Digital currency fraud prevention tips

by 19 August, 2021Compliance

Cryptocurrency trading and investments have become increasingly popular in recent years. With first time investors and crypto enthusiasts lured in by the soaring value of bitcoin, financial institutions are becoming increasingly aware of a rise in fraud victims among their clients’ customers.

The nature of cryptocurrency, whereby the coin only exists electronically and relies on exchanging online via a phone or computer, means that payments can be made quickly and often without legal protocols in place. Credit cards and debit cards have legal protection ensuring that if you dispute a payment, your provider has a process whereby you can get the funds back. With cryptocurrency, this is often not the case and payments can be irreversible, unless the person you paid chooses to return it.

Alongside the growing interest in cryptocurrency comes a rise in popularity for online scammers to use crypto investment as a way to trick unsuspecting people into parting ways with their hard-earned money. Action Fraud, a British reporting centre for fraud and cybercrime, stated that 720 incidents were recorded in the UK in January alone, the equivalent of 23 per day.

The most common fraud is often committed through websites that look like investment schemes or cryptocurrency mining opportunities. These sites may include different investment tiers, promising high returns for higher investments and can even appear to demonstrate users’ investments growing on the website. These sites will boost their credibility through the use of fake testimonials and pages of cryptocurrency jargon.

Fraud is also increasingly committed online through tricking unsuspecting individuals into sharing their personal details, such as bank statements and identification documents, in order to make an investment or deposit into seemingly legitimate business. The money is consequently deposited into the fraudster’s account, registered under well known and credible crypto exchanges.

These internet fraudsters and cyber scams are becoming increasingly sophisticated, sometimes sidestepping the most robust security protocols put in place by institutions. It is becoming more and more important for end customers to be on the lookout for potential fraud. So, what can you do as an individual to protect yourself against the risk of becoming a cyber scam victim?

Individuals should try and be constantly aware of the latest online scams.


Social Engineering – Social Engineering scams revolve around manipulating victims into sharing confidential information. There are two main types of social engineering scams that are popular with online cryptocurrency scammers:

  • Baiting – Baiting scams rely on the use of a false promise to pique a victim’s human interest or curiosity. The scams are usually based on impersonating an investment professional, representative of a legitimate crypto firm, or representative of a non-existent entity. Scammers promise ‘above average’ earnings or ‘special rates’ to draw money from the victims.
  • Scareware – A scareware attack involves victims being targeted with false alarms and fictitious threats in order to elicit payments for a resolution of the issue. For example, they may offer to release frozen or lost funds for a ‘special’ fee.

Phishing – Within the context of the cryptocurrency industry, phishing scams target information pertaining to online wallets. Specifically, hackers are interested in crypto wallet private keys, which are the keys required to access funds within the wallet. Scammers will try to take control of customer e-wallets and encourage you to disclose your password or other authentication measures. A phishing email will impersonate your legitimate wallet provider and promise an ‘update’, or find another way to cause you to input your credentials or request that you ‘change your password’.

Website Cloning – Some more advanced scammers are able to create a webpage that looks exactly like your legitimate e-wallet and/or crypto currency providers, in order to steal your credentials. If not carefully studied, the websites appear to be exact replicas of the original. These types of sites can usually be identified by differences in the URL link or automatic redirecting to an additional page.

Here at Clear Junction, we pride ourselves on having robust and secure controls in place to protect our clients from fraud. As a financial institution and B2B service provider, we rarely have direct contact with individuals and end customers. However, we do understand that fraud prevention and cyber security require mutual efforts on behalf of all market players.


  • We ensure secure connectivity to all our clients and partners, so scams and viruses should not propagate further
  • We constantly exchange information with other security and fraud prevention functions in the financial sector, so we always stay on top of the most recent incidents and attacks
  • We cooperate with law enforcement in their efforts to trace illicit funds and apprehend the scammers

As cryptocurrency becomes increasingly popular, crypto exchanges are under pressure to comply with KYC (Know Your Customer) and AML (Anti-Money Laundering) regulations, meaning that they are required to complete extensive identity verification for consumers and organisations wanting to buy and sell crypto.

However, even with all of these steps in place, it is still vital that customers and end users making payments online are vigilant in their approach to investments and trading cryptocurrency with new or unknown companies.


  • Familiarise yourself with all fraud prevention tips provided by your own service provider
  • Check email addresses and contact names that may be sending you requests
  • Do not give out any personal details, passwords or card numbers over the phone
  • Watch out for clone websites or incorrect links – these may only have one digit different to original website e.g. or
  • Check company names you don’t know on the FCA website or similar fraud prevention sites

If you believe that you have been a victim of fraud, it is important that you report it to your local authority immediately, as well as your service provider.


If you would like to know more about what you can do to help prevent digital currency fraud, have a read of the content via the links below.

ActionFraud’s cryptocurrency scam information

FCA’s advice on unauthorised firms and individuals


We would like to end on a point relating to Clear Junction. We will NEVER write to an individual requesting payment. If you do receive such a request – or are in any doubt whatsoever – please contact our team.