The global surge in cryptocurrency investment has drawn not only eager investors but also opportunistic fraudsters looking to exploit the excitement. One common question—is cryptocurrency taxable?—has become a frequent entry point for scams. In this guide, we’ll clarify the tax implications of crypto in Taiwan and reveal five critical red flags that signal a potential scam, helping you protect your assets while navigating the digital currency landscape.
👉 Discover how to safely navigate cryptocurrency investments and avoid costly mistakes.
Understanding Cryptocurrency Taxation in Taiwan
Despite growing adoption, Taiwan’s Ministry of Finance has not issued definitive regulations on how cryptocurrency gains should be taxed. However, existing tax laws and expert interpretations provide some clarity.
Since 2013, Taiwan’s Financial Supervisory Commission (FSC) has consistently classified cryptocurrencies as "virtual commodities." When these are sold or exchanged at a profit—just like selling art or antiques—the transaction may generate taxable income under Article 14, Paragraph 1, Category 7 of the Income Tax Act.
In short: If you make a profit from crypto trading, it’s considered taxable income and should be reported during tax season.
However, the lack of detailed guidance on valuation methods and reporting procedures leaves room for confusion—making investors vulnerable to misinformation and scams.
Beware: Fake "Tax Payments" to Withdraw Funds
A major red flag is being told by a platform that you must pay taxes directly to the exchange before withdrawing funds. This is almost always a scam.
Legitimate tax obligations are enforced by government authorities—not private platforms. Tax agencies do not authorize exchanges to collect taxes on their behalf.
While crypto transactions may have tax consequences, you never pay those taxes through the exchange itself. If a platform demands payment to “unlock” your funds, treat it as a serious warning sign.
👉 Learn how real crypto platforms handle compliance and user security.
5 Common Red Flags of Cryptocurrency Scams
Even seasoned investors can fall victim to sophisticated scams. By recognizing these five warning signs, you can better protect yourself:
1. Pressure to Deposit Funds Immediately
"Urgent investment opportunity!" "Limited-time bonus!" These high-pressure tactics are classic hallmarks of scams.
Legitimate exchanges don’t use personal messaging (like LINE or WhatsApp) to push users into quick deposits. They don’t create artificial scarcity or fear of missing out (FOMO). If someone is aggressively urging you to “buy now,” it’s likely a trap.
2. “Personal Account Managers” via Messaging Apps
Scammers often pose as dedicated customer service reps, contacting victims through LINE, Facebook Messenger, or Instagram. They offer one-on-one guidance, building trust before directing victims to send funds.
Real exchanges communicate through official channels—email, in-app notifications, or public announcements—not private chats. Never follow investment instructions sent via social media.
3. Unreasonable Withdrawal Restrictions
Scam platforms allow initial deposits and even small withdrawals to build credibility. But when you try to cash out larger amounts, they suddenly impose impossible conditions:
- "You must upgrade to VIP status."
- "A 20% tax fee is required for withdrawal."
- "Your account needs verification with additional funds."
These are not legitimate policies—they’re designed to extract more money from you.
Remember: Tax authorities do not require upfront payments via crypto platforms to release funds.
4. Hidden or Fake Fees
Scam platforms invent arbitrary charges: “account setup fees,” “processing fees,” or “compliance surcharges.” These deductions erode your balance under false pretenses.
Always review a platform’s fee structure transparently before investing. If charges appear vague or suddenly change, walk away.
5. Suspicious or Fake Links
Phishing links are among the most dangerous tools in a scammer’s arsenal. A single click on a fraudulent URL can lead to:
- Fake login pages that steal your credentials.
- Malicious apps that drain your wallet.
- Impersonated versions of well-known exchanges like Binance.
Even if a link comes from a trusted friend or group, verify the official website independently. Never log in through third-party links.
Common Cryptocurrency Scam Tactics: Real-World Examples
According to Taiwan’s National Police Agency, fraud losses reached NT$12.4 billion in December 2024 alone, with fake investment schemes topping the list.
Here are five prevalent scam models:
1. Fake Exchanges
Criminals create counterfeit versions of real exchanges—complete with cloned websites and apps. They lure users with promises of high returns or exclusive promotions.
There are two types:
- Impersonation scams: Pretending to be Binance, OKX, or other major platforms.
- Fake startups: Inventing new brands with fake user reviews and social media buzz.
✅ Defense tip: Always download apps from official sources and double-check URLs.
2. Romance Scams
Also known as "pig butchering" scams, these begin with emotional manipulation. A seemingly genuine romantic interest gains your trust, then introduces you to crypto investing.
They may:
- Offer to guide you step-by-step.
- Encourage loans or borrowing to invest.
- Let you withdraw small profits initially to build confidence.
Once large sums are deposited, withdrawal barriers appear—demanding “taxes” or “VIP fees.”
3. USDT Scams
USDT (Tether) is a stablecoin pegged to the U.S. dollar and one of the most widely used cryptocurrencies. Its popularity makes it a prime target.
Common USDT scams include:
- Selling fake USDT tokens that mimic the real ones but have no value.
- Requesting bank transfers first, then sending counterfeit or stolen tokens.
- Using fake testimonials to appear trustworthy.
Note: Peer-to-peer (P2P) USDT trading outside regulated platforms carries higher risks due to lack of anti-money laundering (AML) oversight.
4. “Air Coins” or “Garbage Coins”
These are worthless tokens created solely to deceive investors. Scammers promote them with claims like:
- “This coin will list on major exchanges soon!”
- “Get in early—this could be the next Bitcoin!”
After enough people buy in, the creators dump their holdings, crashing the price and leaving investors with nothing.
5. Phishing Links and Wallet Drainers
As seen in a 2024 case involving a tech worker, scammers can disguise malicious links as interview confirmations or partnership offers.
Once clicked, these links request wallet permissions—giving attackers instant access to drain funds.
✅ Always verify URLs and never approve unknown smart contract permissions.
Can You Recover Lost Crypto? 5 Steps That Help
Many victims wonder: Can I get my money back? While recovery is challenging, it’s not impossible—with the right actions:
Step 1: Maintain Contact (Don’t Block)
Avoid confronting the scammer immediately. Keeping communication open provides investigators with leads and potential tracing opportunities.
Step 2: Verify Information
Use search engines to confirm official websites. If someone claims to represent Binance or another platform, visit the real site directly—not through provided links.
Call 165 Anti-Fraud Hotline for preliminary verification.
Step 3: Preserve Evidence
Save everything:
- Chat logs
- Website URLs
- Social media profiles
- Transaction records
- Wallet addresses
- Screenshots
This evidence is crucial for legal action and blockchain tracing.
Step 4: Consult a Lawyer
For significant losses, seek legal counsel experienced in cryptocurrency fraud. A lawyer can help file complaints and coordinate with prosecutors.
Step 5: Submit Documentation
Provide all collected evidence to law enforcement through legal representation. The more complete your documentation, the higher the chance of tracking funds and holding perpetrators accountable.
Warning: Using Illegal Exchanges May Freeze Your Bank Account
Using unregulated platforms can have serious consequences beyond financial loss:
- Your bank account may be used by scammers for money laundering.
- Suspicious transactions can trigger alerts.
- Banks may freeze your account—labeling it a "suspicious account."
This not only disrupts daily banking but may lead to criminal investigations for fraud or money laundering.
✅ Always use exchanges registered under Taiwan’s VASP (Virtual Asset Service Provider) framework, listed on the Securities and Futures Bureau’s official portal.
Frequently Asked Questions (FAQ)
Q: Do I have to pay tax when I trade cryptocurrency in Taiwan?
A: Yes, profits from crypto trading are generally treated as property transfer income and may be subject to income tax under current guidelines.
Q: Is it safe to use P2P platforms for USDT trading?
A: P2P trading carries higher risk due to lack of regulation and AML checks. Only trade with verified users and avoid upfront payments.
Q: Can I recover funds after sending crypto to a scammer?
A: Recovery is difficult but possible with prompt action, preserved evidence, and legal assistance. Blockchain transactions are irreversible, but tracing and legal pressure can help.
Q: Are all cold calls about crypto investments scams?
A: While not all are malicious, unsolicited investment advice—especially via messaging apps—is highly suspicious and often fraudulent.
Q: How can I verify if a crypto exchange is legitimate?
A: Check if it’s listed on the SFB’s VASP registry, avoid platforms that promise guaranteed returns, and ensure communication happens through official channels only.
Q: Why do scammers ask for “tax” before withdrawal?
A: It’s a psychological tactic exploiting real tax concerns. No legitimate exchange collects taxes on behalf of governments.
👉 Stay ahead of scams with tools from a leading crypto platform built for security and transparency.