Beware of Crypto Scammers

$14 billion has been stolen in cryptocurrency scams since 2021, according to a new report released by Chainalysis. Crypto-related crimes amount to one out of every four dollars reported stolen by fraud, more than any other payment form. Up 79% from a year earlier, scamming is the greatest form of cryptocurrency crime.

There are multiple ways scammers will get you, and crypto investors must remain vigilant to avoid falling victim to these attacks. Year by year, scammers are becoming more cunning and manipulative, adapting to more protective investors. Here are the most common scams:

Scams to Look Out For

Phishing

These scams are the oldest trick in the book and have been around forever. Why? They still work! During a phishing attack, scammers send emails with malicious links to fake or fraudulent websites to gather personal details, including cryptocurrency wallets and key information. In crypto-specific scams, the victim is usually directed to a fake website that requires the victim to enter their wallet’s key. Once hackers acquire this information, it is quite easy to steal the cryptocurrency in those wallets.

Investment Scams

In this attack, scammers reach out to potential investors claiming they have made millions investing in cryptocurrency, and convince their victims that they are “crypto-investment experts” with deep market knowledge. These scammers request upfront fees and personal information to “open your account.” In doing so, scammers access enough personal identifying information to steal any or all of your crypto assets, along with the upfront fee.

Investment scams also use celebrity endorsements to pump their perceived legitimacy. They will take real photos of celebrities and post them on fake accounts to make it appear as if these celebrities have endorsed their services. They will use real news outlets and professional websites that look credible, but many of these services often turn out to be fraudulent.

Romance Scams

A rising star in the scamming world, romance scams involve dating app romances in which thieves involve themselves in long distance relationships with their victims and then convince them to send their new lover crypto. Tinder swindler, a popular Netflix documentary, detailed this type of scam, demonstrating well how trusting people can become when emotionally involved. According to the Federal Trade Commission (FTC), about 20% of the money lost in romance scams between October 2020 and March 2021 were sent in cryptocurrency.

Rug Pull Scam

These scams involve hyping a new project, nonfungible token (NFT) or token to gain funding. After people invest in the project, the money disappears. The way these scams are structured leaves investors no way to sell their token.

The most famous incident was the Squid Coin Scam, based on the popular Netflix show, Squid Game. Investors had to play to earn cryptocurrency, buying tokens online to play the game and then exchanging them later for other tokens. The price of the Squid token hit a high of $90. Eventually the money disappeared and trading halted completely. The scammers made around $3 million from this scam.

Man-in-the-Middle Attack

Every public wifi source is unsecured. In a man-in-the-middle attack, hackers can steal information sent over a public network by intercepting wifi signals if the hacker is close to his target. Passwords, crypto wallet keys, and account information have all been stolen in these types of hacks. The best way to avoid this type of hack is to use a virtual private network (VPN), which encrypts all data being transmitted regardless of what network you’re on.

Other Noteworthy Attacks

The attacks listed above are only a few, and some of the most pervasive, types of attacks on crypto investors. Other attacks include:

- Fake Cryptocurrency Exchanges

- Fraudulent Employment Offers

- Fraudulent Initial Coin Offerings (ICO)

- Cloud Mining Scams

- Pump and Dump Schemes

- Fake Giveaways

How to Protect Your Cryptocurrency

The best way to protect your cryptocurrency is due diligence. Verify the information provided to you, do research, and always maintain a secure connection when handling your investments.

How to spot scams

The best way to spot a scam sounds cliché but: If it looks too good to be true, then it probably is. Anyone who promises large gains, doubling your money, or a guaranteed return, is likely lying. Listen to your gut as well. Emails, messages, or websites with common misspelling or grammatical errors is likely not legitimate. Here are some more red flags to look out for:

- Excessive marketing

- Free money

- Fake influencers or celebrity endorsements

- Minimal details about investment decisions

- Several transactions in one day

- Only accepting cryptocurrency as payments

How to Avoid Scams

There are multiple ways to avoid falling victim to a cryptocurrency scam. These are good habits to follow to protect yourself and your investment:

- Be careful with your crypto wallet: if you’re testing a new app or wallet address, send a small amount first to ensure its legitimacy.

- Be wary of social media outreach and advertisement.

- Only download apps from official platforms.

- Protect your keys. Losing your key or theft of your key could mean losing your crypto altogether.

- It sounds simple but…use a strong password!

- Use two-factor authentication (TFA): there are many apps that support TFA, and they are all good resources to help protect your accounts.

These are all good places to start to protect your crypto! The final, and most important note, is to be cautious. Be careful about what emails you open, links you select, and websites you visit, as all of these could be scams.

About Centuries Analytics

Investing in cryptocurrency doesn’t have to be risky — not anymore. We let data speak; not investors, “experts”, pundits, or tv show commentators. Centuries uses social media, financial, and macro-economic data to determine and predict cryptocurrency markets.

Find out more: https://www.centuriesanalytics.com/