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Media > Newsletters > Consumer Advocate > August 2021 > Beware of Cryptocurrency Scams

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Beware of Cryptocurrency Scams

If you are considering investing in cryptocurrency, make sure you understand how it works and keep up on emerging cryptocurrency scams. Cryptocurrency is a form of payment that can be exchanged online for goods and services. Common types of cryptocurrency are Bitcoin, Ethereum, Dogecoin, Tether and Polkadot. Cryptocurrencies work using a technology called blockchain, which is a technology spread across many computers that manages and records transactions. 

You can buy cryptocurrency through an online exchange platform. Some people earn cryptocurrency through a complex process called “mining,” which requires advanced computer equipment to solve highly complicated math puzzles. Due to their nature, cryptocurrencies are not regulated, which carries risk of market volatility and loss for investors.

A few things to consider before investing in cryptocurrency:
  • Cryptocurrency is not regulated by any state or federal government agency.
  • Digital currency is highly volatile, making it unsuitable for retirement funds or investors looking for long-term savings. Price fluctuations from one day to the next can be enormous.
  • Researching cryptocurrency online is a good idea. Scammers are using techniques to target investors. A few of the techniques scammers use online include referral chains, giveaways and romance scams.
Referral scams: Referral scams work in a similar way to pyramid schemes. This scam depends on recruiting investors in several investment tiers. The idea being, the more you invest and get others to invest, the greater your return. The scam portion comes when investors attempt to withdraw their supposed profits: They are told to invest more cryptocurrency and get nothing back.

Giveaway scams: Giveaway scams falsely proclaim to be sponsored by celebrities and tell potential victims they are guaranteed to immediately multiply the amount of cryptocurrency they are asked to send. Typically, victims don’t get any jackpot, award or any other giveaway; they have been duped and lose the value of whatever crypto they sent.

Romance scams: Scammers are using online dating sites to recruit new investors in cryptocurrency scam investments under the ploy of a legitimate romance. Always be suspicious if someone you have only met online is encouraging you to invest in a certain product or send them money, especially if the request is by cryptocurrency.

Consumers who need help addressing a consumer problem or question should contact the Ohio
Attorney General’s Office at or 800-282-0515.