Definition
Pronunciation: /frawdz/ Frauds are deception-based schemes that manipulate trust and promise financial gain to steal funds. Unlike hacks that exploit technical vulnerabilities, frauds rely on social engineering, false promises, and relationship building to convince victims to willingly send crypto or invest in fake opportunities.What It Covers
This category includes attacks that:- Persuade victims to invest in fake platforms or projects
- Build romantic or mentor relationships to enable financial exploitation
- Create fake tokens, NFTs, or projects that are abandoned after fundraising
- Impersonate legitimate brands, influencers, or support teams
- Promise unrealistic returns or “guaranteed” profits
- Exploit victims who have already lost funds by offering fake recovery services
What It Does NOT Cover
- Technical exploits that drain wallets via malicious contracts (see Hacks)
- Threat-based extortion demanding payment under duress (see Blackmail)
- Surveillance without immediate financial loss (see Privacy & Tracking)
Why It Matters
Frauds represent the highest individual losses in crypto scams. FBI data shows investment fraud is the #1 category for crypto scam losses, with:- $5.6 billion lost to crypto scams in the US alone (2023)
- Average romance-to-crypto scam loss: $1,300 to $450,000 per victim
- Pig butchering scams can drain entire life savings over months
- Victims often experience secondary victimization through recovery scams
Subcategories & Scam Types
Investment & Fake Trading Platforms
Description: Scams that promise high returns, guaranteed profits, or exclusive investment opportunities through fake or manipulated platforms. Common scam types:- Fake trading platforms - Websites or apps that show fake profits but never allow withdrawals
- Guaranteed-return promises - “Double your crypto in 30 days” or similar impossible offers
- Referral/MLM crypto schemes - Pyramid structures requiring recruitment for returns
- Liquidity mining fraud - Fake DeFi protocols promising unsustainable APYs
- Withdrawal blocks with “tax” demands - Platforms requiring “tax payments” or “fees” to withdraw (which never arrive)
Romance & Relationship Scams
Description: Long-term manipulation through romantic or mentor relationships, often called “pig butchering” (Sha Zhu Pan) where the scammer “fattens the pig before slaughter.” Common scam types:- Pig butchering scams - Romance on dating apps evolving into crypto investment guidance
- Trading “mentors” - New online friends who share “winning” trading strategies
- “Wrong number” friendship scams - Accidentally texted contacts that develop into friendships then investments
- Social media romance - Instagram/Facebook relationships leading to investment opportunities
Pig Butchering Romance Scam
How romance evolves into devastating investment fraud over months
- Week 1-2: Build trust and romance/friendship
- Week 3-4: Casually mention crypto investing success
- Week 5-8: Encourage small “test” investments that show profits
- Week 9+: Pressure for larger deposits; eventually prevent withdrawals
Rug Pulls & Fake Projects
Description: Projects that raise funds (via token sales, NFT mints, or presales) and then abandon the project or drain liquidity, leaving investors with worthless assets. Common scam types:- Token rug pulls - Developers remove liquidity or dump massive hidden allocations
- NFT project abandonment - Mint completes, then team disappears with no development
- Fake ICO/IDO/presales - Crowdfunding for projects that never launch
- Honeypot contracts - Tokens that can be bought but not sold due to contract code
- Anonymous teams with locked socials - Projects with no verifiable team suddenly vanish
- Is the team doxxed and verifiable?
- Is liquidity locked or can it be pulled instantly?
- Does the contract have a mint function or ownership controls?
- Are there audit reports from reputable firms?
- Is there a real roadmap with demonstrated progress?
Giveaway & Airdrop Frauds
Description: Fake giveaways or airdrops impersonating celebrities, influencers, or legitimate projects. Common scam types:- Celebrity/influencer impersonation - Fake verified accounts promising “double your crypto” giveaways
- “Send-to-receive” scams - “Send 0.1 ETH to receive 1 ETH” schemes
- Fake project airdrops - Phishing sites claiming you’ve won tokens if you connect your wallet
- Twitter/X takeover giveaways - Compromised accounts posting scam links
Recovery & Support Scams
Description: Scammers targeting victims who have already lost funds, claiming they can recover stolen assets for an upfront fee. Common scam types:- Fake fund recovery services - “We can retrieve your stolen crypto for $X,XXX upfront”
- Impersonated customer support - Fake support agents sliding into DMs after public complaints
- “Hacker for hire” recovery - Claims of insider connections or technical exploits to recover funds
- Legal service scams - Fake lawyers promising recovery through legal action
Recovery Scam Trap
How secondary victimization exploits desperate scam victims
- Never guarantee results
- Don’t require large upfront payments
- Work through established firms, not random DMs
- Are transparent about the low likelihood of recovery
User Safety Basics
Investment Red Flags
Investment Red Flags
- Guaranteed returns - No investment guarantees profits, especially high/fast returns
- Unregulated platforms - Check if the platform is registered with financial regulators
- Pressure to invest quickly - Legitimate investments don’t have artificial urgency
- Recruitment rewards - MLM structures where you earn by recruiting = pyramid scheme
- Withdrawal restrictions - Any platform making it hard to withdraw is a red flag
Relationship Warning Signs
Relationship Warning Signs
- Online-only relationship - Never met in person, always has excuses
- Crypto comes up organically - “I’ve been making great returns investing…”
- Gradual escalation - Starts with small investments that “succeed,” then larger requests
- Platform control - They guide you to a specific platform or “their broker”
- Resistance to stopping - Any suggestion to slow down met with emotional manipulation
Project Verification
Project Verification
- Team transparency - Real names, LinkedIn profiles, verifiable history
- Contract audit - Reputable audit report (CertiK, Trail of Bits, OpenZeppelin)
- Liquidity lock - Proof that liquidity can’t be pulled instantly
- Community history - Active development, real community engagement over months
- Multiple sources - Don’t rely on project’s own claims; check independent reviews
Relatable Examples
The Romance Victim: After matching on a dating app, they chatted for weeks. The romance felt real. Eventually, they mentioned investing in crypto and offered to teach. Small investments showed returns. Then larger deposits were encouraged. When withdrawal was attempted, the platform demanded “tax payment.” Total loss: $86,000. The romantic partner disappeared. Read the full pig butchering story →
The Recovery Trap: After losing $50,000 to an investment scam, David was contacted by someone claiming to work for a "blockchain recovery service." They promised retrieval for a $5,000 upfront fee. Desperate, David paid. The “recovery service” vanished. Secondary loss: $5,000. Read about recovery scam traps →
Recommended Controls
For Individuals
- Never invest based on unsolicited advice - Even from “friends” you met online
- Independent research - Verify everything through multiple sources
- Start small and test withdrawals - If you do invest, test that you can withdraw before depositing more
- Tell someone you trust - Share your plans with a friend/family member who can provide objective perspective
- Time limits - Give yourself 72 hours before any large investment to think clearly
For Communities
- Education campaigns - Share common scam patterns in community channels
- Verification badges - Clear labeling of official team members vs. community
- Support channel monitoring - Watch for impersonators DMing users
- “No DM” policies - Legitimate support never initiates DMs
Real-World Statistics
What To Do If You’ve Been Scammed
1
Stop All Communication
Cut contact with the scammer immediately. Block them on all platforms. They may try to manipulate you further or target you for recovery scams.
2
Do NOT Send More Money
If a platform demands “taxes” or “fees” to withdraw, it’s part of the scam. Do not send additional funds hoping to unlock your balance.
3
Document Everything
Save all messages, transaction hashes, wallet addresses, URLs, usernames, profiles, and emails. This is crucial for reports and investigations.
4
Report the Scam
- Your local police/cybercrime unit
- FBI IC3: ic3.gov (US victims)
- FTC: ReportFraud.ftc.gov
- ChainAbuse: Flag addresses and URLs
- Platform where you met: Dating app, social media, etc.
5
Protect Against Recovery Scams
Be extremely wary of anyone promising to recover your funds. Legitimate recovery is rare, never guaranteed, and doesn’t require large upfront payments.
6
Seek Support
Scam victims experience real trauma. Consider:
- Talking to a counselor or therapist
- Joining scam victim support communities
- Connecting with financial advisors about recovery planning
Related Resources
Check Your Wallet
Verify if addresses you interacted with are reported
Report a Scam
Add fraudulent addresses to the community registry
Hacks Category
Learn about phishing and wallet drainer attacks
Understanding Risk Scores
How we assess wallet security threats