Captain’s note
- No legitimate business is going to demand you send cryptocurrency in advance, the FTC says.
- The SEC says BitConnect collected about 325,000 bitcoin, worth about $2 billion at the time, through a platform that encouraged investors to lend it their bitcoin.
- Crypto payments typically are not reversible; you usually get money back only if the person you paid sends it back, according to the FTC.
A real crypto loan asks you to hand over bitcoin as collateral. That is exactly what a scammer wants too, which makes lending one of the easiest crypto products to fake. The patterns below come from what the FTC, SEC and CFTC have described in their warnings and cases. None of them requires technical skill to spot once you know what to look for.
The fake lending platform
The website looks professional, shows a loan calculator and offers better terms than any known lender. You send bitcoin as collateral and receive nothing, or receive a loan and then find you cannot get the collateral back. The FTC describes the same mechanics in investment scams: a website that looks real but is fake, where the account balance appears to grow until you try to withdraw.
Before sending anything, the FTC suggests searching online for the company’s name with words like review, scam or complaint. The SEC suggests checking the license and registration status of anyone offering an investment, and the CFTC urges people to verify a firm’s registration before committing funds.
Advance fees in crypto
A lender approves your loan, then asks for a fee, insurance payment or tax deposit in crypto before releasing the money. The FTC’s rule is short: no legitimate business is going to demand you send cryptocurrency in advance, not to buy something and not to protect your money. That is always a scam.
Guaranteed returns for lending your bitcoin
The other side of a lending platform is the pitch to lend your bitcoin for interest. The SEC’s case against BitConnect is the classic example: the platform encouraged investors to lend it their bitcoin, collected about 325,000 bitcoin worth roughly $2 billion at the time, promised profits from a trading bot, paid withdrawals out of incoming investor funds and collapsed. The FTC adds that only scammers guarantee profits or big returns.
Not every high-yield product was an outright fraud, but the line can be thin. The FTC says Celsius promised up to 18 percent annual yield while misusing deposits; that story is in Lessons From Crypto Lender Bankruptcies: Celsius, Voyager and BlockFi.
Impersonators
Scammers pretend to be well-known companies, the FTC warns, and say there is fraud on your account or your money is at risk, and that to fix it you need to buy crypto and send it to them. A message that claims to come from your lender and asks you to move collateral to a new address, or to share a recovery phrase, fits this pattern. The FTC itself says it will never demand money, make threats or tell you to transfer money; legitimate companies behave the same way.
Romance and relationship pitches
The FTC’s advice is never to mix online dating and investment advice: if someone you met on a dating site or app wants to show you how to invest in crypto or asks you to send crypto, it is a scam. The same applies to a new online friend who recommends a little-known lending platform with unusually good rates.
Red flags at a glance
| Red flag | Why it matters |
|---|---|
| Fees demanded in crypto before you receive a loan | The FTC says that is always a scam |
| Guaranteed or very high returns for lending bitcoin | Only scammers guarantee returns, the FTC says |
| Pressure to move collateral to a new address | A common impersonation tactic |
| Requests for your recovery phrase or private key | Anyone with them controls your crypto |
| Testimonials and celebrity endorsements | The SEC warns fraudsters pay people to tout investments |
| Unregistered or unknown company | Regulators say to verify registration first |
Why speed matters
Crypto payments typically are not reversible, the FTC notes; once you send crypto, you usually get it back only if the recipient sends it back. Transactions are recorded on a public blockchain, which can sometimes help identify the people involved, but that is no substitute for not sending.
If you already sent crypto
Stop sending more, including any fee a stranger says will unlock a refund. Contact the exchange you used to send the crypto, and report the scam to the agencies below with the wallet addresses, transaction details and any messages. Be realistic about recovery: the CFTC cautions that even court orders requiring repayment may not always get money back, because the people behind a fraud may not have the funds.
Where to report
- The Commodity Futures Trading Commission at CFTC.gov/complaint.
- The Securities and Exchange Commission at sec.gov/tcr.
- The FBI’s Internet Crime Complaint Center at ic3.gov.
- The FTC at ReportFraud.ftc.gov.
- The crypto exchange you used to send the money.
Tip: Before borrowing from any platform, check that you reached it by typing its address yourself, not through a link in a message or an ad.
Legitimate lenders still carry risk; compare them with How to Compare Crypto Lenders: A Checklist Built From Regulators’ Warnings.