Skip to content Skip to Search
Skip navigation

Crypto scams are widespread – here’s how to protect yourself

The UAE's standardisation of crypto transactions has boosted their leverage to buy real-world assets – but there are reasons to remain wary

Creative Commons
UAE is doubling financial support to low-income Emirati families to 28 billion dirhams ($7.6 billion) to help with soaring inflation in the Gulf state

The UAE has embraced the tremendous potential of cryptocurrency and blockchain technologies – and that is undeniably a good thing.

One of the positive outcomes of standardising crypto transactions in the UAE has been the boosting of its leverage to buy real-world assets.

But there are reasons to remain wary of cryptocurrency. 

Government efforts to secure crypto transactions don’t yet prevent scams. And it remains a fact that the anonymous nature of crypto encourages fraudsters. 

According to Tarek Mohammed, head of the digital assets crime section at Dubai Police, in the first half of 2021 there were hundreds of cases of crypto scams in Dubai with victims losing up to AED80 million in total.

Crypto fraud unpacked

Scams can occur using diverse means and tactics:

  • Transfer recall scam
    The scammer buys cryptocurrencies, sends funds to the seller and receives the tokens. They will then file a fraudulent complaint with their bank, pretending they were the victim of a scam to recall the transferred funds.
  • Peer-to-peer transactions using illegally gained money
    A person offers to purchase tokens at a good price in exchange for cash, bank transfers or a cheque. Crypto asset sellers are, in fact, receiving money from criminal proceedings.
  • Rubber cheque
    The scammer offers to buy cryptocurrency at a good price using a bank cheque which is in fact a rubber cheque later refused by the seller’s bank.
  • Third party scam
    The scammer, posing as a broker, finds a seller and a buyer and offers them a lucrative deal. The broker convinces the buyer and the seller to meet in person for the transaction and asks the buyer to bring cash.

    The fake broker then gives the buyer’s money to the seller and asks the seller to send the cryptocurrency to a trading account, which is his own account instead of the buyer’s account.
  • Copycat administrator
    The scammer messages the user, posing as an administrator, pretends to have interest in the query and offers help which involves asking for the target’s private keys to steal the member’s account details and get wallet access.
  • Pump and dump crypto group
    Supposed utility tokens with little or no future potential use are pumped by the scammer (the founder or an insider) who then sells his tokens on a short-lived exponential rise in price on crypto exchanges, which then crashes, leaving the second wave of investors holding useless and worthless tokens.
  • Giveaway scam
    |The victim is tricked by being offered free crypto assets (cryptocurrency or NFTs) in exchange for his wallets’ public addresses and private keys. The giveaway advertisement can be from legitimate pages.
  • Counterfeit NFTs
    The scammer hacks a NFT, recreates it and sells it on legitimate platforms.

In most of these scams, the scammer enters into agreements with the victim via social media platforms, mostly Telegram groups without having a formal agreement in place. 

How to avoid these scams

There are general precautions to keep in mind when buying or selling crypto assets.

First, it is imperative to not share your personal information or entertain anonymous calls, messages and ads that often claim to be from licensed companies.

It is essential to conduct all transactions using exchange platforms regulated by the UAE financial regulator by checking, for example, with Dubai Financial Service Regulatory Authority (DFSA) or the Abu Dhabi Global Market (ADGM) for their licence and regulatory permission. 

What’s more, the UAE Security and Commodities Authority (SCA) has added entity names or Twitter accounts to its list of alerts for those falsely claiming to be regulated by the SCA.

Likewise, the DFSA publishes alerts about fraudulent crypto assets falsely claiming to be regulated by Dubai International Financial Centre.

Michael Kortbawi is a partner at BSA Ahmad Bin Hezeem and Associates LLP

Latest articles

Despite optimism from hedge funds and traders, oil prices remain relatively stable

Analysts optimistic on oil but the price stays steady

Global hedge funds and money managers have become increasingly optimistic about the short term outlook for oil prices in recent months, despite the oil price remaining flat at around $80 a barrel. The net length held by hedge funds and other money managers in WTI (West Texas Intermediate) futures and options has risen to its […]

Nadhim Zahawi, formerly chancellor of the UK, is thought to be leading a consortium of investors for a £600m bid

UAE’s RedBird IMI hopes for speedy sale of The Telegraph

Nadhim Zahawi, the former chancellor of the UK, is fronting one of seven bids to buy the Daily Telegraph newspaper and The Spectator magazine, which is owned by RedBird IMI, a US investment group backed by Abu Dhabi’s International Media Investments. The deadline for the first round of bidding was completed on Friday, although more offers […]

Egypt external debt

Egypt external debt makes record drop

Egypt’s external debt decreased by over $14 billion between December 2023 and May 2024, the steepest drop on record according to its Central Bank (CBE). External debt fell from a record high of $168 billion at the end of December to $154 billion at the end of May, a decrease of 8.4 percent. The drop […]

UAE trade minister Thani bin Ahmed Al Zeyoudi at the WTO ministerial meeting in Abu Dhabi in February. He said 'We are getting the support from many of the EU members'

UAE to revive EU trade talks before year-end

The UAE plans to restart trade talks with the European Union by the end of the year despite a broader agreement with GCC remaining on hold, according to a news report. The UAE has initiated the discussion both through the GCC and bilaterally, Reuters reported, quoting trade minister Dr Thani bin Ahmed Al Zeyoudi. “We are […]