Image Source

Bitcoin is a cryptocurrency, a type of electronic cash that was formed in 2008. In 2009, Satoshi Nakamoto wrote a paper title Bitcoin: A peer-to-Peer Electronic Cash System. In 2009, Nakamoto mined the first Bitcoin blockchain, the genesis block. Thus, started the wild ride that is Bitcoin. The volatility of Bitcoin is well-known to investors. Despite its volatility, more and more people have been using and investing in Bitcoin. And a few opportunistic scammers have taken advantage of this.

Scammers love Bitcoin because it is largely unregulated. Not a lot of people truly understand Bitcoin. It is also quite anonymous. Bitcoin has reportedly also been used in the black market because of these reasons.

Due to the prevalence of scams in Bitcoin, a lot of people have lost tens, or hundreds of thousands of dollars. Some even lost millions to these scams. Below are a few of the more prevalent, recent Bitcoin schemes along with some tips on how to avoid them.

Ponzi Schemes

One good example that comes to mind when talking about Ponzi schemes in Bitcoin is MiningMax. MiningMax managed to con its investors out of $200 million before its affiliates reported their scam which led to the arrest of 14 fraudsters. They applied the pyramid scheme by asking people to invest $3,200 in return for promised daily ROIs and a $200 referral commission for every personally recruited investor.

How to avoid:

If it seems like it’s too good to be true, it probably is. Research about the company and its promises. And always check if the company is a registered corporation.

Fake Cryptocurrencies

Scammers like presenting a new cryptocurrency as Bitcoin alternatives. The most common line of thinking that they push on their victims is that it’s too late to get your money’s worth if you invest in Bitcoin. So why not invest in a new cryptocurrency. In early 2018, My Big Coin conned $6 million out of their investors and used the money to line their own personal bank accounts.

How to avoid:

If you’re not familiar with the new cryptocurrency, might as well avoid it. Remember that Bitcoin is unregulated, meaning there is no government or asset that backs its value. A Bitcoin is only worth what other people are willing to pay for it. If you really feel like you want to try out a new, lesser known and less expensive type of cryptocurrency, never invest more that you are willing to lose.


A hacker’s favorite tool can now be used to hack into your Bitcoin wallet. Hackers can use malware to gain access to your wallet and drain your money. These insidious programs can be attached to an email message, or on websites, and social media.

How to avoid:

Do not open suspicious looking emails. Do not download programs that promise to let you mine bitcoins after the programs have been downloaded. Use “cold” wallets or offline wallets.

Fake ICOs

ICO (initial coin offerings) have been used by scammers to con people out of their investments. ICOs have been used as a way for companies to raise capital. With the rise of the number of companies entering the market, ICO has proved useful for investors in choosing and backing their favorite companies. However, scammers and fraudsters have been known to use fake websites that resemble ICOs, asking their investors to deposit coins in faulty wallets. One example is Centra Tech, a blockchain company that was backed by celebrities like DJ Khaled. Centra Tech was sued for misleading investors and lying about their products.

How to avoid:

Do your research. Dig into the blockchain company you are planning to back. Do not let celebrity endorsements sway you. If you really want to invest in Bitcoin, go with the bigger, more trusted companies instead.

There is no one sure fire way to avoid Bitcoin scams. However, a good rule of thumb is to always do your research: red flags to look out for, recent scams, market trends.

Contact us at Hogan Injury for expert legal advice.

None of the content on is legal advice nor is it a replacement for advice from a certified lawyer. Please consult a legal professional for further information.

Would you like to discuss your legal matter?


image description
Jack Morgan CALL US! 866-205-4971

We will assist in scheduling new and existing clients for all offices. For initial consultations we will ask you a few questions and then find the best time for you to talk to one of the lawyers that best fits your legal matter.

Call us or use the email form and we will follow up with you right away.


The Law Offices of Hogan Injury will provide you with personalized attention and guidance. Protecting your rights is our main objective. We have been representing clients for the past 30 years and our experienced team of attorneys will advise you of the legal consequences of every decision you take.