Have you heard of crypto scams before? Scammers want your cryptocurrency just like they want your money in the bank account. To keep your cryptocurrency safe, you should know the warning signs that a cryptocurrency and its interactions may be a scam.
Because the popularity of cryptocurrencies has exploded in recent years, con artists have found a plethora of new ways to take your money. The cryptocurrency community encourages everyone interested in the space to educate themselves on the many crypto scams.
Want to find out more right now? Let’s talk about the 12 common cryptocurrency scams in which the con artist convinces you to participate in payment activities involving some cryptocurrency, then disappears after getting the money.
Top 12 Crypto Scams To Be Aware Of
Con artists will target you if they believe you have money they can steal. Likewise, crypto is not an exception. Scammers often pose as industry leaders or experts to exploit the public’s lack of knowledge about blockchain technologies and cryptocurrencies.
Crypto scams can take numerous shapes. Below are some of the most common crypto scams.
1) Investment schemes
Con artists pose as real “investment managers” to contact people who might fall for their investment scams. The so-called “investment managers” tell their victims they can make money through investments while bragging about how much they have made from their cryptocurrency.
Before they start their scam, the con artists want money upfront. Then, the thieves don’t even try to make money; they just take the first payments. Scammers can access a victim’s cryptocurrency by pretending to make a money transfer or deposit and asking for the victim’s personal information.
2) Phishing scams
Crypto-related phishing attacks often try to get information about your online wallets and their amount. Scammers often go after private keys to get to the money in a cryptocurrency wallet. It works like other phishing schemes and is linked to fake websites. They email the target inviting them to a bad website to get private keys. The hackers then use this information to steal the crypto balance from the wallets.
3) Pump and dump schemes
Scammers tell people about a currency or token through email or social media sites like Twitter, Facebook, or Telegram. Investors bid up the price because they wanted to buy these coins. After putting up the price artificially, the con artists sell their stock, which causes the asset’s value to drop quickly. This could happen right away, or it could take a few minutes. This scam is known as the pump and dump scam.
4) Fake app
Scammers often trick bitcoin traders by sending fake apps through the Google Play Store and the Apple App Store. Even though these fake applications are quickly found and removed, that doesn’t mean they don’t hurt businesses’ bottom lines. A lot of people have downloaded fake cryptocurrency apps. These cons then use these apps to empty your crypto wallets.
5) Fake celebrity endorsements
Scammers in the cryptocurrency industry often use the names of famous people or companies or fake endorsements from powerful people to get people to fall for their schemes. This can involve selling fake cryptocurrency to people who don’t know much about it. These scams can be very complicated, with fake but convincing websites and beautiful pamphlets that claim to have endorsements from well-known people.
Fraudsters put real images on fake social media profiles, ads, and articles to make people think that the celebrity recommends the investment and stands to make a lot of money from it. These claims come from sources that look like they can be trusted, like ABC and CBS, which have polished websites and logos. The endorsement, on the other hand, is a complete lie.
6) Giveaway scams
In a giveaway scam, for example, the scammers will say that they will double or triple any crypto given to them or will tell you that you will win something as a lucky draw. Cleverly written messages from what looks like a real social media account can build trust and get people to act. Someone might feel compelled to move money quickly to profit quickly on this “once in a lifetime” chance.
7) Romance scams
There are a lot of cryptocurrency scams, and dating apps are not exceptional. These cons are mostly about long-distance relationships that only happen online, in which one person slowly wins the other person’s trust. Step by step, each person is persuaded to buy or give crypto to the next person.
After getting paid, the online dating con artist disappears. Schemes like these are also called “pig butchering scams.”
8) Man-in-the-middle attack
Scammers can easily get personal information from people logging into their public crypto wallet accounts. Fraudsters can steal information sent over a public network, like a password or the key to a wallet.
A man-in-the-middle attack lets a thief get this information as long as the person is signed in. To do this, it is possible to listen in on the data being sent over trusted Wi-Fi networks as long as they are nearby.
A Virtual Private Network (VPN), which cuts out the middleman, is the best way to protect yourself from these attacks. The VPN encrypts all of the information that is sent. This protects the user’s privacy and makes it impossible for hackers to get into their accounts and steal crypto.
9) Ponzi schemes
Ponzi schemes may use the promise of a profitable cryptocurrency exchange or even more crypto to lure people in. Still, the investor is tricked into giving money before discovering no real deal.
If you want to trade cryptocurrencies, it’s best to do so on well-known platforms like Coinbase, Crypto.com, and Cash App. Before giving out any personal information, you should do your research and check out the exchange’s reputation and legitimacy on sites for the industry.
10) Extortion & Blackmail Cons
Scammers often use blackmail emails to get people to do what they want. Some of these emails say that the recipient’s use of pornographic or other illegal websites will be revealed if they don’t share their private keys with the sender or send them crypto coins. These are all examples of criminal extortion, so they should be reported to the FBI or another law enforcement agency.
11) Cloud mining scams
“Cloud mining” refers to businesses that let you rent mining equipment that they manage in exchange for a fixed fee and a share of the money you make. This could make it so that users don’t have to buy expensive mining equipment to do remote mining. Still, many cloud mining services are scams or, at best, not very good, and users lose cryptocurrency or make much less than promised.
12) Malware
Malware has been a threat to consumers since the crypto, and Web3 industries began. Scammers must find a way to put bad software on their computers or mobile devices. Everyone uses a copied and pasted wallet address when exchanging cryptocurrencies with someone else. At this point, the virus starts to cause trouble by changing the recipient’s address to that of the cybercriminal.
Since addresses are long strings of letters, numbers, and sometimes even symbols, many investors don’t check that they are correct before sending money to fraudsters.
How to Spot Scams in Cryptocurrency
So, how can you spot a cryptocurrency scam? There are several warning signs to look out for, such as:
Guaranteed profit projections
You can’t tell how an investment will do in the future because the value of money could go up or down. Any cryptocurrency deal that promises to make money should raise red flags.
Bad or no white paper
A whitepaper is one of the most important parts of an ICO, so all cryptocurrencies should have them. The whitepaper must explain why the cryptocurrency was designed the way it was and how it will work technically. You should be careful if the whitepaper doesn’t make sense or even exist.
Intense Promotion
No business can survive without advertising. Still, crypto fraudsters find people to scam by spending a lot of money on marketing through online ads, paid influencers, flyers, and other similar methods. The main goal is to get the word out to as many people as possible. Do not invest in a cryptocurrency immediately without first checking out any claims made in marketing materials.
Team Members Not Identified
Most firms that help people invest make it easy to determine who is in charge. Most of the time, this means being active on social media and having an easy-to-find biography of the people behind the investment. If you can’t find out who owns a cryptocurrency, you should be wary of it.
Free Money
Any investment offer that says “free money,” whether in fiat currency or cryptocurrency, is probably a scam.
How to Protect Yourself from Cryptocurrency Scams
Crypto scams are, unfortunately, all too common, and they are often tricky and dishonest. To avoid getting scammed, take these steps:
Keep your money safe.
For any cryptocurrency investment, you need a cryptocurrency wallet with private keys. If a company asks for your keys in exchange for a piece of an investment pie, it’s likely a scam. Keep your wallet’s secret code safe.
Don’t take your wallet app for granted.
Sending a small amount of money the first time you use a crypto wallet is a good way to ensure it works. Stop the update and delete the wallet app if you notice anything strange while it is being updated.
Invest only in what you know.
If you’re still confused about how a certain cryptocurrency functions, holding off on investing is probably advisable until you’ve got more information.
Relax and take your time
Scammers sometimes employ high-pressure strategies to induce hurried financial commitments, such as offering incentives like discounts or bonuses for immediate participation. Don’t rush into investing; find out as much as you can about it.
Try not to click on social media ads.
Scammers spread the word about their illicit crypto activities on popular social media platforms. They could promise freebies or money out of the blue or utilize stock photos of famous individuals without permission. When a crypto opportunity comes up on social media, be careful and do a lot of research.
Don’t bother answering unsolicited calls
Often, an offer to invest in crypto that comes out of the blue is a scam. Avoid giving out personal information or sending money to anyone who reaches you via this method.
Get your apps only from verified stores.
There is a small risk of downloading malware or a virus through the Google Play Market or the Apple App Store, but these are still the safest places to get the software.
Learn the facts.
Most of the digital currencies that people use are not fake. But if you’re interested in a cryptocurrency you don’t know much about, you should research and learn as much as you can about it before investing. This includes reading the project’s whitepaper, learning about the team behind the cryptocurrency and how it works, and reading honest customer reviews and testimonials. To invest in cryptocurrency, you should look at a reliable and up-to-date list of fake cryptocurrencies.
It seems too good to be true.
Most “get rich quick” schemes and ways to make sure you make money are just scams. Be careful with things that seem too good to be true.
Lastly, remember that the rule of thumb for any investment is never to put up money you can’t afford to lose. Cryptocurrency is volatile and based on speculation, so you should be aware of the risks even if you’re not being scammed.
Conclusion
Several individuals have compared the recent rush into cryptocurrency to being volatile. The scale and complexity of the crypto ecosystem mean that it will continue to be a target for con artists.
There are two main types of crypto scams: the victim is tricked into divulging sensitive information, and the victim is tricked into sending crypto coins to a hacker’s digital wallet.
The best approach to avoid falling victim to a crypto-related scam is to be aware of the most frequent tactics con artists use to steal your personal information.
We hope our list of crypto scams helps you know about them and ensure you stay safe from them with our steps.
Read more about Kucoin mega hack.