Guest Blog: The 10 Warning Signs of a Crypto Scam by Jesus Cedeno

February 6, 2020

The 10 Warning Signs of a Crypto Scam

by Jesús Cedeño

It has been more than a decade since a person or a group of people who called themselves Satoshi Nakamoto gave us Bitcoin (BTC), the first cryptocurrency and the first successful use case of a revolutionary technology called the blockchain. This new technology is set to revolutionize how we interact in a world that is fast becoming a highly digitized crypto society.  A technology that enables participants to establish trust without depending on any intermediary or centralized authority. More importantly, it is censorship-resistant, unstoppable and transparent.

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This technology is so revolutionary and its use case so compelling that individuals, companies and even governments are betting on this technology with some of them even identifying its technology as one of the enabling technologies that will bring forth the fourth industrial revolution. Unfortunately, this new technology did not only attract entities that sought to leverage it to do good in society. It also attracted bad actors who prey on unsuspecting investors who are not yet equipped to identify Crypto Scams in the space.

A Boon and A Bane

To make things worse a lot of participants in blockchain-related projects such as cryptocurrencies are unsophisticated investors who are empowered to invest through the use of cryptocurrencies that allowed them side-step restrictions from investing. Freedom, inclusivity and frictionless transactions have been the main characteristics of cryptocurrencies. However, these very same attributes are now being exploited by scammers to con gullible investors into investing in scam coins that have no real use case or unregistered securities.

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With more than 6,500 cryptocurrencies and many more on the way, it is imperative that investors do their due diligence in determining for themselves if the prospective cryptocurrency investment is a scam or not. To help our readers to determine if they are or not we have compiled 10 warning signs of a Crypto Scam. Please be reminded that this compilation is meant only as a quick guide to warn investors of possible crypto scams and is based on several years of experience investing and dealing with the new asset type.

10 Warning Signs Of a Crypto Scam

In no particular order, we have listed below the 10 different warning signs of a crypto scam. These signs are not set in stone as the industry is continuously evolving but should give enough information to would-be investors on how to detect a possible crypto scam. 

1. Anonymous Identity of project leaders and developers

One of the things we usually look at to determine if a cryptocurrency is legit is the team members of the project. In doing so we can determine by ourselves if they have the necessary skills, experience or connections for the project to succeed. This information is usually disclosed in the whitepaper or its website. Some project leaders and developers opted to remain anonymous, while there is no immediate cause for concern, not knowing who are the leaders or developers of a certain crypto project mean no one will be held accountable if the projects fail and can be considered one of the early signs that crypto project is a scam.

2. The non-existence of products and services

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Many crypto projects entail a certain product or service they offer which are delivered via an application or web. They usually promise to incorporate blockchain technology that would enable its users to leverage the revolutionary tech. Unfortunately, many of the crypto projects never become a reality. Hence, it is important to check if they have a minimal viable product (MVP), that will demonstrate that the team is really working on something and more importantly demonstrate they have the capacity to do so. A crypto project without something to show for is another sign that it might turn out to be a crypto scam.

3. Inaccurate information in Whitepaper and other official sources

In an industry that is highly competitive and saturated projects teams oath to always show their best foot forward. This means that before releasing any information or data out in the crypto market they should always ensure that it is accurate, timely and truthful. They should remember that they are in the business of trust and they can only be successful in this if the community knows that they are a reliable source of information. Any signs that the project team members are lying, misleading the community or not forthcoming in important issues that might affect the project can be seen as an early sign that the crypto project might be a scam.

4. Shady Partnerships

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A Partnership is an important aspect of a  successful project. Partners can help support, develop, and market the crypto giving it a higher chance of survival. However, projects should also be careful in associating themselves and pick the right type of partners. Projects that willingly partner with controversial individuals or organizations should be a red flag for would-be investors.  There is wisdom in the old saying that "birds of the same feather flock together" if a project is more than willing to partner with someone or something that has a scammy history then more often than not the project will more likely turn out to be a scam as well.

5. Unrealistic Promises

There is no denying that all of us are always looking for that investment that will finally give us financial freedom and sustainability. This is just human nature but some projects want to exploit this by promising us the moon and stars and a life-changing investment opportunity that is too good to pass up. Unfortunately, oftentimes they are too good to be true. Projects that give too much emphasis on the possible massive profit an investor can make in their project is almost always a sure sign that the project will turn out to be a crypto scam. 

6. No Development Activities

Many crypto projects, especially those who have engaged in crowd-sourcing to raise funds for their project usually allocate a huge amount for research and development. While many blockchain and crypto projects have indeed delivered on their promised products or services some just seem to vanish out of thin air after the fundraising activities. If the project is open-sourced we can usually see its progress in websites like GitHub, if not then we can only rely on reports from project representatives in social media. No movement in GitHub repositories or update social media means that it has turned into scam already.

7. No regulatory compliance

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Admittedly the regulatory environment in the cryptocurrency industry is yet to achieve the same level of maturity it is incumbent upon project founders, developers, and marketers that they are not breaking existing laws in terms of conducting ICOs (Initial Coin Offering) or IEOs (Initial Exchange Offering). It has been a growing trend for SEC to go after cryptocurrency projects that it perceives to have conducted an unregistered securities offering. A notice coming from this agency is almost a guarantee that the project is a scam or will turn into a scam soon

8. Questionable Marketing Practices

In a highly competitive industry, many cryptocurrency projects have engaged in one form or another some questionable marketing practices. One of the most prevalent dodgy marketing schemes that are quite evident in social media nowadays is buying social media followers. They come in many forms a contest, a free giveaway or a social event requirement. No matter how these crypto projects sugarcoat their intent this is still considered buying social media followers and projects who religiously engage in marketing malpractices are more often than not scammy projects.

9. Inorganic Community 

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All too often we have seen bots or fake accounts infest social media networks. From Facebook, Instagram, Twitter, and others it is becoming a real challenge to determine what is the real size of a particular crypto community. Given the right tools and technical knowledge, a single person can create bots or fake accounts that can easily bloat the numbers of a community. However, we can easily check if the number of meaningful engagement tallies with the size of the community. A community with abnormally high members without social engagement is a strong sign that the crypto project is a scam. 

10. Not Being Listed in reputable crypto exchanges

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Getting listed in a reputable cryptocurrency exchange is usually hard. Cryptocurrency exchanges are very careful when it comes to listing digital assets into its platform as they are well aware that the listed digital assets will carry their brand and as a stamp of approval. Hence, big and reputable exchanges have a rigorous and extensive listing process which will allow them to determine if the asset is qualified. We can now deduce that projects that are not listed in reputable exchanges might be deemed unworthy or too much of a risk to get listed and therefore has a higher chance of turning out to be a crypto scam.

Those are our take on the 10 warning signs of a crypto scam. Do you agree on what we have listed above or do you think there is anything we have missed above? We would love to hear from you, perhaps you have your own 10 warning signs please share them in the comments section of this article. 


Jesús Cedeño

Jesus Cedeño is a doctor-educated cryptocurrency expert and enthusiast with a background in data and statistics from the University of Alcalá.

He was a professor of Biochemistry since 2001 and Chief of the Department of Physiological Sciences of the Universidad de Oriente School of Health Sciences since 2016 where he initiated local research projects into Glycemic Index/Loads of local foods, Beta-cell dysfunction in the local adult population and epidemiological behavior of insulin resistance risk in school-age children.

Around 2015 he began applying his love to data and analysis toward blockchain and crypto with the mission of making crypto content more digestible for the average user.

Though his LinkedIn profile he has developed a solid following of over 500+ daily readers of his work.

At, Jesús focuses on writing detailed reviews, tutorials and analyses of the latest crypto products.

NOTE: The views expressed in this Guest Blog are those of the author and do not necessarily reflect those of Blog.