Beware of the Wolves in Sheep’s Clothing: Exposing the Dangers of Fake Crypto Exchanges

The surge in popularity of cryptocurrency has brought about an increase in the number of individuals investing in this digital asset. However, with this rise in demand, there has also been a corresponding increase in scammers trying to get hold of crypto enthusiasts’ money.

One of the highly creative ways scammers are using to lure potential investors and fleece them of their money is building fake crypto exchanges. These fraudulent crypto exchanges may harass the clients, refuse cryptocurrency withdrawals, impose steep fees, or even disappear with your money.

To protect your funds, it’s critical to avoid unregulated and fake exchanges as they are susceptible to scams. Rather, you should stick to reputable platforms. Plus, you should learn to recognize the telltale signs of phony exchanges prior to creating an account.

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fake crypto exchanges

Illustration: Lenka Tomašević

A crypto exchange serves as a virtual marketplace where individuals can engage in the buying and selling of cryptocurrencies. In addition to facilitating transactions, these exchanges often offer storage solutions for digital assets and provide trading services that help establish the value of different cryptocurrencies through market activity.  

Crypto exchanges are subject to specific rules and requirements aimed at ensuring the safety and security of their users’ investments. They must comply with multiple regulations such as anti-money laundering (AML) and know-your-customer (KYC), implement security measures to protect against fraud and cyber attacks, and maintain transparency in their operations. 

However, the decentralized and immutable nature of blockchain technology has enabled con artists to invent nearly ingenious crypto scams. To attain their ultimate goal – to swindle crypto investors and rip them off their money – scammers won’t shy away from doing whatever it takes. One of the widespread methods of stealing investments, and possibly the most dangerous one, is via fraudulent crypto exchanges. 

What are fake crypto exchanges?    

Fake and unregulated crypto exchanges are known to deceive unsuspecting victims by impersonating legitimate exchanges. These fraudulent platforms often entice users with promises of exceptional returns on investments through tactics such as celebrity endorsements, unsolicited phone calls, or emails. 

Once users have been directed to the fake exchange, they may receive numerous follow-up emails or phone calls, with the scammers trying to convince them that their investment is safe and legitimate. 

crypto exchange

Source: Seven Bits 

Victims who fall prey to and invest in fake crypto exchanges may be required to pay significant upfront fees before being given access to a fraudulent trading portal. Once users have made an investment, they may be subjected to harassing phone calls or pressured to invest more with the promise of exceptional returns. Victims may also receive fake account statements showing profits that are too good to be true. 

If users attempt to withdraw their funds, they may encounter obstacles such as unexpected fees or false tax claims. Ultimately, users may even find that their money has disappeared altogether, leaving them with little to no recourse to recover their investments. 

Genuine vs fake crypto exchanges 

The surge in popularity of cryptocurrency has brought about an increase in the number of individuals investing in this digital asset. However, with this rise in demand, there has also been a corresponding increase in both authentic and fraudulent crypto exchanges. As a result, investors need to exercise caution and thoroughly research any crypto exchange before entrusting it with their money. 

For cryptocurrency holders, the most common advice is to refer to popular and reputable crypto platforms. To operate legitimately, they need to comply with the number of rules and regulations present in the country of operation.   

It’s people, not technology
Technology is always morally neutral, implying it’s people who commit fraud. Most scams come from people who pose as great traders or investors and have a special opportunity just for you. You should never send money to anyone to invest on your behalf. Serious investors will never offer special opportunities in your inbox on any network, you have to find them yourself. As they don't work with small sums of money, they rarely accept anyone as a client.

Ivan Andrejević, CTB Crypto & Consulting

Additionally, crypto exchanges should have a well-established history within the cryptocurrency community, with a positive reputation among researchers and other users. Last but not least, regulated crypto exchanges typically have a strong social media presence, a professional website, and easily verifiable information about their employees.  

Fraudulent crypto platforms, on the other hand, lack all these features typical of their regulated counterparts. 

How to recognize a fake crypto exchange 

Identifying fake cryptocurrency exchanges and avoiding online scams requires caution, research, and the implementation of certain security measures. Ivan Andrejević, CTB Crypto & Consulting, shares useful guidelines on how to spot an illegitimate crypto exchange and stay safe on your crypto journey.  

“Before using a particular cryptocurrency exchange, research its reputation. Check for a reliable business history and positive customer feedback. Read reviews, forum discussions and investigate any issues or fraudulent activity associated with that exchange. 

Next, make sure the exchange has the appropriate licenses and regulations. Review the exchange’s website to find information about where they are registered and what rules and regulations apply to their operations. Regulation can provide additional security as exchanges are subject to certain standards and oversight. 

licence and regulation

Source: The Currency Analytics

Read the terms and conditions carefully. Before registering with any exchange, peruse their terms and conditions. Pay special attention to fees, limitations, and refund policies. Be cautious of exchanges with unfavorable or unclear terms, as this may be a sign of a potential scam.” 

Though this might seem a bit time-consuming, it’s critical that you don’t skip these steps. Otherwise, you risk losing your precious funds.  

Other signs to watch out for 

To make sure you’re dealing with the regulated platform and therefore not risking your funds and investments, there are other steps to take.  

“Check the website’s security. When visiting an exchange’s website, check if it is secure. Look for URLs that begin with ‘https://‘ instead of just ‘http://‘. The presence of ‘https’ indicates that communication with the website is encrypted and provides a higher level of security. Also, look for the lock icon in the browser’s address bar, indicating that the connection is secure. 

Check contact information. Make sure that the exchange provides clear contact information, such as an address, phone number, and support email. Try to contact them before making any transactions to see if they are accessible and responsive to your questions. 

Don’t forget to compare the prices and fees of exchanges with other reliable platforms. If you notice that prices are too good to be true or the exchange charges unrealistically low fees, it may be a sign that the exchange is fake or unreliable. Be cautious and do not engage in transactions with suspiciously low prices or fees,” says Andrejević. 


It can’t be overstated how critical it is to be cautious and verify information before engaging in any financial transactions on the internet. Using reliable exchanges and implementing security measures helps reduce the risk of fraud, warns Ivan Andrejević, CTB Crypto & Consulting.

crypto scam alert

Source: Outlook India

To help you stay safe, he shares with you extra steps to take and protect yourself and your money.  

“Look for user feedback. Check if there is user feedback on the exchange on the internet. Search forums, social media, and specialized websites to see the experiences of other users. If you find many negative comments or warnings, it may be a sign that the exchange is unreliable. 

Avoid using unknown exchanges that do not have enough information or are not well-known in the crypto community. Instead, stick to well-known and reliable exchanges with a good reputation and proven history. 

Use two-factor authentication. If the exchange provides the option of two-factor authentication (e.g. via SMS messages, authenticator apps, or biometric data), it is recommended that you enable it. This provides an additional layer of security by requiring an additional verification step when accessing your account. 

Lastly, beware of suspicious emails and ads that promote cryptocurrency exchanges. Before providing any information or making a transaction, verify the authenticity of the source and check if the message or ad is legitimate.” 

Stay safe and protected 

The rise of cryptocurrencies brought about the rise of success stories about getting rich from crypto trading and investing. A few investors who made a fortune by recognizing the perfect moment to invest in digital assets made other people believe getting rich from crypto is a piece of cake.  

stay safe

Source: BigPay

Unfortunately, this is far from the truth. Such a belief urged many people to rush into crypto investing, making decisions that have cost them dearly. Plus, it opened the way for myriads of crypto scams and scammers lurking for the perfect chance to rob you of your money.  

In the crypto world, it’s critical to remember that there isn’t such a thing as “easy money.” There were only few instances of people who got rich overnight. Like any other form of investments, crypto investing requires devotion, knowledge, and research. 


The first line of defense is always learning - learning about the project you're investing in, learning about blockchain, cryptocurrencies, NFTs, etc. Research is key, and there's a nice acronym for it: DYOR (Do Your Own Research). It's necessary to conduct your own research.

Ivan Andrejević, CTB Crypto & Consulting 

As Andrejević explained, social media is a place where most crypto scams occur. Numerous people appear out of nowhere, promising huge profit and guaranteed returns. They jump into the potential victims DM, offering their assistance and advice on crypto investing.  

The flags screaming red here are successful, guaranteed, huge, and DM or email. According to Andrejević, if someone is so successful an investor, how come they haven’t established an investment company so far? Due to the nature of cryptocurrencies, there isn’t such a thing as a guaranteed return. Never fall for success investment story in your DM offering you to get rich quickly if you invest with them.   

“If an offer smells like a possible scam, ask others for their opinion in forums, groups, and chats. There are many such communities in our area, and they should be used for questions so that individuals are not scammed. It’s important to investigate how much the people who claim to be experts are involved in the business they guarantee success for. Usually, if something seems too good to be true, it’s never true,” concludes Ivan Andrejević, CTB Crypto & Consulting. 

"Ever tried. Ever failed. Never mind. Try again. Fail better."


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