How to avoid and report bitcoin scams

Bitcoin is a new technology. Thieves and scammers exploit your lack of familiarity and understanding of bitcoin to trick you into giving the thieves your bitcoin. If someone is reaches out to you and eventually ends up asking you to send them bitcoin, they are probably scamming you. 

Here is how to figure out if you are involved in a bitcoin scam and how to protect yourself from losing your bitcoin to a scam.

Know your enemy

Scams come in many forms, but they often follow a familiar pattern. The safest approach is to be skeptical of anyone telling you to send money—especially if they ask for payment in Bitcoin or other cryptocurrencies—as it's likely an attempt to manipulate or deceive you.

Scammers will lie, pretend to be from real businesses or make up fake businesses or pretend to be a romantic partner that needs your help, but only in bitcoin, of course. Scammers often belong to large scamming businesses with dozens of employees and managers and a sophisticated and tested system to trick you into parting with your money. Below, we discuss their scamming methods and how to protect yourself.

Common types of scams to watch out for:

Investment scams

Scammers pose as legitimate companies offering massive, guaranteed and fast returns through forex trading bots or AI, luring you into sending bitcoin with the promise of profits that never materialize. These scammers will create a fake website that displays falsified trading reports, data and charts that give you the appearance of financial returns, tricking you into giving them more and more money. For example: a scammer will say you need to give them an additional $1000 for them to be able to transfer your $20,000 in returns that you’ve earned. These excuses are lies, and the $20,000 in returns don’t exist; it's a fraud and a trick to get you to part with more of your savings. Beware! 

Investment scams will also claim to help you set up a bitcoin wallet, while preying on a lack of understanding so that theycontrol the bitcoin wallet you think belongs to you. Always set up a bitcoin wallet yourself! 

Romance scams

Fraudsters build fake online relationships and emotionally manipulate victims into sending Bitcoin for emergencies, travel, or fabricated hardships. AI image creation and voice alteration make it easy for a scammer to pose as a completely different person online. AI can be used to assess your public social data to tailor a chatbot to your specific interests. Beware. 

Employment scams

Victims are offered fake job opportunities and tricked into sending Bitcoin as a “processing fee” or “training cost” before the job supposedly begins. These are fake scenarios preying on vulnerable people looking for their next source of income, watch out!

Government scams

Scammers will impersonate government agencies like the IRS or CRA and pressure victims into urgently paying fabricated fines or taxes with bitcoin to avoid legal trouble. Do not send money to anyone urging you to do it quickly or to avoid legal trouble!

Facebook marketplace/ebay scams

Scammers list fake properties/AirBnBs/goods/services and demand a bitcoin deposit to secure the deal, and once you send the payment, they vanish. Do not send bitcoin to people you do not know! 

How to avoid losing bitcoin to a scammer

Don’t send bitcoin to anyone, ever

Scammers always require bitcoin because a bank or government doesn’t control bitcoin, so no one can roll back transactions. Only use trusted institutions and companies that you can independently verify. Bitcoin enables trueownership, which also means it cannot be retrived once sent. Protect your bitcoin. 

Set up your bitcoin wallet alone

Do not let any supposed financial advisor set up your wallet for you or while you are on screenshare. It is easy for a scammer to trick you into momentarily displaying your private key, which they can use to siphon bitcoin from you without your immediate knowledge. If you want a free guide on how to set up a bitcoin wallet, check out our support guide. 

What to do if you think you are being scammed? 

Cease contact and do not send any more bitcoin to a potentially compromised account or wallet. If you are a Bitcoin Well customer please contact us immediately at hello@bitcoinwell.com and provide us with the details to your situation. 

You should also report the crime to your local financial fraud hotline:

- Canada: RCMP anti-fraud center at 1-888-495-8501

- United States: FBI's Internet Crime Complaint Center (IC3) at ic3.gov