Learn how to avoid these 7 cryptocurrency scams
As with all new and exciting technology, for every person out there trying to use it with honest intentions, there are others looking to use it to exploit people. And cryptocurrencies have provided scammers with a new avenue for such exploitation in recent years.
Fake websites, phony promotional giveaways, and Ponzi schemes are just some of the tricks scammers will deploy to try and get a hold of a vulnerable user’s funds. As cryptocurrencies are a borderless digital currency with no central authority, once the scammer holds the funds, they cannot be recovered.
We have compiled some tips on keeping safe when roaming throughout the vast world of digital currencies and avoiding falling victim to seven of the most common fraudulent schemes.
1. Impostor websites
Impostor websites are fraudulent copies of trusted sites you may have visited and interacted with on multiple occasions with no issues. They are made to look identical and function similarly to the original, but they serve only to steal your crypto funds.
Exchanges are the most common websites duplicated by scammers. They will post links to their fraudulent exchange on different platforms to mislead people into thinking it is the original, giving up their account details and even their funds upon attempting to log in.
To avoid being scammed by a fake website, make sure to bookmark the authentic version of the page and always double-check if the URL is correct before entering any personal data.
2. Fake mobile apps
As with fake websites, scammers will also create fraudulent mobile applications to steal users’ funds. Unlike websites, many people think they can trust mobile apps as they have been listed on Apple’s App Store or the Google Play Store.
However, scammers can create apps that are available for a short period in such stores before they are identified and removed. Even just a few minutes is enough for a scammer to escape with all your funds!
The best way to make sure you are downloading and installing the legitimate version of the mobile application is to download it directly from the official website of the company in question. Try not to search for the app through the App/Play store and never download from non-official links.
3. Social media giveaway scams
Malicious bots on Twitter and other social media platforms will regularly create posts or comments that promote “once in a lifetime” offers. They often require you to send a small amount of cryptocurrency to an address with the promise of receiving a larger amount back in return (e.g., “send 0.1 BTC to receive 0.8 BTC in return”).
Of course, the larger amount is never sent as promised, and the initial value is lost forever. The posts are usually created by fake accounts and deleted shortly after being posted.
Be extra careful on social media. If an offer seems too good to be true, it usually is. Never send your funds to any address that is shared on social media, even if the comments appear to suggest it is legitimate Such posts are also created by scammers and come from bot accounts.
4. Ponzi schemes
Cryptocurrency Ponzi schemes are scams that pay rewards to older investors using a new investor’s money. Examples of such scams include OneCoin and BitConnect.
When it is no longer possible for new investors to be onboarded or the desired number of investors is reached, the scammer will dump all their crypto on the market, leaving the remaining holders with substantial losses.
To steer clear of such schemes, be sure to research the cryptocurrencies you purchase. If a coin relies on new investors to sustain its value or requires an initial “large sum” deposit to first invest, it is most likely a Ponzi scheme.
5. Phishing attacks
Phishing is one of the oldest types of internet scams, but as technology develops, so does the savviness of the scammers. In cryptocurrency, phishing attacks usually come in the form of an email or social media message.
The communication will be made to look like an official message from a popular crypto exchange or website. The text will generally inform you that some “issue” or “urgent action” is required with your account and that your funds are at risk if you don’t act immediately. Upon clicking the provided link, you will be prompted to “update your account details” or “reset your password,” but in reality, the scammer is stealing your details.
To avoid such attacks, always verify the account or email address through official sources. This means going to the company’s official website and asking the support desk if the email was from them. Beyond this, always refrain from clicking links sent in unexpected emails. Go directly through the official website to reset your passwords if you think your account may have been compromised.
6. Copy/paste malware
Copy/paste malware is a specific type of malware that scammers have specifically developed to steal cryptocurrency. Once your computer is infected with the malware, it takes over your copy/paste clipboard data and manipulates it to trick you into sending crypto to the scammer rather than your desired address.
The malware will recognize when you have copied a Bitcoin address (or one of another cryptocurrency) and replace it with the scammer’s. So, when you paste the clipboard content, instead of your desired address appearing, it will be someone else’s.
Computer security is paramount for avoiding this type of scam. Regularly run anti-virus and anti-malware checks on your computer and don’t install any software of questionable origin. Furthermore, always double-check the address you paste before sending the transaction, just in case.
7. Ransomware
Ransomware is the most violent and direct type of malware that scammers use to attack your computer. Once your device is infected, the ransomware will lock your computer and threaten to wipe out the device’s memory unless a “ransom” fee is paid (generally in crypto).
Even after the ransom fee is paid, the malware will keep your device locked and delete your data anyway. It is nothing more than a ploy to get you to panic and send the scammer money.
To protect yourself against such attacks, avoid clicking suspicious links or installing untrusted software. Make regular back-ups of essential files in case your device does end up infected.
If your device is somehow infected, restart your computer in “safe mode.” From “safe mode,” you will be able to find the automatic backups your operating system makes (for Windows and Mac users) and use them to do a system restore to a point in time before the ransomware infected your device.
There are a multitude of scams circulating in the crypto industry. As crypto expands further into the mainstream, it is more important than ever to be vigilant and skeptical about all potential scams. Avoid any unexpected links or “too good to be true” offers. And always keep your devices backed up, run regular anti-virus checks, and double-check your addresses.
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