The increase in cryptocurrency’s acceptance has also given scammers additional opportunities to take advantage of the industry’s vulnerabilities and con gullible individuals.
Cryptocurrencies fraudsters stole more than $7.8 billion in cryptocurrency in 2020; this amount increased to over $14 billion in 2021 as a result of their success. Every day, new varieties of cryptocurrency scams emerge, and if you’re not vigilant, you can wind up falling for one of them.
According to estimates from the US Federal Bureau of Investigation (FBI), cybercriminals stole cryptocurrency worth more than US$1.3 billion between January and March 2022. Given that by mid-2022, the market capitalization of all cryptocurrencies combined was just under US$1 trillion, it is a considerable sum.
How cryptocurrency scams work
In a cryptocurrency scam, thieves steal money from victims who actively invest in or use the new digital currency for transactions.
It can be very challenging to get your lost money back from cryptocurrency scammers because the majority of crypto assets aren’t regulated or monitored by the government. This is also the cause of the increasing number of scammers that bravely enter the cryptocurrency industry and prey on trust without any fear. Scams with cryptocurrencies typically fit into the following categories:
- Obtaining access to a person’s wallet: Scams that allow fraudsters to access a target’s digital wallet or their account authentication credentials fall under this category. Scammers may attempt to gain physical access to hardware or attempt gain access to confidential information like security codes or private keys.
- Transfer or steal cryptocurrency directly: In these scams, fraudsters directly move cryptocurrency from the wallet of their victim to their own wallet by impersonating them, creating false business opportunities, or any other deceptive methods, read t
6 Common Cryptocurrency Scams and Frauds
1. Social Media Giveaway Scams
Nowadays, it amazes me how giving everyone looks on social media sites like Twitter and Facebook. A giveaway from one of your favorite cryptocurrency influencers or companies will undoubtedly be visible if you look through the comments to a tweet with high engagement. They guarantee to return you back 10 times as much if you send them just 1 BNB, BTC, or ETH. Doesn’t it seem too wonderful to be true? Sadly, it is because of that. That can be used as a general guideline for many of these scams.
It’s quite rare that someone is holding a genuine giveaway that necessitates you send your own money first. You should be cautious about these messages on social media. They may originate from accounts that resemble those you are familiar with and love, but this is part of the scam. Regarding the numerous answers praising the generosity of the aforementioned account, these are merely fictitious accounts or automated programs used in the giveaway fraud.
It should go without saying that you should ignore these. If you’re certain they’re legitimate, look closely at the profiles so you can spot the differences. You’ll immediately recognize that the Facebook profile or the Twitter handle is bogus. Additionally, even if Binance or another organization chooses to conduct a giveaway, the trustworthy ones will never request that you send money first.
2. Fake Mobile Apps
If you’re not careful, it’s simple to ignore the warning indications on fraudulent apps. These frauds typically instruct victims to download harmful software, some of which seem like well-known ones.
Everything might appear to function as expected once the consumer downloads a malicious app. These programs, however, are made deliberately to steal your cryptocurrencies. In the cryptocurrency industry, there were numerous instances where people downloaded fraudulent apps whose creators pretended to be well-known crypto organizations.
In this case, the user is actually sending money to the fraudster’s address when they are given an address to fund their wallet or receive payments. Naturally, there is no way to reverse a transfer of funds after it has been made.
These scams are also especially successful because of their ranking position. Some malicious apps might score highly in the Apple Store or Google Play Store even if they are malicious, giving them the appearance of legitimacy. You should only download from the official website or from a link provided by a reliable source in order to avoid falling for their tricks. When utilizing the Apple Store or Google Play Store, you might additionally want to verify the publisher’s credentials.
3. Crypto Email Scams
In an effort to deceive people, emails can also be faked to appear as though they came from a reliable and trustworthy source. The majority of these emails demand cryptocurrency payments be made in a “urgent” manner. The goal is to create a sense of urgency in the email so that the recipient responds to it without giving it much thought.
There are more ways than ever for scammers to steal your money because to the unexpected rise in new crypto-based assets like non-fungible tokens (NFTs) and initial coin offers (ICOs). For instance, con artists may send emails purporting to be from a reputable cryptocurrency business and giving you a special deal. In other instances, the creators of new cryptocurrencies themselves may distribute unregulated tokens or deceive investors about their offerings through false advertising.
4. Pump and dump schemes
Through an email blast or social media sites like Twitter, Facebook, or Telegram, con artists will hype up a certain coin or token. Tradesmen hurry to purchase the coins because they don’t want to miss out, which raises the cost. After successfully driving up the price, the con artists liquidate their shares, which leads to a crash as the asset’s value rapidly drops. This can occur in a matter of minutes.
5. Fake Websites
New cryptocurrency users may be drawn to fraudulent websites that promote “huge” investment opportunities or cryptocurrency mining. Many of these websites have authentic-looking design elements that could persuade you that your investment will grow.
Although the investment may be simple, your prospects of recovering your profits are slim because con artists steal all the money and shut down the website as soon as they have amassed enough. Scammers frequently imitate companies and build websites that closely resemble the actual ones in order to target unwary clients.
6. Giveaway scams
In a giveaway scam known as this, con artists guarantee to match or multiply the cryptocurrency donated to them. A sense of authenticity and urgency may be established with 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 allegedly “once-in-a-lifetime” chance.
How to avoid cryptocurrency scams
Even if cryptocurrency scams are on the rise, you can take proactive measures to never fall victim to one. Here are some strategies for avoiding cryptocurrency fraud:
- Protect Your Digital Wallet: You’ll need a digital wallet and the private keys to access it in order to invest in cryptocurrencies like Bitcoin and conduct transactions. It is most obviously a fraud, and you should stay as far away from it as you can, if a website or business requests that you disclose your private keys under any circumstances. Your digital wallet’s secret keys should never be shared.
- Keep an eye on your wallet app: Send a little quantity of money the first time around to test the legitimacy of a cryptocurrency wallet app. When updating your wallet app, stop the update if you see any suspicious activity and remove the program.
- Be wary of social media adverts: Crypto scammers frequently advertise their fraudulent schemes on social media. They may utilize unlicensed pictures of famous people or prominent entrepreneurs to give the impression of credibility, or they may make promises of freebies or free money. Make sure you conduct your own research when you see cryptocurrencies touted on social media.
- Take your time: Scammers frequently employ high-pressure techniques to convince you to invest your money right away, such as making bonuses or discounts contingent on your participation right away. Before making any purchases, take your time and conduct your own research.
- Ignore cold emails: It’s probably true if someone contacts you out of the blue with a “great” investment opportunity in cryptocurrencies. Never divulge your personal information or log into your online wallet using dubious links found in emails because they are almost certainly a fraud.
- Do your research: The most widely used cryptocurrencies are not scams. To learn more about a cryptocurrency you haven’t heard of, do some research on it. Check to see if there is a whitepaper you can read, learn who manages it and how it functions, and look for unbiased reviews and endorsements. To check for scams, locate a reliable, current list of bogus cryptocurrencies.
There is no shortage of methods available to fraudulent actors for stealing money from trusting cryptocurrency consumers. You must always be on the lookout for scams being employed by these parties if you want to avoid falling victim to the most prevalent ones. Always make sure you’re using official websites or apps, and always keep in mind that if an investment seems too good to be true, it generally is, we hope you liked our article which is on, 6 Common Crypto Scams and How to Avoid Cryptocurrency Fraud.