How to spot a crypto scam

Cryptocurrency is no longer a niche investment. According to the National Cryptocurrency Association (NCA)—a non-profit organization dedicated to helping Americans better understand and use crypto—more than 67 million Americans own cryptocurrency. Roughly one in four U.S. adults use crypto as an investment, or to send money, make purchases, and support charitable causes.

Unfortunately, as crypto adoption grows, so does related fraud. The Federal Bureau of Investigation (FBI) reported more than $11.3 billion in cryptocurrency-related losses just in 2025.

Here at Allstate Identity Protection, we’ve seen crypto scams lead to thousands of dollars in losses for our members.

Unfortunately, once a crypto asset is transferred, it’s typically nearly impossible to recover—one reason why it’s important to know about common crypto scams, and then steer clear.

What is cryptocurrency, and why is it linked to fraud and scams?

Some fraudsters target people who actively invest in crypto like Bitcoin, Ethereum, and Dogecoin; others prey on people largely unfamiliar with crypto.

If you fall in the latter category, it might help to know a few basics:

• Cryptocurrency is a type of virtual currency.

• Most crypto isn't issued by a central authority, such as a government or bank.

• Crypto runs on blockchain technology. A blockchain is essentially a digital ledger that records and secures most crypto transactions on a peer-to-peer computer network.

Crypto is an attractive payment type for scammers because, like cash or money sent via wire transfer, once a payment is transferred, it’s difficult to recover.

“One man called us after he transferred thousands of dollars of cryptocurrency to a scammer,” says Vera Tolmachoff, Senior Restoration Manager at Allstate Identity Protection. But unfortunately, when it comes to transferring crypto, there’s no undo button.

“If you’ve sent crypto to someone, the transfer cannot be reversed. It can only be refunded by the person receiving the payment—which isn’t likely if you’ve accidentally transferred funds to a scammer,” Tolmachoff adds.

In addition, crypto is not recognized as legal tender in the United States, so there’s little regulation around it. Unlike traditional types of bank accounts, crypto assets are not insured by the Federal Deposit Insurance Corporation (FDIC), so there’s no government protection if a cryptocurrency provider or exchange goes under.

How to spot a crypto scam

There are a few common ways a crypto scam can play out: a fraudster convinces you to transfer your digital currency to them—or a scammer tricks you into sharing your credentials, then obtains control over your account and locks you out.

But, how do they do it?

In one common scheme we’ve seen, fraudsters post fake customer service numbers online for real cryptocurrency exchange platforms. "People search for a crypto platform’s customer service department and wind up calling the fake number,” explains Tolmachoff.

The phony customer service rep convinces the victim to transfer their money to a “temporary account,” then steals the funds, or tricks them into sharing their credentials. Here are some other common crypto scams to be aware of:

• Bitcoin ATM scams: A fraudster impersonates a government agency, tech support representative, bank employee, or even a loved one in distress and instructs the victim to deposit cash into a cryptocurrency kiosk. Once the money is converted to cryptocurrency and transferred, it is often extremely difficult to recover.

• Business and government imposter schemes: Fraudsters pretend to be a legitimate business (like a retailer, delivery service, or software company) or a government agency reaching out about an outstanding bill or account issue. They use scare tactics to pressure people to send payments via cryptocurrency to rectify the issue.

• Investment scams: Fraudsters lure victims with promises of sizable—and often immediate—returns on cryptocurrency investments. Sometimes they even promise free money. Phony celebrity endorsements (which can be easily deep faked) are sometimes part of the ploy. In other cases, scammers let victims make small withdrawals of money from their crypto accounts, tricking them into thinking the investment is legitimate.

• Romance scams: A fake love interest—often met through a dating app—convinces a victim to buy cryptocurrency, either as an investment opportunity or as a way to help them out of a sticky situation.

It’s important to note that many crypto-related fraud cases reported to the FBI originated on social media—so be wary of related ads or messages on social sites.

How to protect yourself and those you love from crypto scams

To stay safe from crypto scams, steer clear of any “get rich quick” advertisements on social media and beyond. Remember that, as with any investment, there is absolutely no way someone can guarantee a return on a crypto investment, so promises of that point to a scam.

Know that no government agency will require you to pay an invoice or fee in cryptocurrency, so ignore any outreach of this kind. Lastly, consider any unsolicited investing advice from someone you’ve met online (dating sites included) as a major red flag. 

What to do after a crypto scams

Cryptocurrency generally does not have the same consumer protections as traditional banking products. While certain aspects of the crypto industry are regulated, cryptocurrency assets are typically not protected in the same way as funds held in FDIC-insured bank accounts.

That means money lost to a cryptocurrency scam is typically not covered under an identity protection plan (however, select Allstate Identity Protection plans include scam and cybercrime reimbursement benefits that may help cover eligible losses).

Either way, if you suspect you've been targeted by a scam, our specialists are available 24/7 to help you determine the next steps. They can guide you through actions such as securing or closing cryptocurrency trading accounts and reporting the scam to the appropriate authorities. If you've already transferred cryptocurrency to a scammer:

• Contact the cryptocurrency exchange immediately.

• Save transaction records, wallet addresses, emails, and text messages.

• Report the incident to the FBI, FTC, and your local law enforcement.

As with any fraud, the best defense against cryptocurrency fraud is to know what you’re up against, and be wary of any advertisement that seems too good to be true, or any unsolicited investing advice or pressure.