Crypto Markets
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Risks and scams

Crypto risks and scams

Crypto carries risks that bank savings and regulated investments do not, and scammers exploit crypto heavily. Here is how to protect yourself.

Photo: Edwin.images, CC BY-SA 4.0, via Wikimedia Commons

By the Crypto Markets editorial team · Updated · 3 min read

Crypto-assets are among the riskiest things an everyday Australian can buy, and crypto is also one of the most common payment methods in investment scams. Understanding both kinds of risk, the market risk of crypto itself and the risk of being deliberately defrauded, is the most useful thing you can do before going anywhere near it.

Scam warning-sign checker

Does this crypto offer show scam signs?

Think about an offer, platform or person you are dealing with and answer each question.

  1. 1. Did someone contact you out of the blue (social media, dating app, text, call or email)?

  2. 2. Are you promised guaranteed, high or fast returns?

  3. 3. Are you being pressured to act quickly or keep it secret?

  4. 4. Were you asked to install remote-access software or share your screen?

  5. 5. Were you asked for your seed phrase, private key or account password?

  6. 6. Do you have to pay a fee or "tax" before you can withdraw your money?

  7. 7. Is a celebrity, public figure or news story promoting it?

  8. 8. Is the person someone you met online and have never met in person?

  9. 9. Are you asked to pay in crypto, gift cards or by sending money to a personal account?

Your result will appear here as you answer.

General information only, based on warning signs published by Scamwatch and ASIC Moneysmart. It cannot tell you whether a particular offer is legitimate, and it is not financial advice.

Two kinds of risk

Market and product risk. Even when everything is legitimate, crypto prices can swing wildly, platforms can fail or be hacked, and you can lose access to your crypto through a lost key or a mistaken transfer. Moneysmart describes crypto-assets as high risk and speculative. Read the risks of crypto.

Scam risk. Scammers use the excitement around crypto, and the difficulty of reversing crypto payments, to steal money. Fake trading platforms, romance-investment scams, fake celebrity endorsements and impersonation scams are common. Read crypto scams explained.

Stop, check, protect

Scamwatch's three-step advice applies to any unexpected crypto opportunity:

  • Stop. Do not give money or personal information to anyone you are unsure about. Scammers create urgency; take your time.
  • Check. Ask yourself whether the offer could be fake. Check the platform on AUSTRAC's register, search ASIC's investor alert list and look for online warnings. Talk to someone you trust.
  • Protect. Act quickly if something feels wrong: contact your bank, report the scam and get support.
A man in a suit typing a password into a laptop showing a padlock and bitcoin symbol
Strong passwords and two-factor authentication help protect crypto accounts. Photo: Edwin.images, CC BY-SA 4.0, via Wikimedia Commons

Checking a platform

Businesses that exchange crypto for money in Australia must be registered with AUSTRAC. Under recent anti-money laundering reforms, AUSTRAC now refers to these businesses as virtual asset service providers (previously "digital currency exchange providers") and publishes a searchable register. ASIC's Moneysmart also keeps an investor alert list of websites and entities that may be unlicensed or scams. See how to check a crypto platform.

Remember: registration is a minimum legal requirement. It is not an endorsement, and it does not protect you if the platform fails.

Protecting your accounts

  • Use a unique, strong password and two-factor authentication (preferably an authenticator app) on every crypto account and email.
  • Never share your seed phrase or private key with anyone, including people claiming to be from an exchange or the government.
  • Do not install remote-access software at someone else's request.
  • Type platform addresses yourself rather than clicking links in messages or ads.
  • Double-check wallet addresses before sending; crypto transfers usually cannot be reversed.

If something has gone wrong

  1. Stop sending money and cut contact with the scammer.
  2. Contact your bank or payment provider immediately; they may be able to stop or recall payments.
  3. Report to the Australian Cyber Security Centre's ReportCyber and to Scamwatch.
  4. Secure your accounts: change passwords and enable two-factor authentication.
  5. Get support from IDCARE, Australia's national identity and cyber support service.
  6. Beware of recovery scams offering to get your money back for a fee.

If you think you have been scammed

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Guides in this section

Guides in this section

Frequently asked questions

How do I know if a crypto offer is a scam?

Warning signs include unsolicited contact, promises of guaranteed or high returns, pressure to act fast, requests for remote access or your seed phrase, fake celebrity endorsements and fees to withdraw. Check the platform on AUSTRAC's register and ASIC's investor alert list.

What should I do if I have been scammed?

Stop sending money, contact your bank or payment provider immediately, report it to ReportCyber and Scamwatch, and contact IDCARE for support. Beware of "recovery" services that promise to get your money back for a fee.

Can I get my crypto back after a scam?

Often it is very difficult, because crypto transactions are hard to reverse and scammers move funds quickly. Act fast and report to your bank and the authorities.

Is my crypto protected if an exchange collapses?

Crypto is not covered by the government's Financial Claims Scheme, which protects eligible bank deposits. If a platform fails, you may lose your crypto.

Does AUSTRAC registration mean a platform is safe?

No. AUSTRAC registration is a legal requirement focused on anti-money laundering and counter-terrorism financing. It is not an endorsement and does not protect your money.

What are crypto recovery scams?

Scammers target people who have already lost money, offering to recover it for an upfront fee. Legitimate authorities do not charge to investigate.

Sources and further reading

Facts on this page were checked against these primary and official sources. Conditions change — confirm before you travel or buy.

  1. Cryptocurrencies — ASIC Moneysmart
  2. Investor alert list — ASIC Moneysmart
  3. Scam alert - fake crypto trading platforms — Scamwatch (National Anti-Scam Centre)
  4. Virtual asset service providers overview — AUSTRAC
  5. IDCARE — IDCARE