The most common crypto-scam schemes

1. Rugpool

"Rug pull" in English means 'pulling the rug'. It is a type of fraudulent attack in which the organizers promote the project to lure crypto assets from users and then disappear with all the funds.

One of the largest rag pools in the crypto industry was Thodex. Initially, the project functioned as a Turkish crypto exchange and conducted customer transactions. However, in April 2024, the exchange's organizers suddenly disappeared from the radar, taking over $2 billion in client assets.

The founder himself stated about the alleged cyberattack on the cryptocurrency exchange but then stopped contact. However, within a year and a half, law enforcement agencies managed to arrest all the organizers of Thodex, including its founder.

AnubisDAO rag pool was an equally striking example. Its organizers managed to steal $60 in ETH cryptocurrency without even having a website or whitepaper — a technical document with a detailed description of the project and its tokenomics.

Another example is the Squid Game project, which attracted a lot of attention due to its indirect connection to the popular 2021 TV series The Squid Game. Although the damage from the Squid Game rag pool was more modest compared to the other listed ragpools (about $11 million), the fact that the organizers managed to place their fraudulent token SQUID on the site of the leading monitoring service CoinMarketCap is indicative.

2. Phishing

Phishing, along with rag pool and Pump & Dump, is one of the most common methods of scamming in the crypto environment. Scammers most often target users of wallets or crypto exchanges.

Scammers email potential victims on behalf of a well-known company, such as Coinbase, MetaMask, or Ledger, with a message about the alleged hack and instructions on saving assets. Of course, such emails contain a link to a phishing site.

After going to the fraudsters' site, you must enter private data: a seed phrase or a private key from a cryptocurrency wallet or login and password from an exchange account (including 2FA code, if available). The funds will be irretrievably lost if you follow the link and enter the data. According to expert estimates, the damage from phishing attacks amounted from $500 million to $800 million in 2024 alone.

It is not uncommon for attackers to take over domains of popular crypto projects or even celebrities' social media accounts. For example, in 2023, scammers hacked into the Twitter account of the Aptos Foundation, which is behind the creation of the extensive blockchain network Aptos. As a result of the hack, the scammers posted a link to a fake website with a phony giveaway of APT cryptocurrency tokens (the project lacked an original token at the time). Aptos was one of the most anticipated airdrops in 2023, which allowed the scammers to conduct a successful phishing attack, but the exact amount of damage is unknown.

3. Pump & Dump

Pump & Dump is a popular scheme in the crypto industry. Often, its organizers create Telegram channels that provide signals for buying and selling cryptocurrencies, supposedly from professional traders.

The scheme itself works in several stages and consists of the following:

1. First, the organizers select some token with low liquidity, the price of which can be significantly increased even with a small trading volume, and then conduct a preliminary purchase for subsequent sale;
2. Then the organizers promote the pre-purchased token in various ways (e.g., through channels or chats), which "pampers" its price, i.e., dramatically increases the price;
3. After a little time, when the price increases significantly, the organizers sell all their tokens at a profit, causing a sharp drop in the token rate, i.e., "dump."

One of the most high-profile Pump & Dump cases was related to the widely known decentralized exchange SushiSwap. Amid the news about the listing of the SUSHI project's native token on the leading crypto exchange Binance, its price skyrocketed, rising above $1 in a short period.

However, users soon noticed that the project's creator had sold all his tokens, which triggered a large-scale dump of the SUSHI token. The incident caused a wide resonance in the crypto community, and as a result, the founder had to buy back the sold tokens.

By the way, the Squid Game scam project can also be attributed to the Pump & Dump scheme: before creating a rag pool and collapsing the value of the SQUID token, the organizers were able to "pump up" the price of the cryptocurrency by several thousand percent.

4. Ponzi scheme

The Ponzi scheme has existed since the 1920s, but organizers of projects based on it still manage to deceive gullible users. The scheme's essence is that the organizers offer investors the opportunity to invest in their project, promising regular payments with a certain yield (often 180% per annum and even more).

Practically no company, even the most successful one, can provide such payments to its investors, and even for loans, the interest rates are many times lower. Of course, the inflow of funds from new investors ensures payments to old investors. However, over time, the inflow decreases, and the organizers close the pyramid scheme, hiding with the funds of investors, which to some extent resembles a rag pool. And this, as with ragpool, can happen at any moment — even on the day of the project launch.

One of history's most successful pyramid schemes was the OneCoin project, which skimmed its depositors in October 2017. The organizers of OneCoin managed to collect about $4 billion. Investors were not embarrassed even by the project token's absence on the CoinMarketCap website, although its presence there does not guarantee 100% protection from scams.

5. Pig butchering

Many cryptocurrency users, especially experienced ones, have encountered scams in well-known messengers. Most often, scammers act straightforwardly and quickly, getting straight to the point.

Given the high popularity of scam schemes like arbitrage or P2P, many users became immune: users began to quickly identify such scammers and immediately block them. Therefore, scammers had to find new ways to "hook" victims, and one of them was "Pig butchering".

The essence of "pig butchering" is that the scammer takes a long time to process the potential victim, first gaining his trust and then moving to action. Pig butchering works like this:

The scammer unobtrusively gets to know the potential victim. Most often, scammers start a romantic relationship with the victim to gain her trust;

Once the scammer realizes that the victim is already "hooked," he gradually begins to warm up the victim, telling about a luxurious life and a significant passive income. Most often, the legend is as follows: the scammer has a friend who successfully trades on the stock exchange and is willing to share deals for a percentage of profit;

Then, the scammer starts to process the victim more and more actively using social engineering, causing the victim to feel FOMO — fear of lost profits.

The denouement is often the same: the victim who has been caught deposits funds on one or another fake trading platform and eventually loses his savings. At the same time, the scammer deletes his account and disappears without a trace.