Beware of crypto scams - warnings and advices on how to recognize them

07/27/2021, 04:24 PM

Beware of crypto scams - warnings and advices on how to recognize them

Motivated by the increasing number of inquiries and a constant growth of different kinds of various Internet scams under the disguise of cryptocurrencies, we have decided to describe several of the most notorious scams with the purpose of education and prevention of future scams.

Motivated by a large number of inquiries made by our users, we decided to give you an overview of the most recent scams in the crypto world.

In this article you will find details of most common scams and suggestions on how to react on a potential scam.

Although they are highly volatile, cryptocurrencies are interesting to a wide group of investors. Unfortunately, scammers use the popularity of cryptocurrencies to steal money, especially from beginners in cryptocurrencies.

Cryptocurrencies provide many advantages compared to the traditional financial institutions. One of these advantages is transparency. Blockchain transactions are completely transparent and easy to identify.

But, before starting to use digital wallets or executing first crypto transaction, it is necessary to educate yourself.  The education is the only way to prevent becoming a victim of a scam.

If you are a person who doesn't have much of a technical (or informatics knowledge) background, you should think twice before doing any crypto transaction.

People who have trouble understanding technology are the the most common scam targets.

If you are a beginner in cryptocurrency trading you can book an appointment in one of Bitcoin Store exchange offices. Our professional staff provides a basic training on how to use the platform as a beginner and teaches users about basic crypto terminology.

Bitcoin Store will never offer you or try to give you any financial advice.

Most common scams:

  • Pyramid scheme - the only people who earn money are the so-called founders and first cycle of investors. the pyramid is financed from payments of new investors. As long as the cash flow lasts, the scheme will exist. Ponzi scheme operates in a similar way.
  • False promises and guarantees of large profits without risks.
  • Complex and incomprehensible investment structures, which can't be easily checked.
  • Failure to comply with the time limits for product delivery terms.
  • Unsustainable daily percentages of investment return.
  • Project sounds too good to be true.

General instructions:

  • Never invest more money than you can afford to lose. The worst option you can do is to raise a loan to invest in high-risk markets. It is important to rationally distribute investments, depending on the risk you are willing to take.
  • Use only verified crypto exchange platforms.
  • Educate yourself before making any investment decision.
  • Look for opinions on several independent sides.
  • Never make an investment based on someone's opinion or "hunch".
  • If it sound and looks too good to be true, it probably is.


A significant number of elderly people contact us regularly with inquiries on vouchers, packages or gift cards, which they bought online. These vouchers supposedly contain a certain amount of units of one of the cryptocurrencies (most often are Ripple (XRP) and Tron (TRON) coins).

People buy these "vouchers" via pop-up ads on their favorite websites. After the purchase, buyers receives an envelope on their home address. The envelope usually contains a welcoming note with the so called voucher or gift card with some amount of cryptocurrencies.

Bottom line is, these type of vouchers are worthless.

There are plenty of scam websites that use this type of scam. So, when you see that someone mentions  vouchers or gift cards, you should know that it's a scam.

The purpose of cryptocurrencies is to ease transactions and make them direct. Using vouchers only complicates everything.

If someone contacts you and tells you that Bitcoin Store offers vouchers or any type of rewards, you can hang up the phone or ignore the email. Bitcoin Store never offered vouchers, and is not connected in any way with these scam attempts.

This is why we put a lot of effort to educate our users. Once you invest money in a scam, we can't help you to return the money. Only thing you can do is to report the scam to the institutions.

BitConnect (BCC)

The orange and black logo of a Bitconnect, a famous cryptocurrency scam.

Bitconnect is probably one of the most popular crypto Ponzi schemes. One of its main protagonists was Carlos Matos, who eventually became a meme. This video will show you why.

At the top of popularity, BCC was on the list of top 10 coins on CoinMarketCap website. But, let’s go back to the beginning.

Initial funds for initiating Bitconnect scheme was acquired by ICO method at the end of 2016. Bitconnect platform offered loans with unsustainable daily dividends.

The more people you invited, the higher your dividends were. They promised a return of almost 4.000% p.a., which has insane. When you asked them how is it possible that the platform offers such large dividends, the answer was that the main source of income is a trading algorithm which they created.

There wasn't any evidence that an algorithm ever existed. The hoax lived for a while, the community flourished and lived in a temporary utopia, payments were regular and liquidity solid due to large popularity.

Founders and popular influencers made significant sums of money. Certain persons such as YouTube influencer Trevon James made so much money that they gave out 0.05 BTCs to their friends on a daily basis.

Eventually, the whole pyramid soon collapsed, because its foundations were by no means sustainable for a longer period. Founders crushed investors’ dreams and ran away at the peak.

Many people lost a lot of money and assets. Some have put their properties under mortgage or got loans in order to buy BCC coins. At the beginning of 2018 anonymous founders sold their coin reserves and ran away with the collected money.

The price of BitConnect rapidly fell, even 90% in one day, and left most of the naive investors with bags full of useless BCC coins. The price continued to sink slowly until it reached zero, many investigations and claims were initiated, but the situation has still not been resolved. It is very questionable will it ever be known who the founders were and will they ever face justice.


OnceCoin is probably the longest-lasting crypto Ponzi scheme, faithfully supported by a mass of deluded followers. The story started in 2014 in Bulgaria, where Ruja Ignatova opened the OneCoin office. The scheme was based on the sales of “educational” packages, which contained a certain amount of OneCoin coins.

The prices ranged from 100 all the way to several thousand Euros. Of course, blockchain which supposedly initiated OneCoin didn’t have the features of real cryptocurrencies, such as Bitcoin.

The system was entirely centralised and managed by the founders. Creating new coins and manipulating the price was daily routine with OneCoin. Coin replacement for euro was possible exclusively through OneCoin exchange office, with low daily limits and only for certain investors, while others didn’t have that option.

According to the analytics’ estimates, OneCoin extorted almost €4 billion from investors all over the world.

The Croatian National Bank issued a warning regarding OneCoin at the beginning of 2017, you can read the publication here. Some of the main initiators got arrested, while servers and equipment have been long confiscated, but it is interesting to see that OneCoin web page is still in function.

Ruja Ignatova is still trying to maintain the scheme floating, even though she’s on the run since 2017. Her brother - Konstantin Ignatov was arrested at the beginning of the year. He confessed being guilty and is facing 90 years in prison.


The illustration of a thief stealing assets from a users laptop.

KaratBars is a mix of Ponzi and ICO scheme, which recently became popular on these territories. Due to frequent inquiries we decided to explore this project in more detail. Since it made its way into this article, you can figure out that impressions weren’t great.

KaratBars is a company behind Karatgold (KBC) coins. Karatbit stock exchange and a lot of other services which are currently “being developed”. Each KBC coin is allegedly covered in gold in a ratio larger than its market value, which should guarantee the growth of price.

Karatbars “roadmap” states that until the year 2020 the market value of KBC coins will reach 500 million euro (current value amounts to approx. 65 million euro). These claims and promises of value growth are very dangerous and a great warning sign as to what kind of company this is.

The written review of the Karatbars cryptocurrency project.

Karatcoin crypto bank is supposedly opened in the USA, but when you try to verify this information, you find yourself in front of the wall. The same thing happens with the gold mine, which is allegedly owned by it, on Madagascar. They claim that they own gold reserves in a counter value of one billion American dollars.

They plan to develop a network of 10,000 ATM’s worldwide. To keep the story short, they promise vast riches. The reality is that all activities are financed from sales of packages of worthless ERC-20 tokens (1, 2) through a network of salespersons who earn a percentage from each sale.

Supposedly they have acquired approx. 100 million American dollars by now. A neat trick they use to boost their credibility, are banknotes which contain 0,1 or more grams of pure gold. Banknotes should be accepted by their ATMs, while it should be possible to replace KBC coins for gold.

Sounds good, right? The problem is that banknotes are just a marketing trick; it is not possible to verify that Karatbars owns sufficient quantities of gold in order for the whole system to function as described.

Karatgold Coin is listed on CoinMarketCap on 210 place, even though by market capitalisation it should be among the top 100. CMC has a practice to penalise all suspicious coins, which don’t meet the criteria, and sets them on a lower place so they don’t get the attention they don’t deserve.

Reasons why Karatbars are suspicious:

  • It's not possible to confirm claims on their gold reserves, gold mine and crypto bank.
  • Most markets that list KBC coin are not regulated and are known for presenting a false volume (so called "wash trading"). HitBTC is the example of a controversial exchange market, and recently they removed KBC from its offer.
  • Currently there is an ongoing investigation on Karatbars company on Florida, due to a non-existing bank license.
  • German Federal Financial Agency issued a warrant for momentary suspension of Karatbit exchange operations in Germany. You can read more about this case here.
  • Several countries (Netherlands, South Africa and others) issued warning to investors to avoid products of Karatbars company.
  • Continuous postponing and non-compliance with the delivery deadlines, which they set themselves. For instance, their smartphone with a so-called "Voice Over Blockchain Protocol" technology should have been delivered in September this year. However, there's no sign of it.  The same thing happened with Karatnet blockchain, but all coins are still located on the Ethereum platform.
  • Excellent infographic that summarizes some of the most suspicious activities of Karatbars company.

To conclude this article we recommend you to study all elements of these scams in order to recognize the similar signals in the future.

Always be prepared, and remember, if it's too good to be true, in 99% of cases it is. Beware of suspicious cryptocurrency providers. If you want to buy cryptocurrencies visit our official website.

Remember, Bitcoin Store is not a company that gives any kind of financial advices, and as such it's not authorized to provide financial advice. Our articles and opinions can't be a foundation for investment.