Chapter 9: Security and Scams

Protecting Your Crypto: Why Security Must Come First

With billions of dollars at stake and few ways to reverse transactions, security in crypto is not optional—it’s essential. Unlike banks, there’s no customer service to call if your crypto is stolen or sent to the wrong address. It’s your responsibility to keep your funds safe.

“There are scams everywhere. If it is too good to be true, it probably is. Don’t be greedy.”

The Basics: Essential Security Steps

1. Use Strong Passwords and 2FA

  • Always set a unique, robust password for your exchange account.
  • Enable two-factor authentication (2FA), such as Google Authenticator or SMS, to prevent unauthorized logins.
  • Regularly update your passwords and security settings.

2. Withdrawal Whitelist

  • Turn on the “Withdrawal Whitelist” feature on Binance—only approved wallet addresses can be used for withdrawals.
  • Even if someone breaks into your account, they can’t easily send your funds elsewhere.

3. Beware of Phishing

  • Check that website URLs are correct (e.g., binance.com).
  • Never click on links from suspicious emails, messages, or ads.
  • Bookmark exchange and wallet sites; don’t trust search engine results.

4. Secure Your Devices

  • Keep your computer/phone software updated.
  • Use antivirus protection and avoid public Wi-Fi when accessing your accounts.
  • Don’t store passwords or recovery phrases digitally without encryption.

Understand and Use Wallets Wisely

Custodial vs. Non-Custodial Wallets

  • Custodial Wallets (e.g., funds held on Binance): Convenient, but you trust the exchange with your private keys.
  • Non-Custodial Wallets (hardware wallet, MetaMask, etc.): You control your keys; only you can move funds.

Best Practice:
Hold only trading funds on the exchange. Move long-term holdings to a secure non-custodial (“cold”) wallet.

Top Crypto Scams and How to Spot Them

1. Phishing & Fake Apps

  • Imitation sites/apps ask for login details and steal your funds.
  • How to avoid: Only use official links from the exchange or verified app stores.

2. “Too Good To Be True” Investment Schemes

  • Promises of high, guaranteed returns (often masked as “staking” or DeFi).
  • How to avoid: If returns are unusually high and come with urgency or exclusivity, it’s likely a scam.

3. Social Engineering

  • Scammers impersonate support staff, friends, or influencers, offering “giveaways” or help.
  • How to avoid: Never share private keys, wallet phrases, or passwords. Support staff will never ask for them.

4. Dusting and Airdrop Scams

  • Tiny, unsolicited tokens appear in your wallet; interacting with them can expose more info or lead you to phishing sites.
  • How to avoid: Ignore and do not trust random airdrops.

“Even some tiny bits of crypto can be a scam… Check this site [reference to dusting attack overview]. Don’t be greedy.”

Case Study: Learning from Others’ Mistakes

Famous attacks and exchange hacks (Mt. Gox, large rug pulls, etc.) show:

  • Never keep all your funds in one place.
  • Always double (triple) check any transaction address.
  • Heed warnings from the community—if others are raising flags, do more research.

Protecting Your Private Keys

  • Write down (not copy-paste) your recovery phrase and keep it offline in a safe place.
  • NEVER share your private key or recovery phrase—anyone with these can empty your wallet instantly.
  • Consider using a hardware wallet for substantial holdings or long-term storage.

“For most people, they will fail at protecting their key… it is too long to memorize, so most people will have to note it down… and we are all lazy, so we will likely have it somewhere digital. Or, worse, use a shorter password to protect this longer one, forgetting the strength was actually the long key.”

Red Flags: Scam Checklist

  • Unsolicited investment offers or urgent time-limited bonuses
  • Giveaway promotions requiring you to “send first”
  • Unknown tokens appearing in your wallet
  • Support staff or “admins” who ask for passwords or private keys

DYOR: Do Your Own Research

  • Always research projects, coins, and platforms before using or investing.
  • Follow trusted crypto news sites, official channels, and community warnings.
  • If in doubt, ask in public forums—not in private.

Key Takeaways:

  • Your crypto is only as safe as your habits—be disciplined, cautious, and skeptical of “easy” profits.
  • Use all available security tools on Binance and never get complacent, no matter your experience level.
  • If anything seems suspicious, stop and double-check before acting—money lost in crypto is often gone for good.

In the next chapter, we’ll look at regulations, taxes, and how to safely withdraw your crypto profits into the real world.