The surge of Bitcoin to an all-time high of $93,265.64** has ignited a new wave of excitement across global financial markets. With U.S. election uncertainties settling and investor confidence returning, trading volume for Bitcoin recently exceeded **$7.3 billion, drawing in a flood of new participants to the cryptocurrency space. But with rapid growth comes increased risk—especially from sophisticated scams targeting inexperienced investors.
"DYOR—Do Your Own Research—is non-negotiable in this space," warns Lu Wei-Yuan, Chief Prosecutor at Shilin District Prosecutors Office in Taiwan, who specializes in financial crime and digital asset investigations. "Too many people rush into crypto without understanding the risks. That’s exactly what fraudsters are counting on."
As the crypto market evolves, so do the tactics used by cybercriminals. This guide breaks down essential strategies for protecting your investments, based on expert insights and real-world case studies.
Three Critical Tips for New Crypto Investors
With over a decade of experience handling complex financial fraud cases—including money laundering and blockchain forensics—Lu emphasizes that education and caution are the first lines of defense.
1. Practice DYOR: Do Your Own Research
In a landscape filled with hype and misinformation, independent research is crucial. "Never invest based solely on someone else’s recommendation," Lu advises. "Whether it’s a friend, influencer, or online post—always verify."
Start by consulting reputable sources such as:
- Official whitepapers of blockchain projects
- Audits from recognized firms like CertiK or Hacken
- Trusted crypto news platforms
Understanding how blockchain technology works, how wallets function, and what makes a project viable can dramatically reduce your exposure to scams.
👉 Discover how to conduct deep-dive crypto research with trusted tools and resources.
2. Choose Regulated Domestic Exchanges
One of the most effective ways to minimize risk is using licensed and compliant exchanges. In Taiwan, the Financial Supervisory Commission (FSC) maintains a list of virtual asset service providers that have completed anti-money laundering (AML) compliance declarations.
"Always check if the platform appears on the FSC’s official list," Lu says. "This doesn’t guarantee 100% safety, but it significantly raises the barrier for bad actors."
Regulated exchanges typically enforce:
- Know Your Customer (KYC) procedures
- Cold storage for user funds
- Regular third-party audits
These measures help protect users from both internal misconduct and external attacks.
3. Be Cautious With Overseas Platforms and Influencer Endorsements
While offshore exchanges may offer more coins or higher leverage, they often operate under looser regulatory oversight—making them prime targets for fraud.
Lu warns against blindly trusting KOLs (Key Opinion Leaders) who promote foreign platforms. "Scammers exploit trust in public figures. Just because a celebrity endorses a platform doesn’t mean it’s safe."
He suggests future regulations should require influencers to:
- Clearly disclose paid promotions
- Warn followers about potential risks
- Notify regulators before promoting high-risk services
Until then, investors must remain skeptical and verify every claim independently.
Six Common Crypto Scams—and How to Avoid Them
Fraudulent schemes in crypto are constantly evolving. Here’s a breakdown of the most prevalent tactics—and how to spot them early.
1. Unrealistic Return Promises
Platforms like FTX and JPEX lured users with promises of 20%, 50%, or even 100% annual returns—far beyond normal market performance.
“If it sounds too good to be true, it probably is,” says Lu. High yields often mean high risk—or outright fraud.
✅ Protection Tip: Stick to transparent staking or yield opportunities backed by real protocols—not anonymous teams or vague roadmaps.
2. Bitcoin ATM Scams
Scammers contact victims via social media, posing as tech support or investment advisors. They instruct victims to withdraw cash and use Bitcoin ATMs to send funds to a specific wallet.
Once sent, these transactions are irreversible.
✅ Protection Tip: Never follow unsolicited instructions involving physical ATMs or direct crypto transfers. Legitimate services won’t ask you to do this.
3. Investment Pool Scams
Victims are told to send crypto to a “managed wallet” controlled by a supposed expert. In reality, they lose control of their assets immediately.
✅ Protection Tip: You should never transfer private keys or full control of your wallet to anyone. Use only self-custody wallets unless working with licensed financial institutions.
4. Money Mule (Straw Account) Schemes
Scammers recruit individuals—often through fake job ads—to open bank accounts or exchange profiles used to launder stolen funds.
“Don’t share your ID or account details for ‘easy money’ jobs,” Lu warns. “You could be charged with money laundering.”
✅ Protection Tip: Avoid any opportunity requiring you to receive and forward funds, especially in crypto.
5. Air Coins (Ghost Tokens)
These are fake cryptocurrencies with no utility, team, or roadmap—created solely to pump and dump. Projects like IBCOIN and Magic Coupon Coin have already been exposed.
✅ Protection Tip: Research the team, check GitHub activity, review audit reports, and assess community engagement before investing.
👉 Learn how to identify red flags in new token launches before investing.
6. Meme Coin Volatility
While meme coins like Dogecoin or Shiba Inu can generate massive gains, they’re highly speculative.
"Most meme coin investors aren’t beginners," Lu notes. "They understand the risk. Newcomers should approach with extreme caution."
✅ Protection Tip: Allocate only a small portion of your portfolio—if any—to meme coins. Treat them as entertainment, not investment vehicles.
What to Do If You’ve Been Scammed: 4 Immediate Steps
Panic can worsen losses. Follow these steps if you suspect fraud:
- Report Immediately
Call Taiwan’s anti-fraud hotline at 165 or file a report with local authorities. - Stop All Transfers
Halt any pending transactions and secure your accounts with two-factor authentication (2FA). - Preserve Evidence
Save chat logs, transaction IDs, screenshots, and emails. Do not delete anything. - Beware of Recovery Scams
Fraudsters often pose as “asset recovery agents” offering to retrieve lost funds—for a fee. These are almost always scams themselves.
Building a Three-Layer Defense Against Crypto Fraud
Prevention beats recovery. Lu outlines a proactive strategy combining education, regulation, and institutional safeguards.
1. Investor Education
Public awareness campaigns and accessible learning materials can empower users to recognize red flags early.
2. Regulatory Frameworks
Upcoming VASP (Virtual Asset Service Provider) registration rules in Taiwan will improve oversight. Stronger licensing requirements and disclosure mandates will raise industry standards.
3. Banking & Exchange Collaboration
Banks and exchanges must work together to detect suspicious transfers—especially sudden large withdrawals or repeated ATM usage linked to known scam addresses.
“Joint monitoring systems can flag risky behavior before money leaves the ecosystem,” Lu explains.
Frequently Asked Questions (FAQ)
Q: Is Bitcoin legal in Taiwan?
A: Yes, Bitcoin and other cryptocurrencies are legal for trading and investment, though they are not recognized as official currency.
Q: Can I get my money back after sending crypto to a scammer?
A: Recovery is extremely difficult due to blockchain’s irreversible nature. Prevention is key.
Q: Are all overseas exchanges unsafe?
A: Not all—but many lack regulatory oversight. Always research licensing status and security practices.
Q: How can I verify if a crypto project is legitimate?
A: Check for transparent teams, smart contract audits, active development (e.g., GitHub), and community feedback on trusted forums.
Q: What does DYOR really mean?
A: It means taking personal responsibility for verifying every aspect of an investment—team, tech, tokenomics, risks—before committing funds.
Q: Should I trust influencers promoting crypto platforms?
A: Approach with skepticism. Verify their claims independently and look for conflict-of-interest disclosures.
👉 Access free educational resources to strengthen your crypto knowledge today.
By combining vigilance, education, and responsible platform choices, investors can enjoy the opportunities of the digital asset revolution—without falling prey to its dangers. Remember: in crypto, your best protection is knowledge.