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- No legitimate business is going to demand you send cryptocurrency in advance, the FTC says.
- Relationship investment scams are also known as romance scams, financial grooming or pig butchering, according to the SEC.
- The CFTC says financial romance and grooming gangs stole more than $3.5 billion in 2023.
Crypto has two features that scammers love: payments usually cannot be reversed, and stolen funds are hard to trace and recover. The FTC says crypto payments typically are not reversible, and the SEC says recovering money from wrongdoers can be nearly impossible. Knowing the patterns is the best defense, because most crypto scams are old tricks with a new payment method.
Three rules from the FTC
- Only scammers demand payment in cryptocurrency. No legitimate business will demand crypto in advance, to buy something or to protect your money.
- Only scammers guarantee profits or big returns.
- Never mix online dating and investment advice. If someone you met on a dating site or app wants to show you how to invest in crypto, or asks you to send them crypto, it is a scam.
Relationship investment scams
The SEC describes relationship investment scams, also called romance scams, financial grooming or pig butchering, as a long con. Scammers reach out online or by text, sometimes pretending to have the wrong number or to be an old friend, build trust over weeks or months, and then steer the victim into a fake investment, often involving crypto. The CFTC says financial romance and grooming gangs stole more than $3.5 billion in 2023.
The CFTC lists the warning signs:
- A new online contact wants to move the conversation to a private messaging app.
- They claim to be wealthy from crypto or currency trading, sometimes thanks to inside information.
- They recommend a trading website that only accepts cryptocurrency, and tell you to send funds to it or to their wallet.
- Early profits come quickly and easily, and you are encouraged to withdraw a little and invest more.
- Eventually you are locked out and told to pay fees or taxes to get your money back, and then the scammer disappears.
Fake platforms and blocked withdrawals
The FTC describes a so-called investment manager who contacts you out of the blue and promises to grow your money if you buy crypto and transfer it to their online account. The website looks real but is fake. When you try to withdraw, you cannot, or only if you pay high fees. The SEC adds that some promoters pay early investors with money from new investors, which is a Ponzi scheme, and use testimonials, sometimes faked or AI-altered, to recruit more.
Tip: A demand for more money before you can withdraw your own is the clearest sign of a fake platform. Paying it does not release your funds; it adds to the loss.
Impersonators
- Companies. The FTC says scammers pose as well-known firms or your bank, claim there is fraud on your account, and tell you to buy crypto and send it to them.
- Regulators. The SEC warns that fraudsters impersonate the SEC and its staff on social media and in texts, sometimes using real names, photos and the agency seal, to push stock tips, collect advance fees or offer to recover losses.
- The IRS. The IRS warns of letters with a QR code asking people to register their cryptocurrency on a compliance portal. The IRS does not require registration of digital assets and is not sending these letters.
- Celebrities. The FTC says scammers pose as celebrities who will multiply any crypto you send; the SEC adds that even a real celebrity endorsement does not make an investment legitimate.
Other common schemes
- Free money. The FTC says promises of free cash or crypto are always fake.
- Bogus coin offerings, Ponzi and pyramid schemes, and promoters who disappear with investors’ money, all listed by the SEC.
- Exchange scams. The CFTC reports complaints about virtual currency exchange scams.
- Recovery scams. Offers to help you get lost money back, including from people posing as regulators, are a known follow-up scam, according to the SEC.
Checks before you send anything
- Search the company or person with words like review, scam or complaint, as the FTC suggests.
- Check registration at cftc.gov/check for anyone offering crypto futures or options, as the CFTC suggests.
- Look up how long the website’s domain has existed at lookup.icann.org, a CFTC tip.
- Run a reverse image search on photos from a new online contact, another CFTC tip.
- Contact agencies using details from their official websites, never from the message.
Where to report
The FTC lists where to report crypto fraud: the FTC at ReportFraud.ftc.gov, the CFTC at CFTC.gov/complaint, the SEC at sec.gov/tcr, the FBI’s Internet Crime Complaint Center at ic3.gov, and the exchange you used to send the money. The CFTC also asks people to report to the social media or dating platform involved.
Scams often target your wallet keys directly; see Seed Phrases and Wallet Security: Protecting the Keys to Your Crypto. The broader set of risks is in Crypto Volatility and Risk: What Regulators Warn About, and how to vet a platform is in Choosing a Crypto Exchange: Questions to Ask Before You Deposit.