Spot and Avoid Australian Crypto Scams

Crypto Winter Scams are on the rise

Unless you have been living off the grid, cooped up inside a cave, you’ve undoubtedly heard about cryptocurrency (crypto). Crypto has taken the world by storm, and has polarised public opinion. Some people consider cryptocurrency to be a great unknown and avoid it at all cost. Whilst others have invested in crypto believing that it is the way of the future.

Those that have invested in crypto have included many Australians, in particular young Aussie males whom are more inclined to take risk than your average Joe Smith.

End of the Crypto Craze

It was towards the end of 2020, when the first signs of a crypto craze began to appear and really took off in 2021. In 2021, interest rates remained at all time lows, excess liquidity had flooded the market supported by pandemic payments, easy to obtain banking loans, and high employment. With so much cash floating around, 2021 was the year, hundreds of thousands of Australians poured funds into crypto, making astronomical profits via buying low and selling high each day.

But this year, 2022, the tide has turned. Interest rates have begun to rise with the RBA wanting to curb rampant inflation, cost of living pressures are hurting households, and the stock market has crashed forcing many to realise a loss. In June 2022, we saw the largest monthly fall in Bitcoin to AUD pricing, dropping a whopping 35%. From its peak, bitcoin had fallen by more than 75%! Ethereum and other crypto’s have also followed suit, a blood bath across all cryptos for the first half of 2022.

More Scams More Volatility

Though cryptocurrency has become ever increasingly volatile, there continues to be more and more investors buying and selling crypto. However, making a quick buck is no longer an option, but rather mitigating losses, or executing long term hold strategies.

Unfortunately scams are still prevalent despite a crypto winter. Even the prospect of future Australian government regulations has not deterred scams evolving into more sophisticated operations. In fact, the thought of government regulations has spawned scam activity to increase.

What is Cryptocurrency?

Cryptocurrencies are digital coins that cannot be replicated or faked. Due to the intrinsic nature of how digital coins are coded, no one can take advantage of the system by falsely creating coins for themselves.

Each coin is built on a chain of blocks (blockchain) which is made public. The importance of the blockchain and its public availability, is that authenticity of the chain can be verified. The role of verification is cleverly spread among all users (a.k.a. peers). When peers engage and use the cryptocurrency in the ecosystem, they are also performing a verification process which cannot be broken. By not concentrating the role of verification in one individual or entity, the event of collusion among many peers to manipulate the cryptocurrency is impossible.

Accordingly, cryptocurrency can be used to store value and be easily transferred from one peer to another. The validation of ownership is through the use of “keys”. Keys are essentially the passwords that allow a user to transfer crypto. If keys are unknown (lost), then no one has the ability to claim and transfer the cryptocurrency. Thus leaving the crypto untransferable forever i.e it is obsolete.

It is therefore vital for owners of cryptocurrencies to not lose their keys, or to disclose their keys to anyone. The keys enable the transferring of cryptocurrency. And once a transfer has been made, a new set of keys are created and the old set can no longer be used. Reversing or unwinding a transfer is not possible. The importance of safeguarding keys should never be underestimated.

Just like cash, once your wallet is stolen or once the cash has been handed to someone else, the event cannot be reversed.

In the cryptocurrency world, there is a phrase that summarises the ownership of crypto – “if you don’t have the keys, you don’t own the crypto”.

It is important to understand this concept, because in a moment, we explain how obtaining the keys is one way that a scam can be perpetrated.

To facilitate the buying and selling of cryptocurrency, online exchange platforms are available in Australia to convert AUD into crypto and back again. And, you guessed it, because this requires transferring ownership, keys are the key component in this process.

There are several online exchanges that are dedicated to the Australian market, however, none of them are regulated by the government. This means, should an adverse event occur, there is no protection offered to the consumer.

Accordingly the prevalence of scams are proliferating at an astronomical rate.

Aussie Crypto Scams reached $60m in 2021

In 2021, the ACCC (the Australian consumer watchdog) reported 10,412 scams, stealing approximately $129m. Half of the scams were crypto related, often in the form of investing in illegitimate crypto coins.

In 2022, some crypto analysts have predicted a fall in scams, correlating the fall with pricing. In economic terms, the cost vs benefits makes scams less attractive to implement than previous years.

At CoinMaximus, we disagree with this notion. We predict the volume of scams to rise because all asset classes are deteriorating. This means, even cyber criminals need to work harder to earn more income! Hence, it is more important than ever for investors in cryptocurrencies to not let their guard down.

Crypto is Not Legal Tender in Australia

Cryptocurrencies in Australia are not regarded as legal tender. This means, that when buying and selling goods and services, cryptocurrencies is not a mandatory form of payment. It also means that any banking performed wiuth cryptocurrencies does not protect the consumer or user.

Due to no regulations, investments in cryptocurrencies are not required to provide Product Disclosure Statements (PDS). The broader financial services markets is regulated by ASIC and the financial services sectors.

However there has been talk that the new Australian Labor government will be introducing regulations soon to bring investing in cryptocurrencies in alignment with the broader market.

Crypto Scam Characteristics

There are common traits among all types of scams (not just crypto), however specifically within financial products and services, they often tout the below traits:

  • Scams often include investment returns that are just too good to be true.
  • Marketed to include ground breaking technology that can predict by and sell prices
  • Falsely backed by celebrities without their knowledge or consent
  • Falsely provides assurance from Australia government bodies like the ATO.
  • Marketed more often than not via social media and text messages to the phone.

Crypto scams may also extend to basic trickery of revealing keys and transferring funds.

Types of Scams

Crypto Romance Built on Lies

Dating scams will prey on the mindset of users looking for a genuine relationship. Their methods hypnotise their victims to gain their trust. Once a victim has fallen prey, the scammers will request for transfer of funds through cryptocurrencies. Unlike bank transfers, once crypto has been transferred the transaction cannot be reversed. Dating scam operators like using crypto because the owner of the digital wallet can be masked. This allows the scammer to not be tracked, and escape with the crypto without any recourse by the victim.

Crypto Ponzi Schemes

A Ponzi scheme is not necessarily specific to cryptocurrencies, but can be attributed to any financial product. A ponzi scheme begins by providing false confidence to new investors with providing a consistent and reasonable return. These returns are not real, however, they provide the new customers false confidence that the financial product is legitimate and trustworthy. Gradually the returns are increased and the new customers deposit more funds into the financial product.

As word spreads about the incredible returns, more new customers join and deposit their funds. The new funds are used to cover any withdrawals (though withdrawals are always strongly discouraged).

The scheme collapses, once customers realise that their returns are fake. They then attempt to withdraw their deposits, however the ponzi scheme mastermind has stolen all the proceeds.

Pump and Dump Coins

“Pump and dump” is a terminology that is associated with pushing up the price of crypto (or shares on the stock market). The price is pumped up through through a bombardment through social media. Often, it starts with a group of people whom collectively garner more and more publich support of pushing the price of crypto up. Often, there is a social cause to hurt the elite of investors that have shorted the market.

The social cause, brings others on board the pushing up of the price by buying more and more crypto. It’s very effective through a social media campain, because it attracts young Aussie males who like to take a risk and believe of the virture of exploiting the rich. It’s also relatively exciting, since many are aware that after they have collectively pushed up the price of the cryptocurrency, it will come crashing back down. Hence, many are trying to time the market before it crashes.

In simplicity, the intention is to create an atmosphere of driving up crypto pricing, and then jumping out at the peak.

Fake Crypto Apps

Fake apps are released on the Google of Apple iStore that have the intention of users revealing their crypto keys. The user is misled to believe that the app, allows them to keep their coins safe. Ironically, it is through this belief that they are asked to enter their crypto keys to ensure optimal safety.

Of course, once the keys are entered onto the fake app, the scammer can use the keys to transfer the crypto to a wallet that they own.

Crypto Spam Emails

There are an innumerable number of crypto fake emails sent every minute, with the majority being captured in Spam boxes. But some do get through and can appear to be extremely convincing.

These emails are often touted to be supported by the ATO, Medicare, and other government departments. Other emails are supposedly backed by famous Australian celebrities and even politicians: Dick Smith, David Kochie and even Gladys Berijiklian.

These scams email direct the victim to take cryptocurrency exchanges, and ask them to deposit AUD into the scammers bank account.

Fake Crypto Exchanges

A crypto exchange helps swap AUD for crypto and vice versa. It matches buyers and sellers together, to faciliate an exchange. Because the market is unregulated in Australia, online crypto exchanges do not need to be licensed by ASIC or any regulator. Accordingly, the market is an open market, with a lot of difficulty with substantiating true and honest exchanges from the fake.

The only way to have some sense of assurance is to search the forums and read up on crypto exchange reviews.

Fake New Coin offering

The idea of jumping onboard a new coin offering is exciting. Many investors believe, if they can get in early, they can then obtain a generous profit.

When a new coin offering takes place, there is often a huge marketing campaign. The campaign takes off when word of mouth goes around, generating a lot of excitement. An example of a new coin offering was the launch of Squid Game Coin. Off the back of the success Netflix hit named Squid Game, many believed Squid Game Coin would be genuine fun and exciting. However, Squid Game Coin turned out to be a fake coin, with the creators stealing millions of dollars of investor monies.


Aussie Crypto Scams are on the rise even though the prices are tanking. Make sure you are aware of the traits and characteristics of crypto scams to ensure you avoid them. Crypto Scams can be cleverly disguised in many forms and are becoming more sophisticated.

Do not fall for their trickery. Keep your keys safe and never disclose them to anyone. Be alert to too good to be true returns, and the promise of easy quick profits. It simply is not possible.

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