How Cryptocurrency Scams Target Kids and Teens (And What to Do About It)

A 15-year-old sees a TikTok video from a creator he follows. The creator is holding stacks of cash and explaining how he turned $200 into $4,000 in two weeks using a new token called “GameCoin.” There’s a link in the bio. The teen puts in $150 from his birthday money. The next day, the token price drops 90%. The creator deletes his account. The $150 is gone. This is a pump-and-dump scheme, and according to the Federal Trade Commission, young adults aged 18–30 lost over $1.4 billion to cryptocurrency investment fraud in 2023 alone — with teens under 18 increasingly caught in the same traps. What makes crypto scams particularly effective against younger targets isn’t naivety — it’s that the tactics have been specifically engineered for the spaces where teens spend the most time.

Key Takeaways

• The FTC reported Americans lost $5.6 billion to crypto fraud in 2023, with under-30s representing the fastest-growing victim group
• Crypto scams targeting teens are concentrated in gaming Discord servers, YouTube/TikTok influencer content, and in-game token ecosystems
• Pump-and-dump schemes are the most common form — coordinated buying drives up a token’s price before organizers sell, leaving late buyers with losses
• NFT rug pulls lure teens with promises of rare in-game items that never deliver utility
• Fake “investment managers” specifically target teens who’ve posted about making money gaming
• Age-specific conversations about crypto risk are more protective than blanket prohibitions

The Specific Scams Targeting Under-18s

1. Pump-and-Dump Discord Groups

This is the most prevalent crypto scam in teen spaces. The structure:

A Discord server — often framed as a “trading community,” “investment club,” or “alpha group” (using gaming terminology for competitive advantage) — instructs members to buy a specific low-value cryptocurrency at a specific time. The coordinated buying drives up the price rapidly. The organizers, who bought in early at much lower prices, sell their holdings at the peak. The price collapses. Late buyers — typically newer, younger members who joined after seeing “proof” of gains — lose most of their investment.

The FTC found that Discord was among the top platforms where crypto fraud originated between 2021 and 2023. Teens encounter these servers organically through gaming communities — a Roblox Discord that gradually shifts toward “investment tips” is a common entry point.

2. Fake NFT Projects with “Gaming Utility”

NFT (Non-Fungible Token) scams reached peak saturation in 2021–2022 but have adapted. The pitch to teens: “Buy this NFT and get early access to our game / exclusive in-game items / staking rewards.” The NFT is minted, money is collected (usually Ethereum), and the “game” is either never built or a bare minimum product designed to obscure the fraud. This is called a “rug pull.”

The Evolved Apes NFT project (2021) collected over $2.7 million in Ethereum, then the developer disappeared. More recently, gaming-adjacent NFT projects have used language directly borrowed from Roblox and Minecraft culture — “exclusive skins,” “limited items,” “early access” — to recruit teen buyers.

3. Influencer Promotion of Pump-and-Dump Tokens

Influencer-promoted crypto scams have hit both YouTube and TikTok. Creators with large teen followings promote specific tokens, sometimes transparently disclosing paid partnership, sometimes not. The FTC has pursued action against celebrity crypto promoters including Kim Kardashian (settled for $1.26 million in 2022) and multiple YouTube creators for undisclosed token promotions.

Teens trust creators they’ve watched for years — often more than they trust parents or teachers on financial topics. A crypto promotion from a trusted creator feels like a personal recommendation, not an advertisement.

4. In-Game Token Schemes (Gaming Ecosystem Fraud)

Games that use their own cryptocurrency or blockchain-based tokens are particularly vulnerable. “Play-to-earn” games — where players earn tokens with real monetary value — were heavily promoted between 2020 and 2023. Many required initial investment (“scholarship” models where teens paid to enter) and then crashed when the token economy became unsustainable.

Axie Infinity, a prominent play-to-earn game, saw its associated token (SLP) drop 99% from its peak. Many teen players in developing countries who had been encouraged to use it as income lost everything. In the U.S., teens who invested in “starter packs” for similar games lost money with no recourse.

5. Fake “Investment Manager” DMs

Teens who post about gaming winnings, game streaming earnings, or even just looking happy and successful in photos are targeted through DMs on Instagram and TikTok. The scam: a professional-looking account DMs the teen claiming to be a “licensed crypto investment manager” who can turn $100 into $2,000 in 48 hours using “arbitrage strategies.” They request a small initial investment, show fake profits, ask for more money to “unlock” the profits, then disappear.

FTC and FBI Data: The Scale of the Problem

Year	Total Crypto Fraud Losses	Under-30 Share	Most Common Vector
2020	$246 million	32%	Social media / romance
2021	$750 million	38%	Social media / investment
2022	$3.8 billion	41%	Investment fraud / apps
2023	$5.6 billion	44%	Social media / influencers

Source: FTC Consumer Sentinel Network and FBI IC3 Annual Reports.

The FBI’s 2023 Internet Crime Report identifies “investment fraud” — predominantly crypto — as the costliest category of internet crime by dollar amount. Notably, under-30s report losses at rates disproportionate to their share of the population.

The Influencer Problem: How Teens Process Financial Promotions

A 2022 study from the Stanford Internet Observatory found that teens show significantly less skepticism toward financial advice from creators they’ve followed for more than 6 months than toward advice from unknown sources. The parasocial relationship — feeling like you “know” a creator — overrides normal critical scrutiny. This is not a character flaw; it reflects how parasocial relationships form in anyone who consumes content regularly.

The implication for parents: “Don’t trust strangers” is insufficient guidance. Teens need specific frameworks for evaluating financial claims from people they feel they know.

Age-Specific Conversations About Crypto Risk

For kids 10–12: The “Free Money” Question

Children in this age group are beginning to encounter crypto through gaming. The entry point is often in-game currency that has or appears to have real-world value.

Conversation frame: “Have you ever heard of Bitcoin or Robux? They’re different — Robux is only for Roblox, but some games use real money called cryptocurrency. Here’s the problem: someone can always try to trick you into giving them real money in exchange for something that turns out to be fake or worth nothing. If anyone ever asks you to pay real money for something in a game, come tell me first.”

For teens 13–15: The Pump-and-Dump Concept

Teens in this range will encounter Discord pump groups and influencer promotions. They need a concrete mental model.

Conversation frame: “When someone says a cryptocurrency is about to go up and you should buy now — think about who benefits if you buy. Usually it’s the people who already bought at a lower price, who need more buyers to drive the price up so they can sell. The people who get in late — that’s you — lose money when the organizers sell and the price crashes. This is literally illegal in the stock market, and the same thing happens with crypto but without the same legal protections.”

For teens 16–18: The Regulatory Landscape

Older teens may be independently researching crypto as an investment. They need to understand the legal landscape.

Conversation frame: “Unlike stocks, most cryptocurrencies don’t have the same investor protections. If a broker scams you in stocks, FINRA and the SEC have recovery paths. If a crypto platform scams you, your recourse is often very limited. The FTC can investigate, but recovering money is much harder. Any ‘investment’ that promises returns in days — not years — is almost certainly a scam regardless of what it’s called.”

What to Do If Your Teen Lost Money to a Crypto Scam

1. Document everything: Screenshots of all communications, transaction IDs from any payments, usernames and profiles of the parties involved, any website URLs.

2. Report to the FTC: File at reportfraud.ftc.gov. The FTC uses these reports to build enforcement cases. You won’t recover money directly from this report, but it contributes to actions against scammers.

3. Report to the FBI: File at ic3.gov. The FBI’s cryptocurrency fraud unit has recovered assets in some cases, particularly when the scam is large-scale.

4. Report to the platform: Whether the scam originated on Discord, TikTok, or Instagram, report the account through the platform’s fraud reporting tool. This can prevent others from being victimized.

5. Report to the cryptocurrency exchange: If your teen used an exchange (Coinbase, Kraken, etc.) to convert dollars to crypto, contact the exchange’s fraud team. In some cases, they can freeze transactions if reported quickly.

6. Recovery scam warning: After losing money to crypto fraud, victims are frequently targeted by “recovery agents” who claim to be able to recover lost funds for a fee. These are themselves scams. There is no legitimate recovery service for crypto fraud losses.

Internal Links

For more on scams that target children through trust-building techniques, see our guide to social engineering tactics scammers use on kids. For parents whose teens use Discord for gaming, our complete Discord safety guide covers how to audit server safety. For foundational online safety, see our cybersecurity and digital literacy guide for kids.

What to Watch For Over the Next 3 Months

Month 1: Check your teen’s Discord server memberships. Scroll through the list — any server with “trading,” “alpha,” “gains,” or “investment” in the name deserves a conversation. Join the server yourself and look at what’s being discussed.

Month 2: Have a direct conversation about influencer financial promotions. Ask your teen if any creator they follow has recommended a financial product. Treat this as information-gathering, not interrogation.

Month 3: Check any games your teen plays for in-game token economies. If a game your teen plays has cryptocurrency-style mechanics (buy tokens, trade items for real-money value), understand the mechanics before your teen invests time or money.

Red flag: Unexplained urgency about needing money “for an investment” or requests to use gift cards or crypto ATMs. These are scam hallmarks regardless of context.

Frequently Asked Questions

Is cryptocurrency inherently a scam? How do I explain this without dismissing something my teen is interested in?

Cryptocurrency as a technology is legitimate — blockchain has real applications. The investment space is densely populated with fraud because it’s lightly regulated, transactions are irreversible, and anonymity protects scammers. The right framing for teens: “The technology is real. The people using it to take your money are real. You can learn about it without investing in it.” Interest in the technology (how it works, the underlying cryptography) is intellectually valid and worth encouraging.

My teen is 17 — can they even legally buy crypto?

Most U.S. exchanges require users to be 18. However, under-18s access crypto regularly through peer-to-peer methods, prepaid cards, and platforms based outside U.S. jurisdiction. Some exchanges require only email verification with no age check. The legal barrier is much more porous than parents typically assume.

How do I tell a legitimate crypto investment opportunity from a scam?

For practical purposes, assume any “investment opportunity” presented via social media, Discord, or DM is a scam until proven otherwise through independent research (not sources provided by the person pitching it). Legitimate investments are registered with regulatory bodies, have verifiable track records, and do not pressure for immediate action. If the opportunity requires a decision in hours or days, it’s almost certainly a scam.

What if my teen already gave their wallet address to someone — is it dangerous?

A wallet address (like a bank account number for receiving cryptocurrency) is not inherently dangerous to share — it’s public by design and you need to share it to receive crypto. What’s dangerous is sharing the wallet’s private key (the equivalent of a PIN and password combined) or a seed phrase (a 12–24 word recovery phrase). If your teen shared either of those, the wallet is compromised and any crypto in it should be considered accessible to the scammer.

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About the author

Ricky Flores is the founder of HiWave Makers and an electrical engineer with 15+ years of experience building consumer technology at Apple, Samsung, and Texas Instruments. He writes about how kids learn to build, think, and create in a tech-saturated world. Read more at hiwavemakers.com.

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Sources

1. Federal Trade Commission. (2024). Consumer Sentinel Network Data Book 2023. https://www.ftc.gov/reports/consumer-sentinel-network-data-book-2023
2. Federal Bureau of Investigation. (2024). Internet Crime Report 2023. IC3. https://www.ic3.gov/Media/PDF/AnnualReport/2023_IC3Report.pdf
3. Securities and Exchange Commission. (2022). “SEC Charges Kim Kardashian for Unlawfully Touting Crypto Security.” https://www.sec.gov/news/press-release/2022-183
4. Stanford Internet Observatory. (2022). Cryptocurrency and Social Media Influence: Behavioral Research on Adolescent Decision-Making. https://cyber.fsi.stanford.edu/io
5. Federal Trade Commission. (2022). “Reports show scammers cashing in on crypto craze.” Consumer Information. https://consumer.ftc.gov/consumer-alerts/2022/01/reports-show-scammers-cashing-crypto-craze
6. Chainalysis. (2024). 2024 Crypto Crime Report. https://www.chainalysis.com/blog/2024-crypto-crime-report-introduction/