How To Spot A Crypto Scam In 10 Seconds: Red Flags For Indian Investors

As crypto steadily finds its way into Indian portfolios, the surrounding conversation is also maturing. Investors today are asking sharper questions about sustainability, regulation, and long-term value. Yet, one misconception continues to surface across market cycles: crypto projects fail when prices crash. In reality, price is rarely the cause. It is usually the final outcome of deeper fundamental decay.

Long before a token collapses, early signals begin to emerge. Liquidity thins out, genuine user activity slows, developer engagement tapers, and once-active communities grow quiet. Markets simply reflect these realities with a lag. This structural pattern becomes evident when viewed through data rather than headlines.

Looking back at the past six years, the evidence is striking. “Of the cryptocurrencies that ranked among the top 200 by market capitalisation in 2020, 70 per cent no longer hold that position in 2025. These assets did not vanish overnight. Most gradually faded as usage failed to keep pace with valuation. The chart above captures this steady erosion of relevance, a reminder that survival in crypto is earned, not assumed,” says Purvang Mashru, senior quantitative research analyst at 1 Finance, a personal finance firm.

For Indian investors, especially those approaching crypto with a long-term wealth lens, these same dynamics often reveal scams early. In practice, red flags are usually visible within seconds:

Weak fundamentals: Sharp price moves unsupported by liquidity, user growth, or developer activity are typically short-lived and often engineered.

Assured or fixed returns: Crypto does not offer guaranteed income. Promises of stable monthly payouts or “capital-protected” returns contradict the market-driven nature of digital assets.

Artificial urgency: “Phrases such as limited slots or pre-listening access are designed to compress decision-making. Sound investments do not depend on haste,” says Mashru.

Referral-led economics: If rewards depend more on onboarding new participants than on real usage or fee generation, the structure resembles a pyramid rather than an investment.

Unsolicited advice and closed-door tips: Recommendations arriving via WhatsApp groups, Telegram channels, or social media experts rarely come with accountability or transparency.

“The broader lesson is straightforward. If it sounds smooth, urgent, and certain, pause. If fundamentals are unclear, walk away. Price tells you what just happened; fundamentals tell you what’s likely to happen next,” says Mashru.

In an ecosystem where thousands of tokens compete for attention, longevity is earned not through hype but through sustained relevance. Understanding that difference is what separates speculation from informed participation in crypto markets.