Is It Risky to Buy Crypto? What Are the Common Scams?

Ruby Layram 19th Feb 2026 No Comments

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Cryptocurrency has gone from a niche tech experiment to a mainstream investment, and with that rise has come a wave of curiosity, and unfortunately, a wave of scams too.

If you’re thinking about buying crypto, it’s smart to ask: Is it risky? And how can I avoid getting scammed?

The honest answer is, yes. Crypto carries risks. Understanding these risks is important, but does not eliminate them or protect you from losses.

In this post, we will explain the main risks that come with investing in crypto and the most common scams to avoid.

Is It Risky to Buy Cryptocurrency?

Yes, crypto comes with significant risks that should not be ignored by investors. However, many of the risks associated with investing in crypto can also be found in other types of investments, including stocks, property and startups!

Just because something is risky doesn’t mean it’s always a bad idea, but it does mean you should go in with your eyes open.

Here are some of the main risks to be aware of.

1. Extreme price volatility

Crypto prices can rise and fall dramatically within hours.

It’s not unusual to see:

Daily price swings
Sudden crashes
Rapid hype-driven rallies

This volatility makes crypto exciting, but also dangerous if you panic sell or invest money you can’t afford to lose.

Only invest what you can afford to lose entirely (just in case!).

2. Limited regulation

Unlike banks and stock markets, crypto is only lightly regulated in many countries.

That means:

Less consumer protection
No guaranteed refunds
Harder to recover stolen funds
Scammers can operate more easily

If something goes wrong, and you aren’t on an FCA-registered platform, there’s often no customer service.

3. Technology risks

Cryptocurrency exists entirely online. Crypto relies on digital wallets, private keys and exchanges.

If you:

Lose your password
Lose your recovery phrase
Send crypto to the wrong address

your money could be gone forever.

There is no “reset password” for blockchain transactions.

This is why it can be useful to keep your crypto in a centralised exchange, such as CoinJar. These platforms often have recovery solutions that can be used to access your account, recover lost passwords and assist you with keeping your portfolio safe. While this means that if the exchange collapses or is hacked, your funds are at risk, it is also great for beginners.

4. Fake projects and hype coins

Thousands of cryptocurrencies exist, and many are created for pure speculation. These may have flashy websites but no real product, or even disappear overnight (often called rug pulls). Some are just for fun with no real value outside of social media sentiment.

Also read: Addressing common misconceptions about crypto

Common Crypto Scams to Watch Out For

Scammers target both beginners and experienced investors. Here are the most common traps to be aware of.

1. Fake investment platforms

These look like real crypto exchanges but are actually scams.

They may:

Show fake profits
Let you deposit money
Block withdrawals
Ask for more money to “unlock” funds

Once you send crypto to these platforms, it’s usually gone.

2. Social media scams

Social media is rife with scammers who devise clever ways to get your money! There are many types of social media scam but commonly, a scammer befriends you online and slowly introduces crypto investing.

They might:

Pretend to be successful traders
Share screenshots of profits
Guide you to a fake website
Encourage bigger and bigger deposits

This is called pig-butchering.

3. Fake celebrity endorsements

Scammers use deepfake videos or hacked accounts claiming:

Elon Musk is giving away Bitcoin
A famous investor guarantees returns
A “new secret coin” is launching

If it sounds too good to be true, it is!

4. Pump-and-dump schemes

This is perhaps one of the most common crypto scams to be aware of! Groups hype up a small coin on social media to encourage investment.

They might say things like:

“This coin will 10x!”
“Last chance to buy!”
“Going to the moon!”

Early promoters sell once the price rises, and everyone else is left with losses.

In this case, social media is used to manipulate the price of a coin (called a pump and dump scheme).

5. Phishing emails and fake wallet apps

Scammers send emails or messages pretending to be:

Exchanges
Wallet providers
Customer support

They trick you into entering your password or recovery phrase. Once you give them this information, they will be able to access your funds.

Never share your password, private key or seed phrase, ever.

How to Stay Safe When Buying Crypto

Yes, cryptocurrency does come with risks. However, these risks can be mitigated by following best practices.

Also read: What I wish I knew before buying my first Bitcoin

1. Use trusted exchanges only

Stick to well-known platforms with:

Security measures
Two-factor authentication
Regulatory oversight
Good reputations

Avoid random links from social media or WhatsApp groups. If possible, stick to FCA-registered exchanges (as a UK investor).

2. Enable two-factor authentication (2FA)

Always use:

A strong password
2FA via an app (not SMS if possible)
Email alerts for logins and withdrawals

This reduces hacking risk.

3. Never share your recovery phrase

Your recovery phrase = your money.

No legitimate company will ever ask for it.

If someone does, it’s a scam.

4. Beware of ‘guaranteed’ returns

There is no such thing as guaranteed profit in crypto.

Any offer promising:

Risk-free income
Fixed returns
“Insider tips”

should be avoided. It is probably too good to be true!

5. Research before you buy

Don’t invest blindly. It is important that you understand the cryptocurrency you are investing in, before you place an order.

Ask:

What problem does this coin/project solve?
Who runs the project?
Is there a real product?
Is it widely used?

If it was created just for fun or has no real use, then think carefully before buying.

6. Start small

As with any new investment, you don’t need to go all-in.

Start with a small amount (say £10), and gradually increase your investment over time.

Try:

Small amounts
Well-known coins like Bitcoin or Ethereum
Long-term holding rather than day trading

Learning slowly is safer than rushing in.

Should You Avoid Crypto Completely?

No, crypto can be part of a diversified portfolio, but it should be a small percentage rather than the entire portfolio. Of course, no investment should be relied on for essential savings.

Think of crypto like any risk asset: exciting, but not guaranteed.

Final Thoughts

Crypto isn’t automatically dangerous, but ignorance is.

The biggest risks come from:

Lack of research
Emotional decisions
Falling for scams
Investing more than you can afford to lose.

If you stay vigilant, follow best practices and only invest money that you can afford to lose, cryptocurrency can be a good way to diversify your investments.

Disclosure

Don’t invest unless you’re prepared to lose all the money you invest. This is a high‑risk investment and you should not expect to be protected if something goes wrong. Take 2 minutes to learn more: www.coinjar.com/uk/risk-summary.

Cryptoassets traded on CoinJar UK Limited are largely unregulated in the UK, and you are unable to access the Financial Service Compensation Scheme or the Financial Ombudsman Service.

We use third party banking, safekeeping and payment providers, and the failure of any of these providers could also lead to a loss of your assets. We recommend you obtain financial advice before making a decision to use your credit card to purchase cryptoassets or to invest in cryptoassets. Capital Gains Tax may be payable on profits.

CoinJar’s digital currency exchange services are operated in the UK by CoinJar UK Limited (company number 8905988), registered by the Financial Conduct Authority as a Cryptoasset Exchange Provider and Custodian Wallet Provider in the United Kingdom under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, as amended (Firm Reference No. 928767).

Standard Risk Statement

The above article is not to be read as investment, legal or tax advice and it takes no account of particular personal or market circumstances; all readers should seek independent investment advice before investing in cryptocurrencies. The article is provided for general information and educational purposes only, no responsibility or liability is accepted for any errors of fact or omission expressed therein. Past performance is not a reliable indicator of future results.

UK residents are required (in accordance with local legislation) to complete an appropriateness assessment to show they understand the risks associated with what crypto/investment they are about to buy and enabling CoinJar to categorize them as an investor. New customers are also required under local regulations to wait 24-hours as a “cooling off” period (from account creation), before their account is active (i.e. to deposit, trade, withdraw etc.).

Cryptocurrency is currently not regulated in the UK. It’s vital to understand that once your money is in the crypto ecosystem, there are no rules to protect it, unlike with regular investments. You should not expect to be protected if something goes wrong. So, if you make any crypto-related investments, you’re unlikely to have recourse to the Financial Services Compensation Scheme (FSCS) or the  Financial Ombudsman Service (FOS) if something goes wrong.

Remember:

If you use a credit card to buy cryptocurrency, you would be putting borrowed money at a risk of loss. We recommend you obtain financial advice before making a decision to use your credit card to purchase cryptoassets or to invest in cryptoassets.

Note the standard risk warning from the CoinJar website.

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Is It Risky to Buy Crypto? What Are the Common Scams?