpetual state of delay. The platform's customer support team continued to provide excuses, claiming technical difficulties, a high volume of withdrawal requests, or other reasons for the delay. Despite her persistence and numerous attempts to follow up, Emma never received her funds.

It became painfully clear to Emma that she had been tricked into paying more without ever having the opportunity to make a withdrawal. The fraudster's objective was to drain her funds, using the guise of processing fees or other excuses to exploit her trust and eagerness to secure her profits.

Amid her frustration and despair, Emma received an unexpected call from a company claiming to be a recovery service. The person on the other end assured Emma they could help her retrieve her lost funds for a fee. Hope flickered within Emma as she entertained the possibility of recovering her investments.

However, as she pondered the offer, a wave of caution washed over her. She couldn't shake off the feeling that this call from the recovery service might be another attempt to trick her out of more money.

Recognizing the potential danger, Emma decided to take matters into her own hands. Instead of relying on the questionable recovery service, she sought out legitimate resources and consulted with local law enforcement, anti-fraud center and securities commissions who specialized in dealing with scams and fraud. They provided her with valuable guidance and advice on reporting the scam and filing complaints.  

Emma's story serves as a warning to others, reminding them to be cautious when asked to provide additional funds before being able to make withdrawals. It emphasizes the importance of thoroughly understanding the terms and conditions of any investment platform and scrutinizing any requests for additional payments.

Legitimate investment platforms typically have transparent and reasonable withdrawal processes, without imposing exorbitant fees or unnecessary hurdles. It is crucial for investors to verify the legitimacy of such requests, seek clarification, and consult trusted sources if they encounter unusual demands or obstacles to accessing their funds.

🚩 Disappearing Act

One of the significant red flags to watch out for is encountering difficulties when trying to reach someone or receive responses while attempting to gather more information about your investments. Legitimate companies prioritize customer support and have established systems in place to address inquiries and concerns promptly. However, fraudsters operate differently, often employing evasive tactics to avoid contact or dodge questions in order to evade scrutiny and accountability.

Story: David was entangled in a disheartening situation when he attempted to withdraw his funds from a crypto investment company. What started as a promising venture quickly became a frustrating experience, characterized by evasive customer support and unanswered queries.

Initially, David had entrusted his hard-earned money to the company, believing in the potential of their investment offerings. However, when the time came to access his funds or seek assistance, he encountered several obstacles. He reached out to the company's customer support team, expecting prompt and reliable assistance, but to his dismay, the responses grew scarce and eventually vanished altogether.

As David persisted in his efforts to reach out for support, he realized that he was caught in a classic disappearing act orchestrated by fraudsters. The company, which had once appeared reputable and trustworthy, had abruptly ceased all communication and effectively disappeared from the scene. They had cunningly evaded his inquiries, effectively cutting off any means of contact.

The realization struck David hard—he had become a victim of an elaborate scam. The fraudsters behind the crypto investment company had skillfully used evasive tactics to avoid scrutiny, escape accountability, and ultimately abscond with his investments.

🚩 Unsolicited Communication

One of the warning signs to be cautious of is unsolicited communication, which includes receiving unexpected emails, social media messages, or phone calls promoting investment opportunities. Fraudsters frequently exploit these channels to reach out to unsuspecting individuals and present enticing offers that may seem too good to pass up.

Story: Sarah, an unsuspecting investor, was entangled in a web of deceit after receiving an unsolicited message on social media. The message came from an unknown sender claiming exclusive information about a new and promising investment opportunity in the cryptocurrency market.

Intrigued by the unexpected offer and enticed by the possibility of substantial profits, Sarah engaged in further conversation with the sender. They portrayed themselves as experienced traders with insider knowledge, fueling Sarah's excitement and fostering a sense of urgency.

Blinded by the allure of quick gains, Sarah made the regrettable decision to invest a significant amount of money based solely on unsolicited communication. Little did she know that she had fallen victim to a carefully crafted scheme orchestrated by fraudsters.

As time passed, Sarah's initial enthusiasm waned, and doubts started to creep in. The promised investment returns never materialized, and Sarah began to suspect that she had been deceived. Despite her attempts to contact the sender for clarification, they conveniently disappeared, leaving Sarah feeling helpless and defrauded.

In hindsight, Sarah realized that she had overlooked a critical red flag—the unsolicited nature of the communication. Legitimate investment opportunities rarely emerge through unsolicited messages or social media contacts. This should have raised her skepticism and prompted her to conduct thorough research.

Sarah’s story serves as a reminder to be skeptical and perform thorough due diligence before making any investment decisions. Also, to never trust requests for personal information or account details in unsolicited messages or emails.

🚩 Pump-and-Dump Schemes

A pump-and-dump scheme is a form of investment fraud that involves artificially inflating the price of an asset, typically a stock or a cryptocurrency, through false or misleading information. The scheme's goal is to create a buying frenzy among unsuspecting investors, allowing the fraudsters to sell off their holdings at the inflated price and make a profit, while leaving other investors with significant losses.

Story: Chris, eager to capitalize on potential profits, joined a social media group that claimed to have insider knowledge of cryptocurrencies with tremendous growth prospects. Within the group, members worked together to create a frenzy of excitement and hype around a specific cryptocurrency, causing its price to skyrocket rapidly.

Chris, enticed by the promises of massive returns, invested heavily in the hyped cryptocurrency. However, once the price reached its peak, the group abruptly initiated a sell-off, causing the value of the cryptocurrency to plummet. Chris, along with many other unsuspecting investors, found themselves holding worthless tokens, facing significant financial losses.

This story exemplifies the red flag of pump-and-dump schemes, which involves unsubstantiated claims of a cryptocurrency's potential, coordinated efforts to artificially inflate its price, and subsequent crashes in value once the hype fades. Investors must remain cautious and vigilant to protect themselves from falling victim to these manipulative schemes.

Additional Red Flag: Unsubstantiated claims of a cryptocurrency's potential, coordinated efforts to hype up the price, and sudden price crashes after the hype fades.

🚩 Unregulated or Unregistered Companies

Another significant red flag is dealing with companies or individuals that operate without proper regulation or registration. Legitimate crypto investment firms are typically registered with relevant financial authorities and comply with regulatory requirements. However, fraudsters often operate outside the bounds of regulation to avoid scrutiny and accountability.

Story: Maria, was eager to enter the world of cryptocurrencies. She stumbled upon a company that claimed to be a leading player in the crypto investment industry. Intrigued by their promises of high returns and personalized investment strategies, Maria decided to explore this opportunity further.

However, as she dug deeper into the company's background, Maria discovered a concerning fact: the company was unregulated and unregistered with any financial authorities. This realization raised a red flag in her mind, signaling potential risks and lack of accountability.

Despite her reservations, Maria hesitated to completely dismiss the opportunity. The company's representatives were persuasive, assuring her that regulation was unnecessary due to the innovative nature of cryptocurrencies and the freedom it offered. They emphasized the potential for higher returns without the burden of regulatory oversight.

As Maria continued her research, she uncovered numerous warnings and cautionary tales from investors who had fallen prey to unregulated companies. These stories highlighted the lack of protection, transparency, and accountability that came with dealing with such entities.

With a new understanding of the risks involved, Maria decided to avoid the unregulated companies located in foreign jurisdictions. Instead, she focused her efforts on finding reputable Candian based crypto trading platforms that adhered to regulatory standards by visiting the Canadian Securites Administrators {CSA} website.

This cautionary tale underscores the importance of verifying the regulatory status of any investment firm before committing your funds. Legitimate companies adhere to regulatory requirements to protect investors and provide transparency. Always research and ensure that the company you're dealing with is registered and regulated by the appropriate authorities.


Being aware of these red flags and exercising caution can significantly reduce the risk of falling victim to crypto fraud. It is essential to conduct thorough research, seek advice from trusted sources, and approach investment opportunities with a skeptical mindset. By staying informed and vigilant, we can protect ourselves and ensure a more secure financial future.


The stories shared in this blog are fictional but based on common occurrences.