Scammers are constantly searching for new ways to steal your money, and the recent explosive growth of cryptocurrencies has made crypto scams abundant.
However, according to a report by blockchain data firm Chainalysis, criminals stole $14 billion in cryptocurrencies in 2021, making it a record year for cryptocurrency crime. It’s critical to understand the hazards and all other pertinent information if you’re interested in cryptocurrency.
By understanding the tactics used by crypto scammers and learning how to spot and avoid these scams, you can reinforce your defences and navigate the digital landscape with confidence.
Learn more about Bitcoin scams and how to avoid scammers preying on the naïve. It’s time to safeguard your investments and realize the full potential of cryptocurrencies without succumbing to deceptive scams that lurk in the shadows.
Typical Cryptocurrency Investment Scams
There are many types of crypto scams. Some of the most common include:
1. Fake Websites
In order to deceive gullible victims, scammers may produce phony cryptocurrency trading platforms or phony replicas of official cryptocurrency wallets. The domain names of these phony websites are typically somewhat different but similar to those of the websites they try to imitate. It is challenging to distinguish between them because they resemble authentic websites so much.
2. Phishing Scams
Information about online wallets is frequently the subject of crypto phishing scams. The private keys of cryptocurrency wallets, which are necessary to access funds within the wallet, are the target of scammers.
Their approach is connected to the phony websites mentioned above and is comparable to other phishing attempts. In order to entice receivers to a specifically designed website and request private key information, they send an email. The Bitcoin in those wallets is stolen by the hackers after they have this information.
3. Pump and Dump Schemes
This is when scammers use social media platforms like Facebook, Telegram, or Twitter to promote a specific coin or token. Traders hurry to purchase the coins because they don’t want to miss out, which raises the price.
The scammers sell their assets after successfully inflating the price, which results in a crash as the asset’s value drastically drops. This might occur in a matter of minutes.
4. Fake Apps
Scammers frequently use phony apps that can be downloaded from Google Play and the Apple App Store to deceive cryptocurrency investors. Even though these fraudulent apps are swiftly discovered and eliminated, many businesses are still being negatively impacted by them. Fake cryptocurrency apps have been downloaded by thousands of individuals.
5. Fake Celebrity Endorsements
In order to draw in potential victims, cryptocurrency scammers occasionally pretend to be or claim endorsements from influencers, businesses, or celebrities. This sometimes entails offering inexperienced investors phantom cryptocurrencies that don’t exist.
These scams can be elaborate, comprising glossy booklets and websites that seem to feature celebrity endorsements from well-known figures like Elon Musk.
6. Giveaway Scams
In what is referred to as a giveaway scam, con artists promise to equal or multiply the cryptocurrency that is transferred to them. A perception of legitimacy and urgency can be generated by clever messaging from what frequently appears to be a legitimate social media account.
People may transfer money rapidly in the hopes of receiving an immediate return due to this purported “once-in-a-lifetime” chance.
7. Blackmail and Extortion Scams
Blackmail is another tactic used by con artists. They send emails claiming to have a list of the user’s visits to sexual websites and threatening to expose them if they don’t give the scammer their private keys or cryptocurrencies.
8. Cloud Mining Scams
Cloud mining refers to organizations that rent out mining hardware in exchange for a predetermined price and a percentage of the revenue you are expected to generate. In theory, this enables individuals to mine remotely without purchasing expensive mining hardware.
However, many cloud mining organizations are scams or, at best, unproductive, resulting in you losing money or earning less than advertised.
9. Initial Coin Offering (ICO) Scams
Start-up cryptocurrency businesses can raise capital from potential customers through an initial coin offering, or ICO. Customers who contribute active cryptocurrencies like Bitcoin or another well-known cryptocurrency are usually guaranteed a discount on the new coins.
A number of initial coin offerings (ICOs) have proven to be fraudulent, with criminals going to great efforts to trick investors, including renting fictitious offices and producing upscale marketing materials.
How to Spot Cryptocurrency Scams
How then can one identify a cryptocurrency scam? Some warning indicators to watch out for are:
- Promises of Guaranteed Returns: Since investments can fluctuate in value, no financial investment can promise future returns. Any cryptocurrency proposition that guarantees financial gain is suspicious.
- A Weak or Nonexistent Whitepaper: Since a whitepaper is one of the most important components of an initial coin offering, every cryptocurrency should have one. The cryptocurrency’s design and operation should be described in the whitepaper. Be cautious if the whitepaper doesn’t make sense or, worse, doesn’t exist.
- Over-Promotion: Every company advertises itself. However, investing heavily in marketing—online advertising, hired influencers, offline promotion, etc.—is one way that cryptocurrency scammers draw in victims. This is intended to collect money quickly by reaching as many individuals as possible in the shortest amount of time. Stop and do more study if you think a cryptocurrency offering’s marketing sounds overbearing or makes grandiose claims without providing evidence.
- Unidentified Members of The Team: It should be possible to identify the primary players in the majority of investing businesses. This typically entails having an active social media presence and easily accessible biographies of the investment managers. Be wary if you are unable to identify the person managing a coin.
- Free Money: Any investment opportunity that promises free money, whether in cash or Bitcoin, is probably fraudulent.
How to Avoid Cryptocurrency Scams
Many cryptocurrency scams are clever and convincing. You can take the following precautions to keep yourself safe:
- Safeguard Your Wallet: You need a wallet with private keys in order to invest in cryptocurrencies. It is quite likely to be a scam if a company requests your keys in order for you to take part in an investment opportunity. Keep the keys to your wallet hidden.
- Invest only in items You Are Familiar With: It’s best to take a step back and do more research before deciding whether to invest if you don’t understand how a certain cryptocurrency operates.
- Take Your Time: To encourage you to invest your money immediately, scammers frequently employ high-pressure techniques, such as offering bonuses or discounts if you participate right away. Before making any financial investments, take your time and do your own crypto research.
- Watch out For Social Media Advertisements: Crypto scammers frequently utilize social media to advertise their fraudulent schemes. Do your research and keep a healthy dose of skepticism when you see cryptocurrency chances advertised on social media.
- Ignore Cold Calls: It’s likely a fraud if someone calls you out of the blue to pitch you a cryptocurrency investment opportunity. Never send money or divulge personal information to someone who contacts you in this manner.
- Only Download Apps from Legitimate Platforms: It is safer to download software from the Google Play Store or Apple App Store than from other sources, even though fraudulent apps may find their way there.
- Do Your Homework: The most well-known cryptocurrencies are legitimate. However, if you are unfamiliar with a certain cryptocurrency, do some research on it. Look for real reviews and testimonies, find out who owns it and how it works, and see if there is a whitepaper you can read.
Lastly, never invest money you can’t afford to lose, just like with any other investing opportunity. Understanding the dangers is crucial because cryptocurrency is speculative and volatile, even if you’re not being scammed.
What to Do if You Fall Victim to A Crypto Scam
It’s critical to take immediate action if you have made a payment or revealed personal information since falling for a Bitcoin scam can be disastrous.
Get in touch with your bank right away if you have made a purchase with a credit or debit card, made a bank transfer payment, or shared personal information about yourself.
Wrapping up, crypto scammers frequently sell other criminals the information they have obtained. Therefore, in order to stop additional harm, it is imperative that you change all of your usernames and passwords.
You can report a social media crypto scam to the appropriate social media network if you fall victim to one. Also, report frauds to the appropriate body in your jurisdiction, depending on where you live.r example, in the US, that would be the Federal Trade Commission. Other countries have their own equivalents.
