Dec 9, 2021
Crypto scams uncovered: How to keep your cryptocurrency safe [Updated 2022]
In 2021 alone, $12 billion worth of cryptocurrency assets were sent to illicit addresses. This is what you can do to avoid becoming part of the stats.
The cryptocurrency world, as young and promising as it is, also has cracks. Plenty of crypto scams are responsible for yearly losses of billions of dollars in cryptocurrency assets.
As the crypto market keeps growing at a large scale and new projects constantly launch in the market, there is also a rise in crypto-related scams. Thus, investors must keep their funds safe from fraudulent cryptocurrency activities.
According to CNBC, in 2021 alone, there have been over $12 billion in losses in crypto thefts, hacks, and scams. Fraud and theft made up most of the sum with $10.5 billion, an increase of over 7X from last year. In Q1 of 2022, we witnessed the biggest crypto theft when Axie Infinity’s Ronin Bridge got hacked and lost over $600 million.
Below, I will share tips on identifying the most deceptive cryptocurrency scams and ways to keep your crypto wallet safe.
Top crypto scams in 2022
The list of crypto scams, unfortunately, is extensive. From scamming emails to employment crypto scams, there are numerous ways bad actors perform in an attempt to steal the identity and money from their targets. Here is a rundown of some of the most common ones investors go through in 2022.
Scamming emails
A scam email can look like a legit crypto company, making it harder for the receiver to recognize.
Check their validity before investing. If you have doubts about the email, you can directly contact someone working there.
A scam email may also entice the reader to click on a link redirecting to a different site. Never click on a link on an email that brings you to a website you don’t know. ICOs, or Initial Coin Offerings, is another way scammers entice their targets through email. Take your time to read the entire email carefully, and avoid falling for this type of scam.
A similar scam is known as a blackmail email. In this approach, the email may claim someone owns embarrassing or compromising images, tapes, or personal information about you. Then, they threaten or blackmail you to release it publicly if you refuse to pay a certain sum in the form of cryptocurrencies.
Don’t comply with the scammer. Instead, report it to your country’s Federal Trade Commission (FTC).
Employment crypto scams
Like other crypto investment opportunity scams, an employment crypto scam often presents an unreal job opportunity that directs to a fraudulent site through a link. The potential “employer” then usually asks for money for “training purposes and agency fees.” They require the amount in crypto assets since it’s much harder (or impossible) to retrieve it.
Fraudulent tweets and other social media posts
In crypto, malignant bots can be found anywhere, even impersonating public figures. Don’t accept offers from Twitter or other social media platforms, even if the results seem big. Also, the comments on the posts of these figures are bots, as well, trying to make you believe it’s a legit account.
Fake Mobile Apps
Another form of crypto scam is fake apps or dapps. These malicious applications look like genuine brands, often available for download on iOS or Android devices.
Although you can usually find out about it soon after and remove the app, the damage often doesn’t end there. According to Sophos, a cybersecurity firm, millions of people fell for 167 fake apps in 2021. While Android users are at a higher risk, iOS devices are not exempt.
DeFi Rug Pulls
Decentralized finance, or DeFi, aims to remove the barriers to financial transactions, and DeFi has become an essential innovation in the crypto ecosystem.
However, the development of DeFi protocols has given a chance to numerous scammers that walk away with investors’ funds– a practice known as a Rug Pull. The method is responsible for over $10 billion lost through cryptocurrency assets in 2021.
Scam of authentication or renewal of wallet
A scam involving the “authentication or renewal of a wallet” is one of the most common fraudulent scams in 2022. This method usually occurs when a fraudster offers to scan a barcode with a promise to fix an issue you may go through or simply make a payment on a compromised website. The scanning of the barcode allows the scammer full access to the wallet.
Bottom line: What to do next
Below are a few things to watch out for before deciding to make your first investment in a
cryptocurrency.
- Do your own research (DYOR). Before making any investment, especially in a project that promises “investment opportunities with overnight profits,” do your own research first. If it’s too good to be true, chances are pretty high it’s a scam.
- Never reveal your crypto wallet’s private key or seed phrase to anyone. For higher security purposes, storing that information somewhere offline is recommended.
- Enable two-factor authentication in any crypto wallet or exchange you use. That may not be the unbreakable locker to your funds, like in the case of the Coinbase hack, but it is a significant security step.
- Doublecheck website URLs. A phishing scam may simply swap a letter or number (such as an “I’ to a “1” or “O” for the number “0”) to make a URL look like a real one.
As the world of cryptocurrency continues to gain traction and grow, it will also be the attention of ill-intended actors.
By getting to know the common ways with which scammers try to steal your information and, ultimately, your cryptocurrency, you will be more likely to identify a crypto scam early on and keep your crypto wallet safe.
