The simplest way to avoid a scam is to self-custody your own Bitcoin and never relinquish it to a third party in exchange for a product/service/investment that maintains control over your bitcoin with full custody of the private keys.
Many people have been caught in Bitcoin scams. Common types of scams include:
- Trading bots
- A.I. Trading bots
- Cloud mining
- Multi-level marketing investment clubs (Mirror Trading International (MTI) for example)
- A combination of all of the above
- Phishing scams
Typically, scams offer outrageous promises of return, generally in excess of 20% per year.
Often, they pay out to the early investors for a period of time, as new money coming into the scam is used to pay off the early investors. However, this is unsustainable and eventually the scam collapses.
The scam founders then make off with all of the accumulated Bitcoin, which they have been holding in custody on behalf of their members.
Since the Bitcoin blockchain is immutable, the Bitcoin cannot be forced back into the user's wallet unless the scammer has been physically arrested by the authorities. Often this does not happen though as the scammers exit the country prior to the scam blowing up to remain outside the jurisdiction of local police.
The simples way to avoid a scam is to self-custody your Bitcoin and do not give anyone else control over it in exchange for promised returns.