Education Hub — Investor Protection Guides

Last updated: March 2026

Off-chain attacks — social engineering, phishing, and compromised credentials — caused an estimated 76% of crypto hack losses in 2025, according to TRM Labs, a clear shift from code exploits toward human targeting. This guide covers staying safe in the cryptocurrency space, from understanding wallets to spotting scams before you lose money.

What Is Cryptocurrency?

Cryptocurrency is a digital form of money that operates on decentralised networks called blockchains. Unlike traditional currencies, no central bank or government controls it. Transactions are recorded on a public ledger and secured by cryptography.

Bitcoin (BTC) was the first cryptocurrency, created in 2009. Since then, thousands of cryptocurrencies have been created — ranging from legitimate projects to outright scams. Understanding the difference is essential before investing.

Key fact: cryptocurrency transactions are generally irreversible. Unlike a bank transfer, there’s no central authority to reverse a fraudulent transaction. This is why prevention matters more here than with almost any other asset class.

How Wallets Work

A cryptocurrency wallet doesn’t store coins — it stores the private keys that prove ownership of coins on the blockchain. There are two main types:

Hot wallets — connected to the internet. Convenient for frequent trading, but more vulnerable to hacking (exchange wallets, software wallets).
Cold wallets — offline storage, much more secure for long-term holdings (hardware wallets like Ledger or Trezor, paper wallets).

Critical rule: never share your seed phrase (recovery phrase) with anyone, ever. Anyone who has it has full control of your wallet. No legitimate service will ever ask for it.

Choosing a Safe Exchange

Not all crypto exchanges are equal. Choosing the wrong one can mean losing your funds to fraud, hacking, or insolvency.

Regulatory registration — check if the exchange is registered with the FCA (UK), FinCEN (US), or an equivalent
Proof of reserves — reputable exchanges publish regular audits of their holdings
Security features — 2FA, withdrawal whitelisting, anti-phishing codes
Track record — how long have they operated, and any major hacks or insolvencies?
Transparent fee structure — hidden fees are a red flag

Safe Storage Practices

The golden rule: “not your keys, not your coins.” If your crypto is on an exchange, the exchange controls it — not you.

Use a hardware wallet for any holdings you don’t need to trade immediately
Write your seed phrase on paper and store it in a secure physical location — never digitally
Never store your seed phrase in cloud storage, email, or notes apps
Use a dedicated device for crypto transactions where possible
Enable every available security feature on exchanges: 2FA, withdrawal whitelist, email alerts
Regularly review and revoke unnecessary token approvals using a tool like Revoke.cash

Red Flags Before Investing

Apply this checklist before investing in any cryptocurrency project:

Anonymous team with no verifiable identities
Promises of guaranteed or “risk-free” returns
Unaudited smart contracts
Developers hold a large percentage of the token supply
Liquidity isn’t locked
Aggressive FOMO marketing — “last chance,” “limited time”
Celebrity endorsements (often paid or fake)
No working product — just a whitepaper
Pressure to recruit others to earn returns
Withdrawal restrictions or fees

See our Rug Pull guide if you’re seeing several of these signs on a project you’re already holding.

Protecting Yourself Online

Most crypto theft happens through phishing, social engineering, and malware — not sophisticated hacking. Basic security hygiene prevents the majority of attacks.

Bookmark exchange URLs and always use bookmarks — never click links in emails or messages
Use a unique, strong password for every crypto account, ideally via a password manager
Enable 2FA using an authenticator app, not SMS, on all accounts
Be suspicious of any unsolicited DM offering help, opportunities, or airdrops
Verify smart contract addresses before interacting — use official project links only
Keep your operating system and browser updated
Use a VPN on public Wi-Fi

If You’ve Been Scammed

Act quickly. While crypto transactions are generally irreversible, fast action can prevent further losses and help law enforcement.

Stop all transactions immediately — do not send any more funds.
If your wallet is compromised, move remaining funds to a new wallet immediately.
Screenshot all evidence — transactions, communications, platform details.
Report to your national cybercrime or fraud authority.
Report to your financial regulator if a licensed firm was involved.
Contact your bank if any fiat payments were made.
Do not pay any “recovery fees” — these are additional scams. See our Recovery Scam guide for how this specific follow-up tactic works.

Frequently Asked Questions

Is it safe to keep crypto on an exchange? For small amounts you’re actively trading, it’s generally fine on a reputable, regulated exchange. For significant holdings you don’t need immediate access to, a hardware wallet is safer — if the exchange fails or is hacked, funds held there may not be recoverable.

What’s the single most important security step for crypto? Never share your seed phrase with anyone, under any circumstances. No legitimate exchange, wallet provider, or support agent will ever ask for it — a request for your seed phrase is always a scam, regardless of how official it looks.

How do I check if a crypto project is legitimate before investing? Check whether the team is publicly identified, whether the smart contract has been independently audited, whether liquidity is locked, and whether a working product exists rather than just a whitepaper. Our Rug Pull guide covers this checklist in more depth.

Can I get my crypto back if I send it to the wrong address or a scammer? Almost never. Crypto transactions are irreversible by design — there’s no central authority to reverse them the way a bank can reverse some transfers. This is exactly why prevention (verifying addresses, avoiding phishing links, never sharing your seed phrase) matters more than recovery.

Crypto Safety Guide