How to avoid Bitcoin scams

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How to avoid Bitcoin scams

Although Bitcoin is a safe, secure banking and finance system, there are still unscrupulous people who attempt to defraud uninformed investors through “man in the middle” scams and unauthorised transactions.

These cons exist on any exchange, from eBay to your inbox, but buying from an online exchange can increase the risk. Here’s how they work.

Man in the middle scam

You unknowingly agree to purchase from a “man in the middle” – he owns no bitcoin – rather is liaising with a real seller. 

  1. ‘Man in the middle’ gives you the sellers account details.
  2. You deposit your funds in the sellers account. 
  3. The seller sends the bitcoin to the man in the middle.
  4. You never receive your bitcoin and lose your money. 

Even if you are confident you are buying directly from the seller, you can still be exposed to unauthorised transaction scams.

Unauthorised transaction scam

  1. You agree to purchase bitcoin from the seller and to transfer your payment upon receipt.
  2. The seller transfers their bitcoin to you, whilst simultaneously transferring it to another one of their wallets. 
  3. You receive one confirmation that the bitcoin has been transferred.
  4. You transfer your funds to the seller. 
  5. When the Blockchain updates it recognises the two identical transactions and orphans the duplicate transaction. 
  6. You lose your money and your bitcoin.

Always buy from a trusted source and always wait for six confirmations in the Blockchain before making payment.




Bitcoin Trader is a personalised cryptocurrency brokerage firm catering to individual, corporate, institutional and SMSF clients. The company is incorporated in Australia, with established global partners providing access to high liquidity and multicurrency settlements. Our core focus is on safe, secure and compliant cryptocurrency investment, divestment and portfolio reallocation.

Disclaimer: This content is for informational purposes only. It does not constitute investment or financial advice. Any information, material or commentary is intended to provide general information only. Information contained in this document has been obtained from sources believed to be reliable, but BT Brokerage Services Pty Ltd trading as Bitcoin Trader, makes no representation as to its accuracy or completeness. Before acting on any information contained in this document, each person should consider its appropriateness having regard to their own or their clients’ individual objectives, financial situation and needs. You should obtain independent taxation, financial and legal advice relating to this information and consider it carefully before making any decision or recommendation.

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