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Scamwise › Top 10 scams › Investment and crypto scams
Scam #2 of 10 · Biggest losses

Investment and crypto scams: how they work and how to spot them

Updated October 2026 · 4 minute read

A friendly stranger or slick ad shows huge returns on a crypto or trading platform. Your balance grows on screen until you try to withdraw, then fees appear and the money is gone. Often called pig butchering.

How the scam works

Like almost every scam, this one follows a three step script:

  1. The hook. Something believable lands in front of you: a message, a call, an ad or a new "friend".
  2. The pressure. Urgency, fear, excitement or secrecy, so you act before you think or talk to anyone.
  3. The payment. A method that can't be reversed: gift cards, crypto, a Bitcoin ATM, or an e-Transfer to a stranger.

Spot any one of those three steps and you can stop the whole thing.

Red flags to watch for

  • Guaranteed or very high returns
  • Met online, never in person, pushes you to a specific app
  • Withdrawal needs a tax or unlock fee first
  • Pressure to keep it secret or to act right now.
  • Any request for gift cards, crypto, a Bitcoin ATM or an e-Transfer to a person's name.

What to do if it happens to you

Never pay to withdraw. Check the platform with your securities regulator. Stop sending money and report it.

If you already paid or shared details

  1. Call your bank or card issuer right away and ask them to stop or reverse the payment.
  2. Change any password you entered, and turn on two step verification.
  3. Report it to the Canadian Anti-Fraud Centre (1-888-495-8501) in Canada, or reportfraud.ftc.gov in the US.
  4. File a police report and keep every message, receipt and screenshot.
  5. Watch out for "recovery" offers. Anyone promising to get your money back for a fee is running a second scam.

Related scams

  • Ponzi scheme: Early investors are paid with new investors' money until the whole thing collapses.
  • Pump and dump: Promoters hype a penny stock or coin, then sell their shares once you buy in.
  • Fake crypto exchange: A slick trading site shows big gains but never lets you withdraw.
  • Crypto rug pull: Developers of a new token vanish with investors' funds overnight.
  • AI trading bot: A 'guaranteed profit' bot that only ever takes deposits.
  • Recovery room scam: Someone offers to get back money you lost to a scam, for an upfront fee.

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