Common Exchange Scams and Red Flags Beginners Should Watch Out for

Overview

• Common exchange scams are growing as scammers use more advanced methods to target cryptocurrency users.

• Phishing scams, fake support, SIM swaps, and rug-pull tokens are the biggest threats to beginners.

• Strong security habits and careful platform research can significantly reduce the risk of cryptocurrency scams.

As the number of traders entering the cryptocurrency market is growing, the risks surrounding digital exchanges are also increasing. Many beginners start trading without understanding how scammers operate or how exchanges can become targets. 

Scam tactics are becoming more advanced each year, making awareness the most important defense. This article explains the most common crypto exchange scams, recent data showing the scale of the problem, and the major red flags that beginners often overlook.

Rising Scale of Crypto-Related Scams

Losses from crypto scams and thefts across 2024 and 2025 are extremely high. According to Chainalysis, more than $2.17 billion was stolen from cryptocurrency services by mid-2025. Some of the biggest incidents involved state-supported hacking groups, showing how organized and strategic these attacks have become. 

Additionally, figures from the last few years show that tens of billions of dollars have moved through illicit crypto addresses. This emphasizes the scale of criminal activity within the wider market.

These numbers highlight a clear reality that scams are not isolated incidents. They are part of a global pattern that affects new traders, experienced investors, and even major exchanges. As the popularity of digital assets grows, scammers also invest in new methods to trick users and breach platforms.

Also Read - Australia Cracks Down on Crypto ATMs Amid Rising Scams

What are the Current Crypto Scams?

Phishing Scams and Fake Login Pages

Phishing is one of the most common techniques where scammers create fake login pages that are almost identical to real exchange websites. The use of artificial intelligence has made these fake sites even more convincing. These pages are often promoted through emails or text messages that appear to have authentic sources. 

Once users enter their account details or API keys into these fake pages, scammers can immediately access and empty their accounts within minutes. Phishing scams usually happen during busy market periods. This is when exchanges send genuine updates, and traders quickly act without cross-checking links. 

Account Takeovers Through SIM Swaps

A SIM-swap attack is another common method used to breach exchange accounts. This involves transferring a victim’s phone number to a scammer’s SIM card by tricking or bribing telecom employees. Once the scammer gets access to numbers, they can block SMS security codes and reset passwords on connected exchange accounts. 

Users protected by only SMS-based two-factor authentication are highly vulnerable to these attacks. Telecom-related fraud specifically targets individuals who are new to the digital assets trade.

Impersonation and Fake Customer Support

Many scams begin with someone posing as customer support from a well-known exchange. Scammers usually reach out through social media, messaging apps, or email. They often claim that an account is locked, compromised, or needs verification, intending to trick users into sharing private keys, passwords, or full verification codes. Once these details are revealed, cybercriminals immediately transfer funds.

Real exchanges never ask for private keys or complete authentication codes. This consistent rule is one of the simplest yet most ignored warnings.

Token Scams, Rug Pulls, and Honeypots

Beginners are often drawn to new tokens that promise rapid growth. However, many newly launched tokens are created solely for scams. Some developers add hidden functions to the token contract that allow them to pull the liquidity and flee with the funds. Honeypot is another tactic that fraudsters use. They design the token in such a way that users are restricted from selling their purchased assets.

Rug pulls and token manipulation are also some of the most common cryptocrimes. A few poorly regulated platforms list tokens without proper checks, making it easy for scammers to trap beginners.

Withdrawal Freezes and Exit Scams

Some fraudulent platforms claim to be full-scale cryptocurrency exchanges but operate with the intention of disappearing once enough deposits are collected. These platforms often announce unexpected maintenance or system upgrades to temporarily freeze withdrawals. During this time, insiders quietly move user funds. Once the theft is complete, the platform shuts down all communication.

While even well-known exchanges can collapse suddenly, platforms that hold user funds instead of providing independent wallets are more suspicious of a withdrawal freeze.

Manipulated Trading Volumes and Market Hype

Some exchanges or token issuers artificially inflate trading volumes to make an asset appear highly active. Beginners often interpret this as a sign of strong demand and invest without understanding the risk. This is known as wash trading, a scam that can create the illusion of liquidity. These schemes are usually paired with social-media hype and lead to pump-and-dump cycles where early insiders profit and late buyers face heavy losses.

How to Identify Fake Crypto Exchanges and Red Flags

Many cryptocurrency scams share similar early warning signs. Unsolicited contact from anyone claiming to be support staff is a major red flag. Any request for passwords, private keys, or full verification codes signals fraud. Sudden withdrawal delays without clear evidence of technical issues should also raise concern. Another major warning sign is a new token promoted aggressively without visible team details or a public smart-contract audit.

Beginners should also watch for tokens that appear overnight, offer unrealistic promises, and trend heavily on social media despite having little technical information available. Unusual trading patterns, extreme price swings, and overly positive promotions often point toward market manipulation.

Also Read - Most Common Bitcoin Scams and How Beginners Can Avoid Them

Final Thoughts: Practical Ways to Stay Safe

Ensuring security starts with simple habits. Traders should use authenticator apps or hardware-based security keys for protection rather than SMS codes. One must always prefer reputable exchanges with established security practices. Long-term holdings are safest in personal cold wallets.

Regularly checking official alerts from cybersecurity teams, regulators, and industry analysts can also prevent exposure to known scams. Staying informed is one of the most effective ways to reduce risk.

FAQs

1. What are the most common scams targeting cryptocurrency exchanges?
Common exchange scams include phishing pages, fake support impersonation, SIM-swap takeovers, rug-pull tokens, and withdrawal freeze schemes.

2. How do phishing scams trick cryptocurrency traders?
Phishing scams use fake websites or messages that look real to steal login details, security codes, or API keys and gain access to exchange accounts.

3. Why are beginners more vulnerable to cryptocurrency scams?
Beginners often lack awareness of red flags, trust unverified platforms, and act quickly during market hype, making them easy targets for scammers.

4. How can traders protect themselves from exchange scams?
Using strong authentication methods, choosing reputable exchanges, and storing long-term funds in secure wallets can help reduce risks.

5. Are new tokens listed on exchanges always safe?
No. Some new tokens are created for rug pulls or designed with restrictions that prevent selling, emphasizing the importance of in-depth market research.