Cryptocurrency was supposed to change the financial system, offering decentralised and secure alternatives to traditional banking.
But as 2024 proved, not all crypto platforms live up to their promises. From billion-dollar bankruptcies to fraudulent schemes, major scandals have rocked the industry, leaving investors scrambling.
In this article, we get into the FTX scam—explained, break down the Celsius fraud case, and explain how to identify fake cryptocurrency in Australia. If you’re investing in crypto, knowing the warning signs can help you avoid becoming the next victim.
FTX Scam Explained: What Happened?
The FTX scam scandal remains one of crypto history’s most talked-about financial disasters. The once-dominant exchange, founded by Sam Bankman-Fried, collapsed after it was revealed that customer funds had been misused to cover losses at its sister company, Alameda Research.
FTX marketed itself as a reliable trading platform, attracting millions of users. But behind the scenes, executives were moving customer assets without consent. When reports surfaced about financial mismanagement, panic set in, and investors rushed to withdraw their funds—only to find that FTX didn’t have the money.
Authorities quickly stepped in, charging Bankman-Fried and other key players with fraud. The case not only highlighted the risks of centralised crypto exchanges but also raised serious concerns about regulatory oversight.
Celsius Network: Another Crypto Collapse
While FTX grabbed headlines, Celsius Network also faced a major reckoning in 2024. The platform, which claimed to offer high-yield crypto savings accounts, was running an unsustainable business model.
Celsius promised users they could deposit cryptocurrency and earn passive income through lending and investments. In reality, executives were making risky bets with customer funds. When the market crashed, Celsius froze withdrawals, leaving thousands of investors locked out of their accounts.
The Celsius fraud case led to lawsuits, regulatory action, and financial losses for everyday investors. It’s a cautionary tale about trusting platforms that offer guaranteed high returns—because in crypto, nothing is guaranteed.
How to Identify Fake Cryptocurrency in Australia
Scammers have taken advantage of the hype surrounding digital assets, launching fake cryptocurrencies to trick investors. These fraudulent projects often make bold claims, promising rapid gains with little risk. But how do you spot them?
Here’s how to identify fake cryptocurrency in Australia:
- Check regulatory approval – In Australia, legitimate exchanges and crypto projects must comply with ASIC regulations. If an investment opportunity lacks clear licensing, that’s a red flag.
- Verify the whitepaper – Authentic crypto projects provide detailed documentation explaining their goals, technology, and tokenomics. If the whitepaper is vague, copied, or full of buzzwords, proceed with caution.
- Look for team transparency. Trustworthy projects disclose the identities and backgrounds of their developers, while scams often hide behind anonymous teams.
- Avoid unrealistic guarantees – If a cryptocurrency promises huge profits with zero risk, it’s likely a scam. No legitimate investment works this way.
- Check for independent audits – Reputable crypto projects undergo third-party security audits. If there’s no audit or the audit comes from an unknown firm, be sceptical.
Scammers are always looking for ways to exploit crypto investors. Knowing the warning signs can help protect you from a cryptocurrency investment scam before it’s too late.
Common Crypto Scam Types in Australia
Crypto fraud isn’t limited to fake coins. Scammers use various tactics to steal money from unsuspecting investors. Some of the most common crypto scam types in Australia include:
- Ponzi Schemes – Fraudsters promise high returns but use new investors’ money to pay earlier participants. Eventually, the scheme collapses.
- Fake Wallets & Exchanges – Scammers create fake apps or websites that steal login credentials and private keys.
- Pump and Dump Schemes – Organised groups artificially inflate a coin’s price and then sell off their holdings, leaving other investors with worthless tokens.
- Romance Scams – Fraudsters build online relationships and convince victims to invest in fake crypto schemes.
To avoid these traps, always research any investment opportunity and only use regulated exchanges.
What is an Investment Scam?
So, what is an investment scam? It is any scheme designed to trick people into handing over their money with false promises of profit. In the crypto world, these scams can be particularly damaging due to the lack of regulation and the irreversible nature of blockchain transactions.
Investment scams often target new investors who may not fully understand how cryptocurrency works. Scammers use social media, fake endorsements, and pressure tactics to lure people into their schemes. If an investment seems too good to be true, it probably is.
Can You Get Your Money Back After a Crypto Scam?
Recovering lost funds from a crypto scam is challenging, but not impossible. Here are some steps to take:
- Report the scam – Contact the Australian Financial Complaints Authority (AFCA) or ASIC to file a report.
- Contact your exchange – If you transferred funds through a legitimate exchange, report the fraud immediately.
- Seek legal advice – A financial fraud specialist may be able to assist in tracing stolen funds.
- Stay informed – Learning about common types of Bitcoin scams can help prevent future losses.
Protect Yourself from Crypto Fraud
The collapses of FTX and Celsius are reminders that even the biggest platforms can fail. Whether you’re trading, investing, or just exploring the crypto space, staying informed is the best way to avoid becoming a victim.
To learn more about how fraudsters operate, read more about investment scams and keep your money safe in the digital age.
