How Do Crypto Scammers Hijack Your Mind? Expert Insights on Avoiding Pitfalls
Apr 01, 2025The crypto landscape is brimming with opportunities yet fraught with danger. Scams and bad actors are rampant, leaving many hesitant to participate. But is the crypto world really that perilous? And how can you safeguard yourself from becoming a fraud victim, whether you're new to the game or you've been around for awhile?
Drawing on the expertise of Kirk David Phillips, a CPA and certified fraud examiner, and founder of Crypto Bullseye Zone™, and Jonathan Logan, who has 30 years of expertise in psychology and neurolinguistic programming, this post illuminates the psychological techniques employed by crypto scammers and provides actionable strategies for maintaining control while securely navigating the crypto world.
What is the psychology behind scamming?
Jonathan explains how scammers often exploit our stress and emotional vulnerabilities to influence our decision-making. He notes that, like legal clients who struggle with stress impacting their judgment, crypto investors can fall prey to scams when they're not in a clear, grounded state of mind.
"The stress impacts their decision-making ability and the way they experience their lives," he explains. This stress, whether real or imagined, future or past-oriented, can cloud our judgment and make us more susceptible to manipulation.
How can you recognize and avoid crypto scam tactics?
The key, according to Jonathan, is to regain "agency" in your life – to move from being a passive passenger to an active driver. This means taking control of your thoughts, emotions, and actions, rather than being at the whim of external forces or internal anxieties.
- Become a learner - Adopt a "white belt mentality," acknowledging that you don't know what you don't know.
- Seek education - Invest in learning about the crypto space, its risks, and security measures.
- Find mentors - Surround yourself with knowledgeable individuals who can guide you and provide valuable insights.
What are the biggest threats in the crypto space?
Kirk introduces a framework for understanding threats in the crypto world, identifying "three enemies" that investors must be aware of:
- The external enemy (hackers, scammers) - This is the threat most people immediately think of – the hackers and scammers trying to steal your funds.
- The enemy within (organization) - This refers to the risk of trusted team members or insiders turning rogue and undermining your efforts.
- Yourself - Kirk argues that you are your own worst enemy, as lack of education and poor decision-making account for the majority of losses.
Why are you your own worst enemy in crypto?
Kirk emphasizes that while external threats exist, the biggest risk lies within ourselves. He estimates that 80% of the problem stems from a lack of education, training, and proper navigational tools.
"It really comes down to you. You're the problem," he asserts. "Because you didn't get educated. You didn't get trained…You didn't get the right navigational tools."
Imagine buying a million-dollar yacht in Miami and setting sail without any training or knowledge of navigation. You wouldn't know where the safe passages are, where the coral reefs lie, or how to avoid running aground. Similarly, entering the crypto space without proper education is a recipe for disaster.
Related: Comprehensive Guide to Crypto Risk Management
How do blind spots affect your crypto investments?
"Blind spots" are the things you don't know that you don't know. These blind spots can significantly impact your investment decisions, leading to costly mistakes.
"The blind spot piece, the what you don't know that you don't know, that's probably 80% of the pie," Kirk suggests.
Jonathan adds a simple yet profound piece of advice: "The first step is to say, even if I don't think I have a blind spot, I do. And my blind spot might be thinking that I don't think I have one."
Acknowledging the existence of blind spots is the first step towards uncovering them. From there, you can actively seek out education, mentorship, and experiences that broaden your perspective and fill in the gaps in your knowledge.
Key takeaways for crypto investors
- Education is paramount - The most significant risk in the crypto space is a lack of knowledge and understanding. Invest time and resources in educating yourself about the technology, security measures, and potential crypto scams.
- Cultivate self-awareness - Recognize that your emotions and biases can influence your decisions. Practice mindfulness and seek feedback from trusted sources to identify and address your blind spots. (The Crypto Mindset course is a great place to start.)
How does a mindset of vulnerability protect you in crypto?
Having a vulnerability mindset means knowing that anyone—including you—can be a scam victim at any time. Whether you're a newbie or a crypto OG, you have to remind yourself to be vigilant on a daily basis. You never graduate to a place of immunity from scams and fraud. Even people with the highest level of fraud and scam intelligence could fall into a trap on any given day. You have more defensive power when you keep an awareness of your vulnerability.
As always, your goal is to get a Crypto Bullseye™.
Yours in crypto,
Kirk David Phillips, CPA, CMA, CFE, CBP
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