Crypto Exchange Fraud: How Scams Work and How to Avoid Them

When you hear about crypto exchange fraud, the deliberate deception of users by fake or compromised cryptocurrency trading platforms. Also known as crypto exchange scams, it’s not just about hacked wallets—it’s about entire platforms built to vanish with your money. These aren’t rare accidents. They’re calculated schemes, often run by organized groups who know exactly how to trick new users into trusting them.

Look at what happened to Altsbit, a small exchange that collapsed after a 2020 hack stole nearly all user funds. Or Blockfinex, a platform with no verified volume, no user reviews, and zero transparency. Then there’s Polyient Games DEX, a fake decentralized exchange that never existed but tricked people into thinking it did. These aren’t outliers. They’re textbook examples of how fraud works: fake websites, cloned logos, fake testimonials, and promises of low fees or high yields that sound too good to be true—because they are.

It’s not just about shady exchanges. crypto theft, the illegal extraction of digital assets through hacking, phishing, or insider collusion, often starts with a fake login page. Scammers mimic Coinbase, Binance, or even smaller platforms like Libre or DogeSwap. They wait for you to enter your seed phrase, then drain your wallet before you even realize you’re on the wrong site. And when you go to complain? There’s no customer service. No legal recourse. No refund. That’s the reality for thousands of people every year.

Some frauds are even more elaborate. Take the OFAC sanctions, U.S. government actions targeting criminal crypto networks tied to North Korea and Myanmar. These aren’t random hackers—they’re state-backed operations stealing billions, laundering it through fake exchanges, and using it to fund illegal activities. Meanwhile, projects like Videocoin by Drakula, a token copied from a real project but with zero development or team, prey on people who don’t know how to check if a project is real. They use fake whitepapers, copied code, and influencer shills to create the illusion of legitimacy.

So how do you stay safe? Start by asking: Is this exchange audited? Is there real trading volume? Are the team members verifiable? Does it have a history of complaints? If the answer is no to any of these, walk away. You don’t need to chase the next big thing. You just need to avoid the next big loss.

Below, you’ll find real cases of exchanges that failed, tokens that vanished, and scams that tricked thousands. Each story is a lesson. Learn from them before you lose your next coin.