How many pitfalls do newbies encounter in the crypto before becoming victims?
Five pitfalls, each with real-life examples. After reading this, you'll understand: these are pitfalls you almost can't avoid.
In the crypto, there's a saying: "Wealth redistribution"—the sickle takes your money, and you're left with the bill. How many pitfalls do newbies fall into, from entry to total loss? The following five pitfalls are all real-life tragedies. If you're considering "whether to give it a try," please read this carefully.
Pitfall 1: Copying others' trades can lead to financial ruin.
On social media platforms, a self-proclaimed "expert in the crypto for 8 years" posts screenshots of his profits daily, with comments section filled with "Thank you, teacher." You add him on WeChat, deposit 1000 yuan, follow his instructions, earn 200 yuan, and can even withdraw it. So you deposit 100,000 yuan—the platform shuts down, and the "teacher" blocks you.
Why did you fall for it? Because scammers understand human nature: they let you taste the sweetness first. That successful withdrawal of 200 yuan was the key to lowering your guard. You thought you'd met a benefactor, but you'd actually encountered an entire fraud ring—the "teacher," customer service representatives, and the "students" in the group were all their people. The 100,000 yuan you deposited was transferred away through dozens of cards within minutes.
Real-world example: In 2025, a platform called DELOX launched the "Real Trading Club," claiming it could replicate the trading strategies of "trading geniuses" with a single click. Countless novices rushed in, drawn by the promise of high returns, only to find the platform suddenly bankrupt, leaving users with $16 million in lost funds . The "genius traders" showcasing their trades were all fake, their identities fabricated.
There's an even more insidious method called the "plumber model" : Scammers first buy several active WeChat groups, then replace the group owners with their own people. Suddenly, they release a "new token" in the groups, claiming it's the "next 100x coin." Shills in the groups frantically post their profits, KOLs echo the shill, and newbies rush to buy. Once the project team cashes out and leaves, the token price plummets to zero overnight. You think you're making money by following "experts," but actually, the scammers are fleecing you.
Pitfall 2: Contract leverage, overnight liquidation
If you're lucky enough to avoid losses in copy trading, the next step will most likely involve leverage. The crypto packages "contract trading" as "high-risk, high-reward"—if you dare to use 100x leverage, your assets can double in minutes. But nobody tells you: with the same leverage, a 1% adverse price movement can wipe out all your funds instantly.
A classic analogy: "A contract is like a race car with the accelerator welded shut; you either crash or you fall to your death, there's no safe way to get off."
Why is leverage poison? Because it amplifies your greed. When you make a profit once with 100x leverage, you'll feel like you're "chosen one." You'll increase your position size and leverage even higher. But a small market reversal can wipe out all your capital and profits. Even worse, many people, unwilling to accept defeat after being liquidated, borrow money to continue gambling—ultimately losing everything.
Real-world example 1: In April 2026, a trader opened a $33.3 million long position on FARTCOIN. He thought he could control the market. Within just four hours , the entire position was forcibly liquidated, resulting in a loss of $3.02 million . He wasn't the first, and he won't be the last.
Real Case 2: A trader with some reputation in the crypto grew his initial capital of 3 million to 30 million two months ago using high leverage. He thought he had found the "holy grail." However, in the recent market surge, he lost a net of 18 million USD in just 7 days , leaving his account with only 300,000 USD. From peak to trough, it only took a week.
Three possible outcomes for retail investors in the crypto:
- He was liquidated and forced out of the market, and has not been heard from since.
- Becoming addicted to high leverage leads to a deeper and deeper entrapment, ultimately resulting in a more devastating loss.
- He survived by sheer luck, but his initial investment of 100,000 yuan was reduced to a pittance.
Pitfall 3: Air coins (cryptocurrencies with no real value), project teams run away with the money.
Some newbies might say, "I don't touch futures contracts; I'll just stick to buying mainstream or trending new coins." Sorry, but what you're buying might not be a coin at all, but a sophisticated scam.
How are worthless cryptocurrencies created? Project teams spend a few thousand dollars to have a beautiful white paper written, steal a few photos from the internet to create a "luxury team," and then pay a few "crypto KOL" to endorse them. They then build a community where shills spam the chat with messages like "I'm on board!" and "Ready to take off!" Finally, the token is listed, the price is quickly driven up, and newbies rush in to buy—only to have the project team "dump the internet" and abscond with all the money in the liquidity pool. The tokens you hold become nothing more than a string of worthless code.
Real Case 1 (Fake Pump): In September 2025, the MYX token staged a textbook example of a pump-and-dump scheme. Within a week, the price surged from $1.30 to $18.42, an increase of over 1300%. However, strangely, the project made no announcements or product updates, and no real transactions could be found on the blockchain. Those in the know immediately recognized it as a fake pump . The token was firmly controlled by a few wallets behind the scenes, who could dump it whenever they wanted. Retail investors who rushed in at the peak were left with nothing but losses.
Real Case 2 (Pyramid Scheme-Style "Air Cryptocurrency"): In 2026, the Taizhou Cyber Police in Zhejiang Province reported a large-scale cryptocurrency fraud case. The criminal gang first launched a points-based project using "facial recognition payment devices" to attract ordinary people to participate. Once they had a large user base, they began to induce them to buy their own issued "air cryptocurrency." Then, through a three-pronged approach of locking up tokens, manipulating prices, and forcing "coin swaps," they continuously siphoned off funds. Ultimately, more than 130 investors were defrauded of approximately 35 million yuan . You think you're investing in "future internet infrastructure," but in reality, you're investing in "code air" created by someone else using a white paper written in Word.
Pitfall 4: Cloud mining, a Ponzi scheme where you get something for nothing.
If you think buying cryptocurrencies is too risky, there's another concept in the crypto"mining." Sounds much more reassuring, right? You have the technology, the equipment, and the output. But as an ordinary person, you can't possibly buy thousands of mining rigs to mine at home. That's where "cloud mining" comes in: you just need to spend a few thousand dollars on a mining power package through an app, and the system will generate cryptocurrency for you every day—earn money while you sleep.
Wake up, it's all fake. The vast majority of "cloud mining" platforms have hard-coded backend data. The screen showing "0.001 BTC produced daily" is essentially a numbers game—every time you refresh, the backend adds a fake entry. Your principal never participates in mining; it goes directly into the scammer's wallet.
Real Case: In 2026, prosecutors in Taichung, Taiwan, dismantled a transnational fraud ring. They claimed to have developed a "mining accelerator," attracting customers to subscribe at $1,000 per unit. They also launched their own "BTH coin" and "MONO cold wallet" app, boasting a complete ecosystem of "own coin, own blockchain." What happened? The so-called "blockchain" was merely a single-node webpage , controllable by a single person in the backend. The mining profits displayed on the front end were entirely fake. The principal and fake profits were ultimately exchanged for worthless shit coin. Ten victims were defrauded of 5 million yuan .
Policy Red Line: In March 2026, a "315" themed report reiterated that cryptocurrency "mining" has been completely banned in China. Any "cloud computing power" investment promising fixed high returns is a Ponzi scheme. If you see advertisements promising "daily returns of 2%-5%", the answer is simple—someone is directly taking your principal from your pocket.
Pitfall 5: Pig butchering scam, fake platform, fake returns, fake withdrawals
If you say, "I don't trust anyone, I just stick to legitimate exchanges," you might not know that illegitimate platforms, fake exchanges, and pyramid schemes are using the most ruthless methods to fleece retail investors.
This type of scam is the most insidious blow in the crypto: fake platforms + fake data + fake withdrawals + misleading sales pitches . The whole process makes you feel like you've "made money," but the moment you try to withdraw your money, all sorts of obstacles and excuses are thrown at you.
Scam Analysis: Scammers first add you as a friend through social media (TikTok, WeChat, dating websites), chatting for a few days to build trust. Then, they "casually" mention making a lot of money investing in cryptocurrency and invite you to join them. If you invest a small amount, the platform shows you've made a profit; if you invest a larger amount, the platform shows you've earned even more. When you try to withdraw your money, customer service says, "You need to pay a 20% handling fee," "You need to make up for the exchange rate difference," or "Your account is abnormal and needs an unfreezing fee." You keep paying until you run out of money—then the platform disappears, and the scammer becomes unreachable.
Real Case 1 (Macau): A Macau woman was lured by an online acquaintance to invest in cryptocurrency. Starting in September 2025, she transferred 1.18 million Macau Patacas to a designated account in eight separate transactions. The investment platform initially showed her account balance as high as 7.9 million Patacas . Overjoyed, she prepared to withdraw her funds. Customer service said, "You need to pay 250,000 Patacas for the exchange rate difference first." She paid. Then, the platform became inaccessible, and the online acquaintance disappeared. The 1.18 million Patacas vanished completely.
Real Case 2 (Hong Kong): Hong Kong police disclosed that a retiree was deceived three times by different "cryptocurrency experts." Each time, the script was the same: meeting online, being recommended a platform, making small profits by trying it out, investing large sums, being unable to withdraw funds, and then being scammed by another "expert"... Over six months, he was defrauded of a total of HK$6.6 million . His retirement savings were completely drained by the scammers who repeatedly blocked him, changed his contact, and blocked him again.
This story of "a paper profit of 7.9 million" that can't be withdrawn is almost a standard script in all pig butchering scams. The numbers you see are fake; your "profits" are just bait to lure you into throwing more principal into the trap.
In conclusion: The biggest pitfall is wanting to "take a gamble."
After reading about these 5 pitfalls, you might think, "I won't make these mistakes." — But that's exactly the answer scammers love to hear.
Because what truly preys on you is often not a specific scam or trick, but rather the last bit of stubborn greed within your own humanity.
When you've lost almost all of your initial investment of tens of thousands of yuan, you're unwilling to give up. You cash out your credit cards, borrow money from relatives, and even use your children's tuition fees, trying to "win back what you've lost." This is the true mark of a "leek" (a term for someone who is easily taken advantage of). Those victims who were scammed out of 1.18 million, 35 million, or 6.6 million yuan all initially invested only a small amount.
In the crypto, every time someone cries out, "I just want to win back the 100,000 I lost," they've already lost. From the moment they entered the market, they were gambling against a group of meticulously trained professional scammers. And in that gamble, retail investors have never won.
There's a saying in the stock market: "Bull markets are the main reason why retail investors lose money." If we apply this to the crypto, it might need to be revised to:
"Entering the market is the only reason why retail investors lose money."
The best investment is to avoid it altogether. Share this article with your friends who are still dreaming; it might just save their life savings.
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