Cryptocurrency Scams
How scammers use cryptocurrency payments — and why they are so hard to trace.
Last reviewed: 1 June 2026
Cryptocurrency's decentralised and largely irreversible nature makes it a preferred payment channel for many types of fraud. Unlike bank transfers, cryptocurrency payments cannot be recalled through a financial institution once confirmed on the blockchain, and they can cross borders instantly and pseudonymously.
Scammers demand cryptocurrency across a wide range of fraud types — from pig-butchering investment scams and romance fraud to fake government demands and sextortion. The emergence of cryptocurrency ATMs has also given scammers a new way to receive funds from victims who might otherwise be flagged by a bank.
This guide explains how cryptocurrency is used in fraud, the pressure tactics scammers deploy, and what to do if you have sent cryptocurrency to a scammer.
Common scams using Cryptocurrency
Fake investment platform deposits
Victims are guided to deposit cryptocurrency into platforms that appear to show strong returns but are fully controlled by scammers.
Government impersonation demanding crypto payment
Callers impersonating tax authorities or police instruct victims to convert funds to cryptocurrency at an ATM to pay a fabricated debt or avoid arrest.
Sextortion threats demanding Bitcoin
Messages claim to have compromising material and demand cryptocurrency payment to prevent its release.
Rug pull schemes
Scammers promote a new cryptocurrency token, drive up its price, then liquidate their holdings — leaving investors with worthless coins.
Wallet drainer attacks
Users connect their crypto wallets to malicious sites that drain their funds in a single transaction.
Common red flags
- Any government, court, or law enforcement agency demanding cryptocurrency payment
- Investment platforms that only accept cryptocurrency deposits and show suspiciously consistent returns
- Requests to withdraw profits requiring additional cryptocurrency 'tax' or 'fee' payments
- Threats about compromising material where only cryptocurrency payment will prevent release
- Requests to connect your crypto wallet to an unfamiliar website
- Crypto ATM instructions from anyone claiming to be from a government agency or utility
How to protect yourself
- Understand that no legitimate government agency, court, or utility accepts cryptocurrency as payment
- Research any investment platform thoroughly and independently before depositing cryptocurrency
- Never connect your crypto wallet to unfamiliar sites — verify contract addresses through official sources
- Use a hardware wallet for significant crypto holdings
- Be aware that cryptocurrency transactions are irreversible once confirmed
How to report it
- Report to your national fraud authority and, if relevant, the crypto exchange you used
- In the US, report to the FTC, FBI IC3, and the CFTC
- Contact the exchange immediately if funds were sent from an account there — they may be able to flag the recipient address
Frequently asked questions
Can I get cryptocurrency back after a scam?
Recovery is very difficult. Transactions on most blockchains are irreversible once confirmed. Reporting to your exchange may lead them to freeze the recipient address in some circumstances, but this is not guaranteed. Some law enforcement agencies have had success tracing and recovering crypto in high-value cases.
A government officer told me to pay by crypto ATM — is that legitimate?
No. No legitimate government authority, court, or law enforcement agency instructs people to pay fines or debts at a cryptocurrency ATM. This is a well-documented scam pattern. Hang up and report the call.
What is a rug pull?
A rug pull happens when the creators of a cryptocurrency project attract investors, then suddenly withdraw all liquidity, making the token worthless. The key warning sign is anonymity of the team combined with high-pressure promotion.