Cryptocurrency trading is an exciting and lucrative industry, but it is not without scams and frauds – or what is termed as Crypto Scams. There have been reports of scammers mimicking crypto exchanges and siphoning off investor funds. Scammers are constantly seeking for new methods to steal your money, and the explosive rise of cryptocurrencies in recent years has offered several chances for fraud.
Cryptocurrency uses blockchain technology, a digital ledger in which funds cannot be retrieved once transferred. So, if you’re interested in cryptocurrency, you should be aware of the risks. In this article, I’ll discuss typical cryptocurrency scams, how to recognize them, and how to avoid them.
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Contents
How to Recognize Cryptocurrency Scams
There are several forms of crypto scams. Among the most frequent are:
Fake websites
To deceive unwary customers, scammers may occasionally construct bogus cryptocurrency trading sites or false copies of legitimate crypto wallets. These bogus websites frequently have domain names that are similar but somewhat different from the sites they are attempting to imitate. They appear remarkably like authentic sites, making differentiation difficult. Fake cryptocurrency sites frequently function in one of two ways:
- As for phishing pages: All the information you submit, including your crypto wallet’s password and recovery phrase, as well as other financial information, ends up in the hands of fraudsters.
- Investment Scam: At first, the site may enable you to withdraw a little sum of money. If your investments appear to be performing well, you may decide to invest additional money in the site. However, when you want to withdraw your money, the site either closes or denies your request.
Pump and dump schemes
This includes fraudsters hyping a certain coin or token using an email blast or social media platforms such as Twitter, Facebook, or Telegram. Traders hurry to acquire the coins in order not to miss out, pushing up the price. After successfully increasing the price, the fraudsters liquidate their shares, causing a crash as the asset’s value falls precipitously. This may happen in a matter of minutes.
Fraudulent initial coin offerings (ICOs)
An initial coin offering, or ICO, is a method for new cryptocurrency enterprises to raise funds from potential consumers. Customers are typically given a discount on the new cryptocurrency in return for sending active cryptocurrencies such as bitcoin or another popular cryptocurrency. Several ICOs have proven to be fraudulent, with criminals going to great pains to defraud investors, including hiring bogus offices and developing high-end marketing materials.
Cloud mining scams
Cloud mining refers to firms that rent out mining hardware in exchange for a predetermined price and a percentage of the money you allegedly generate. In principle, this allows users to mine remotely without having to purchase expensive mining equipment. Many cloud mining organizations, on the other hand, are frauds or, at best, unproductive, resulting in you losing money or earning less than was promised.
Fake apps
Scammers also frequently use phony apps available for download on Google Play and the Apple App Store to dupe bitcoin investors. Although these fraudulent applications are rapidly discovered and removed, it doesn’t mean they aren’t having an impact on numerous businesses. Thousands of individuals have installed fraudulent bitcoin applications.
Phishing scams
Crypto phishing attacks frequently target information about online wallets. Scammers target private keys for crypto wallets, which are essential to access funds within the wallet. Their operation is comparable to other phishing attempts and is connected to the bogus websites discussed above. They send an email to entice readers to visit a specially designed website where they must submit private key information. After obtaining this information, the hackers take the bitcoin stored in those wallets.
Giveaway scams
In what is known as a giveaway scam, fraudsters offer to equal or multiply the bitcoin transferred to them. Clever messaging from what seems to be a legitimate social media account may establish a sense of legitimacy and urgency. This ostensibly “once-in-a-lifetime” chance may entice people to send assets immediately in the hope of a speedy return.
Fake celebrity endorsements
To attract potential victims’ attention, cryptocurrency fraudsters may masquerade as or claim endorsements from celebrities, businesses, or influencers. This can include selling phantom cryptocurrency to inexperienced investors. These frauds may be sophisticated, with gleaming websites and booklets purporting to demonstrate celebrity endorsements from big names like Elon Musk.
How to protect yourself from Crypto scams
Many crypto scams are sophisticated and convincing. Here are some actions you can take to protect yourself:
- The most popular cryptocurrencies are not fraudulent. However, if you haven’t heard of a certain cryptocurrency, research it – To avoid frauds, look for an up-to-date and reliable phony cryptocurrency list.
- If you’re not sure how a certain cryptocurrency works, it’s advisable to take a break and do more study before deciding whether to invest.
- To invest in bitcoin, you must have a wallet that contains private keys. If a company wants you to provide your keys to join in an investment opportunity, it’s most certainly a fraud. Keep your wallet keys to yourself.
- Never give up your personal information to anybody who contacts you unexpectedly by email, text, social media, or other means. It might even look to be a friend, but it could be a hacker who has taken over their email or social account. Check with them individually using another mode of communication.
- When something appears to be too good to be true, it typically is. Take any investing strategy with a grain of salt.
- Turn on two-factor authentication for all cryptocurrency accounts.
- Any investment ‘opportunity’ that needs an upfront payment should be avoided.
- Never utilize unauthorized app shops.
- Install trusted anti-malware software on your PC and mobile devices.
Finally, like with any investment, never invest money that you cannot afford to lose. Even if you aren’t being scammed, bitcoin and other cryptos are volatile and speculative, so you must be aware of the risks. That’s all about crypto scams. Feel free to share with us your cryptocurrency scamming experience or any tips that have kept you safe before investing in any crypto ventures.