How to Spot a Crypto Scam

This is one of those columns I hate to write…

But there’s a cautionary tale here in the lesson to be learned.

An “Ask El Jefe” email landed in my inbox recently, from a reader who put some money to work in a cryptocurrency trading program. And as he told me, “on paper I made a small fortune. Unfortunately, it has been an ongoing problem to withdraw the funds. I am now being told that the following must take place in order to complete my withdrawal request.”

Here’s a screenshot of the email he received:

What you’re looking at is a scam.

How do I know this?

First, there’s not a single reason any financial institution anywhere in this solar system would tell a customer they need a “clearance certificate” from the Federal Open Market Committee, known as the FOMC.

The FOMC is the Federal Reserve body that gathers to hammer out interest rates. They’d have no say on whether a bank clears a customer’s payments. Nor would they care.

Second… there’s no such animal as a “clearance certificate” issued by the FOMC. (You can find all this by googling whatever someone tells you they need—just to see if it’s remotely legitimate.)

Third… I googled the name of the company this email supposedly came from. It does not exist.

Fourth… the reader noted that he is being told that a (non-existent) clearance certificate will cost $3,000. He didn’t say if this company was requesting that payment to facilitate the issuance of the certificate, but I have to assume that’s the case since no such certificate exists within the world of the FOMC and there would be no way to determine that such a certificate would cost three grand.

So this is 100% a scam.

And I am sorry to have to write that.

I know this reader is going to be upset that he lost money to what I would bet is an overseas scam—largely based on a the crappy use of English and the formatting that is off (the strange line break between “available” and “From,” which also misses punctuation and oddly capitalizes the F… the extra space in “they  provide”… and the missing “to” in “enable us [to] finalize this withdrawal.”)

It’s frustrating for me as well because I write about crypto all the time, and I know there are so many legitimate opportunities in crypto to make life-changing wealth—or at least a very pretty penny.

But I also know there are even more opportunities to lose money to scams.

So that’s the lesson we ultimately come to. Unless you’re familiar with other reputable outlets—like those I’ll be recommending in my upcoming Crypto Profits Masterclass—do not put any money to work anywhere in crypto that is not Coinbase, Kraken, Gemini, Binance.US, Robinhood, or PayPal.

Those are legitimate sites, from which you can buy crypto, stake crypto for income, and move your crypto to legitimate browser wallets such as Phantom, Backpack, Solflare, Metamask, or a hardware wallet such as Ledger, Trezor, or Keystone.

As to hardware wallets: Never EVER order a hardware wallet from anyone other than the manufacturer.

Third-party resellers on eBay and Amazon buy these things in bulk and then open the packaging and copy down the secret recovery phrase that offers full-on access to the device to anyone who has that phrase. After resealing the package, they sell the device, and once a buyer has it in hand, the scammy seller uses a second device to install your recovery phrase… and then drains your wallet without you having any idea where your crypto went.

Also, pay attention to solicitations and how words are used or phrased. Pay attention to spelling, grammar, and punctuation. Look for weird formatting.

Scammers are almost always foreigners or those lightly educated in English. They always screw up the language somehow or they phrase sentences in a way that no American, Canadian, Aussie, Kiwi, or Brit would ever use.

That’s not idiosyncratic… it’s an idiot at the business end of a keyboard.

Legitimate organizations are never going to send solicitations and emails that are fat with multiple errors and formatting stupidity. That’s always a dead giveaway that a scam is afoot.

And even if there are no errors and everything looks copasetic… google the website the solicitation purportedly is linked to. Does it exist? Does it function legitimately? I got an email about a week ago, purportedly from a Portuguese agency (I live in Lisbon) telling me I owed €2.30 in VAT for some delivery coming into Portugal. I have all kinds of deliveries coming to my apartment, but the amount seemed weird… and oddly, the only working link on the website connected to a payment mechanism. Not a single other link worked.

Scam.

And always, always, always look at the return email address.

I cannot tell you how many emails I get, supposedly from Binance and Coinbase telling me I need to do this or that to keep my account active, or that someone has linked a bank account to my crypto account, etc. I reflexively know these are scams… but I always look at the return email address.

One hundred times out of a hundred, it’s an email that does not end in “binance.com” or “coinbase.com.” It’s always a Gmail account, or some rando dot-com I’ve never heard of.

I can guarantee that a legitimate bank, a legitimate brokerage firm, a legitimate government agency, and a legitimate crypto exchange will never send you an email from a Gmail account or a rando dot-com.

We are in the age of artificial intelligence and scams are growing smarter. Pay attention to everything.

And be safe out there.