Scam Spotlight Series: Cryptocurrency and Investment Scams

What Are Cryptocurrency and Investment Scams?

Cryptocurrency and investment scams are fraudulent schemes where scammers lure victims with promises of high returns, fake investment opportunities, or false claims about crypto trading success. These scams often involve Ponzi schemes, fake trading platforms, impersonation of financial advisors, or phishing tactics to steal money or personal information.  Common cryptocurrencies used in these scams are Bitcoin, Ethereum, Dogecoin, and start-up meme coins.

Following the last presidential election last fall, cryptocurrency markets soared.  Many scammers take advantage of people’s FOMO (fear of missing out) on the fast-growing crypto market, convincing them to invest in non-existent coins, fraudulent exchanges, or bogus investment funds. Once the victim deposits their money as part of the scheme, the scammer either disappears or continues pressuring them for more funds under false pretenses.

According to the Better Business Bureau Institute for Marketplace Trust, crypto & investment scams rose to the #1 riskiest scam in 2023.  In their BBB Scam Tracker Risk Report, more than 80% of people who were targeted by this scam type reported losing money and had the second highest median dollar loss reported at $3,800. 

In this blog, we share a real-life example of how one person fell victim to a crypto investment scam and how scammers used their tricks to steal over $5,000 from them. With the rise of the crypto market, it is likely these scams will continue to be heavily used by fraudsters.  Learn how to protect yourself with practical tips to stay one step ahead of fraudsters. Don’t let an investment scam take you by surprise—get informed, stay safe, and protect your hard-earned money.

Real-Life Story: How David Lost His Savings to an Investment Scam

David, a 65-year-old retired business owner, had been interested in cryptocurrency for a while.  His son-in-law recently shared with him how much he had earned on his Bitcoin investment in 2024 and he was intrigued. He had other investments with known investment fund managers, but they didn’t do anything with cryptocurrencies so he wasn’t sure where to start.  One day, he saw an ad on social media featuring a well-known financial expert and billionaire entrepreneur, Elon Musk, endorsing a crypto trading platform. The ad even had the Fox News logo, making it seem like a legitimate news article about how Musk’s new crypto fund was “changing the lives of everyday investors.”

Curious, David clicked the link, which took him to a sleek website filled with glowing testimonials and success stories. The homepage featured what looked like a real Fox News article, with a headline that read, "Elon Musk's Latest Crypto Project is Making New Millionaires Overnight!" The article claimed that Musk had backed this trading platform and that investors were already seeing huge returns with zero risk.

A friendly “investment manager” named Eric quickly reached out, explaining that with just a $500 deposit, David could start seeing profits within days. Skeptical but excited, David transferred the funds. Sure enough, the platform’s dashboard showed his investment growing rapidly. Encouraged, he invested another $5,000.

A few weeks later, David decided to withdraw some of his “earnings.” But when he tried, the system blocked him, claiming his account required "verification" before withdrawals were allowed. Eric assured him it was just a security measure—David only needed to invest an additional $2,500 to "unlock" his funds.

Sensing something was off, David tried searching for reviews about the company. He was shocked to find reports from others who had been scammed in the same way. The "Fox News article" was completely fake, and Elon Musk had never endorsed the platform. It was all an elaborate scam designed to trick people into investing.

David immediately contacted his bank, but the transactions were irreversible. By the time he realized it was all a scam, the website had disappeared, and Eric’s phone number no longer worked.

David had fallen victim to a crypto investment scam, losing over $5,000 of his hard-earned savings.

Please note: David’s story is a fictional example based on real-life examples created to illustrate how investment scams work while protecting the privacy of real individuals.

How to Protect Yourself from Crypto & Investment Scams

• Be skeptical of "guaranteed" returns – No legitimate investment is risk-free.
• Verify the source – Scammers impersonate real financial experts or fake endorsements.
• Research the platform – Search for independent reviews and regulatory warnings.
• Watch out for urgency tactics – Scammers pressure victims into quick decisions.
• Never send money to strangers – Especially via crypto, which is hard to recover.

To learn more about cryptocurrency and their use in scams, check out this information from the Federal Trade Commission. David’s story is a reminder that if an investment opportunity sounds too good to be true, it probably is. Stay informed, stay cautious, and always double-check before investing!

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About the Scam Spotlight Series:

Each month, we shine a light on the latest scams that fraudsters use to trick people into giving up their money or personal information.  In 2023, consumers reported losing over $10 billion to fraud, with a median loss of $500 per incident, according to the Federal Trade Commission. By sharing real-life examples, we aim to uncover the tactics scammers use, helping you recognize and avoid their schemes. Along the way, we’ll also provide practical tips to safeguard yourself and your loved ones. At Rivers Edge Bank, your safety and security are our top priorities—because protecting your hard-earned money starts with staying informed.  To learn more about cybersecurity best practices, visit our Cyber Security page.

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