Crypto scams exploit trust, anonymity, and a general lack of industry regulation. In this post, we’ll explore common crypto scam terminology—from Pig Butchering (one of the most prevalent scams) to lesser-known schemes—and provide real-world examples to help you stay alert.
Glossary
Pig Butchering Scams
Pig Butchering is a long-con in which the scammer (“butcher”) forms a fake relationship with the victim (“pig”), often romantic or friendly. Over time, the scammer encourages the victim to invest in a fake or manipulated crypto scheme. Once the scammer deems the victim “fat” enough with trust and money, they disappear with all funds.
Example Situations
- Romantic Approach
- You match with someone on a dating app.
- Over weeks, they share personal stories and “insider tips” about crypto.
- They convince you to invest in their special trading platform, and initially, you see fake profits.
- When you try to withdraw, both your money and your new “friend” vanish.
- Business Mentorship
- A seemingly successful professional on LinkedIn starts offering “VIP investment advice.”
- You see screenshots of their “profits” and eventually deposit funds into a questionable exchange.
- The scammer then blocks you or the website suddenly goes offline.
Red Flags
- – Rapid emotional connection paired with immediate investment proposals.
- – Unrealistically high returns or secret “VIP” opportunities.
- – Pressure to deposit large sums quickly.
- – Sudden radio silence once you attempt a withdrawal.
Rug Pull
A Rug Pull happens when developers create a new token or DeFi project, hype it up, and encourage mass buying. Once the token’s price surges, the team drains liquidity or sells their holdings, causing the token price to crash.
Example Situation
- A new token is promoted heavily on social media.
- Early investors see rapid price increases, but the founding team suddenly sells off their entire stake.
- The token’s value plummets, leaving investors with worthless coins.
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Pump and Dump
A Pump and Dump is a coordinated effort to purchase a large quantity of a low-cap token, spread hype (often via social media), and inflate the price artificially. When enough new investors buy in, the perpetrators sell off their tokens, causing the price to crash.
Example Situation
- A Telegram group claims they have insider info about a major exchange listing.
- Members rush to buy the coin, creating a spike in value.
- The group admins then sell at the peak, leaving latecomers holding the bag.
Ponzi / Pyramid Schemes
A Ponzi scheme pays existing investors with the capital of new investors. Eventually, when no new funds arrive, the scheme collapses. In crypto, these often appear as “high-yield investment programs.”
Example Situation
- A platform promises 10% weekly returns.
- Payouts to older members come directly from new members’ deposits.
- When growth slows, withdrawals cease, and the entire scheme unravels.
Phishing Scams
Phishing involves masquerading as a trusted entity—an exchange, wallet provider, or official support team—to trick you into revealing private information such as login details or seed phrases.
Example Situation
- You receive an urgent email from “Binance” saying your account has been compromised.
- The link directs you to a fake login page that steals your credentials.
Fake Airdrops & Giveaway Scams
Scammers promise free tokens (airdrops) or giveaways but require you to connect your wallet or send a small “activation fee.” You either lose funds, grant malicious smart contracts access, or both.
Example Situation
- A tweet announces a “limited-time” free token drop.
- You connect your MetaMask and approve a transaction.
- Scammers drain your funds or compromise your wallet.
Social Engineering / Impersonation
Social engineering relies on psychological manipulation. Scammers impersonate support staff, project admins, or community members to coerce you into revealing private information or sending funds.
Example Situation
- You comment on a crypto forum about a wallet issue.
- Someone posing as “official support” DMs you, requesting your seed phrase.
- They drain your wallet within minutes.
SIM Swapping
SIM Swapping is when a fraudster convinces your phone carrier to transfer your phone number to their SIM. They then bypass two-factor authentication or password resets, accessing your exchange accounts.
Example Situation
- Your phone unexpectedly loses service.
- The scammer uses your number to reset exchange logins.
- Funds are withdrawn before you can regain control of your account.
Front-Running Scams (DeFi)
Malicious front-running bots scan pending blockchain transactions and insert higher-fee trades just before yours, profiting from the price movements you trigger.
Example Situation
- You place a large buy order on a DEX.
- A bot pays extra gas to front-run your order, buying cheaper and then instantly selling at a higher price once your order goes through.
Malware & Remote Access Scams
Scammers distribute crypto-focused malware or convince victims to install remote access software, allowing them to hijack wallet addresses or control the entire device.
Example Situation
- You download a “free trading bot” from an unverified website.
- It includes a clipboard hijacker that swaps your wallet address for the scammer’s whenever you send funds.
Fake Exchange / Broker Scams
A Fake Exchange or Broker Scam involves cybercriminals creating a highly professional-looking website or mobile app that appears nearly identical to a legitimate trading platform. The design often includes accurate-looking real-time price charts, flashy marketing materials, and claims of quick, effortless returns. Scammers are meticulous in crafting the user interface, featuring well-designed dashboards, instant notifications, and even fake trade volume to convince unsuspecting visitors that they are engaging with a real, reputable exchange.
Once victims deposit funds—whether in cryptocurrency or traditional currency—these platforms either prevent withdrawals entirely or subject users to a series of dubious requirements and “fees” before finalizing any withdrawal request. Common excuses include “verification pending,” “platform maintenance,” or “compliance checks.” In many cases, the withdrawal interface will show repeated delays or remain indefinitely “under review,” prompting victims to pay extra for expedited processing or “tax fees.” By the time users realize the withdrawal obstacle is insurmountable, the scam site typically goes offline or blocks access, leaving victims unable to recover their funds.
Example Situation
Polished Web Platform
- You discover a sleek website—XYZExchange.org—advertising competitive trading fees and seamless crypto/fiat deposits.
- The site features a busy “order book,” real-time charts, and even a list of trading pairs that mimic those on major exchanges.
Initial Deposit & Trading Success
- Intrigued, you deposit a small amount of BTC to test the platform.
- After placing a few trades, you seemingly make a profit and see your balance increase on the platform dashboard.
- Because of the initial “success,” you feel confident and deposit even more funds.
Suspicious Withdrawal Delays
- Eventually, you decide to withdraw your BTC or cash out some gains.
- The withdrawal request is marked as “under review.” Days pass, and there is no progress.
- A support representative contacts you, claiming you need to pay a “verification fee” or “tax fee” to proceed.
Site Suddenly Disappears
- You reluctantly pay additional charges, hoping it will allow you to withdraw.
- The platform continues to block your request or provides new reasons you must pay more.
- As doubts grow, you try to contact support again, only to find they have deactivated their live chat or removed the site entirely.
Typical Red Flags
- – Overly Professional but Unverified: A visually stunning website that lacks genuine reviews, social media presence, or any verifiable corporate background.
- – No Real Regulation: Claimed licenses or certifications often can’t be verified with official regulatory bodies (e.g., SEC, FCA).
- – Excessive ‘Fees’: Repeated demands for administrative or clearance fees before releasing funds.
- – Lack of Transparency: Hidden or vague ownership information, with no official company registration details.
- – Hyped Marketing: Promises of guaranteed returns or substantial profits in a short time, a major red flag in any legitimate financial market.
How to Protect Yourself
- – Check Licenses and Registration: Real exchanges provide verifiable information on regulatory approval and corporate identity.
- – Look for Reviews: Search forums like Reddit or reputable crypto review websites to read user experiences.
- – Use Trusted Platforms: Stick with well-known exchanges that have a track record of successful operation, responsive customer support, and comprehensive security measures.
- – Test Before Trusting: If you must try a new platform, start with a very small amount and attempt an immediate withdrawal to verify legitimacy.
- – Be Skeptical of High Returns: Anything promising low risk and high, guaranteed profits is almost certainly a scam.
In summary, Fake Exchange / Broker Scams rely on creating a deceptive sense of authenticity through professional design and false trading data. The criminals behind these scams know that once people see “profits,” they will be more inclined to deposit larger amounts. Recognizing the warning signs early—such as endless withdrawal hurdles and excessive fees—can save you from substantial financial losses.
Exit Scams
In an Exit Scam, a previously “legitimate” project suddenly disappears with user funds. This can occur with lending platforms, mining operations, or NFT marketplaces.
Example Situation
- A well-marketed cloud mining company pays out for a few weeks.
- Suddenly, withdrawals halt, and the team deletes all social media.
- Investors are left with nothing.
Suspect fraud or need to investigate a suspicious transaction? FraudOptics can help. Our pioneering Commercial Risk Intelligence Platform and Expert Team uncovers the hidden connections between on- and off-chain data—exposing the true scope of any scam. Contact us today to protect your assets and stay one step ahead of fraud.
Conclusion
Crypto scams are constantly evolving, and pig butchering stands out for its emotional manipulation and the level of trust it builds before stealing funds. Recognizing the red flags can save you or your community from significant losses. If you ever feel pressured to invest or are promised unrealistic gains, take a step back, do thorough research, and remember: if it sounds too good to be true, it likely is.
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