Many people see Bitcoin and other forms of cryptocurrency (crypto) as viable investment strategies. However, scammers looking to exploit this digital currency mint fake versions to bilk investors out of money, create shady exchanges, and often use crypto as a payment method in their scams. Let’s take a quick look at how one of those frauds played out in the past. When the popular Squid Games series debuted on Netflix, a curious new “Squid Games” crypto also hit the scene not long afterwards. As reported by several tech media outlets, the buzz around the show lured investors, subsequently driving up its value. Then, the bubble burst. The scammers behind it quickly cashed in their coins to the tune of an estimated $3.3 million, which then saw the cryptocurrency’s plummet to less than a penny per coin, leaving investors in the lurch. The Squid Game crypto was nothing more than a front for a scam.. Scams like these have a track record nearly as long as crypto itself, the Squid Games scam being an example of a “rug pull” or “pump and dump” tactic where phony crypto offerings quickly rise, hit their peak, and then plummet to near worthlessness — all manipulated by scammers. Note that this Squid Game cryptocurrency had no relationship to the show or to Netflix, aside from hijacking the name without permission so that the scammers could use it as bait. It’s a common theme.

Types of Bitcoin and crypto scams

From phishing schemes and fake investment platforms to pump-and-dump schemes and giveaway scams, the methods used by cryptocurrency fraudsters are constantly evolving. As cryptocurrencies remain largely unregulated, it’s essential to stay vigilant and informed about the most common types of Bitcoin and crypto scams. Here, we explore these scams and offer practical tips to protect your digital assets.

Initial coin offering scams

Scams like the Squid Game crypto are an example of “initial coin offering” (ICO) scams. In many cases, they involve newly minted – meaning bogus – crypto that taps into trending memes, shows, events, and celebrities. Using tried and true emotional levers like hype and fear of missing out, they drum up investments in the ICO and then tap it dry. Left in its wake, thousands of investors holding thousands of worthless crypto coins. ICO scams should come as little surprise when you get a sense of just how many cryptocurrencies there are. One estimate puts that number at more than 10,000 in early 2025, with another 10,000 inactive. Of them, another analysis shows that 90% of crypto’s total market value is concentrated in just 20 cryptocurrencies. Taken all together, there’s a lot of junk and scam crypto out there.

Phony crypto exchange scams

In the case of the Squid Game cryptocurrency, there were several apparent signs that it was bogus to begin with. Reports call out the fact that the currency was not available for purchase on mainstream platforms. Instead, investors could only purchase the cryptocurrency on its own platform. Further, investors could only buy the currency, not sell it, effectively locking them into the investment. These are all signs of a phony crypto exchange scam. Your best bet for buying crypto is to go with a reputable and highly rated exchange. When choosing one, seek out independent reviews from trusted investment and financial resources that grade exchanges on qualities like security, transparency, audit practices, and strength of regulatory compliance. Sources like Forbes, Nerdwallet, and Investopedia regularly publish rankings and recommendations. Investors can also turn to traditional brokers like Robinhood and Fidelity. They’ve recently offered ways to invest in crypto, which makes them viable and trustworthy options as well. As of 2024, the U.S. Securities and Exchange Commission approved what’s called “spot Bitcoin” exchange-traded funds. Their price directly tracks the price of Bitcoin, so their values rise and fall along with Bitcoin’s value. Lastly, Venmo, PayPal, and Cash App offer ways users can purchase cryptocurrency — in addition to thousands of ATMs in the U.S. that support it as well. A web search for “Bitcoin ATM near me” might turn up some results for you.

Crypto as the coin of choice for scammers

While not a scam in itself, crypto remains a popular form of payment for all kinds of bad actors online. Whether scammers ask for crypto in the form of a romance, investment, sweepstakes, or what have you, it’s because crypto is so difficult to trace and recover once it leaves the victim’s wallet. With that, if an ad or direct message on social media offers something up for sale and accepts payment in the form of crypto, beware. Like scams that ask for payment in gift cards or with a wire transfer, it’s a red flag. Granted, many highly reputable and recognizable brands accept crypto as a legitimate form of payment. Crypto.com maintains a partial list of legitimate brands and retailers that accept crypto. In it you’ll see names like Apple, Columbia Sportswear, Nike, and even PlayStation, to list a few. Bottom line: if you’re going to spend your crypto, spend it wisely with known and trusted retailers that will secure your transaction.

Protecting yourself from cryptocurrency scams

Any investment you make in Bitcoin or any kind of crypto is highly risky and speculative. The volatility of the markets could work dramatically for or against you. We strongly recommend consulting a qualified financial pro before diving into an investment on your own. Other tips you should consider:

  1. Steer clear of cryptocurrency investments that ask you to contribute money directly from one of your own accounts rather than through a reliable exchange.
  2. Consider investing in established cryptocurrencies such as Bitcoin or Ethereum — of course, while also recognizing that even established cryptocurrencies can be highly volatile investments.
  3. Regard any cryptocurrency based on a pop culture reference like movies, memes, and shows with a highly critical eye. It may very well be a scam built around buzz rather than an earnest attempt at launching a legitimate cryptocurrency, such as it was with the Squid Game scam or the hundreds of meme coin copycats when the $Trump meme coin was launched in January 2025.
  4. Check if any crypto ICO you’re interested in has been registered with the Securities and Exchange Commission’s (SEC) Electronic Data Gathering, Analysis, and Retrieval System. Most ICOs must register with the SEC, and it’s a potential sign of a scam if you can’t find a registration with them.
  5. Watch out for upfront payments or requests for private keys. No legitimate crypto project will ever ask for either one. Also watch out for payment via gift cards or wire transfers. That’s a sure sign of a scam as well.
  6. Use cold storage by putting your assets in a hardware wallet that protects against hacks. These are more secure compared with hot wallets stored online, which are more susceptible to falling victim to hacks and attacks. But remember, you need to secure your cold wallet in a safe place — if it gets lost or stolen, so does your crypto.
  7. Use protection like McAfee+, which can help spot potential scam texts and websites, along with potential deepfakes that promote crypto scams.