5 Types of Crypto Scams
Investment Scams
Investment scams revolve around deceptive individuals luring unsuspecting victims into sending their cryptocurrency, promising substantial profits in return. These fraudsters adopt various personas, posing as “investment managers,” celebrities, or even feigning romantic interest on online dating platforms. Regardless of their role, they assure people that their investments will grow significantly if they transfer their cryptocurrency to them.
Should individuals succumb to their appeals, they risk losing their cryptocurrency with little hope of recovery. Among the fraudulent tactics is the “pump-and-dump” scheme. In this scenario, scammers encourage individuals to purchase lesser-known cryptocurrencies at supposedly “low prices,” asserting that the asset’s value is poised to skyrocket.
As the purchased cryptocurrency’s value increases, the fraudster sells off their own holdings at an inflated price. This orchestrated sell-off causes the cryptocurrency’s value to plummet, resulting in financial losses for those who were deceived into buying during the surge.
With the rapid emergence of new cryptocurrencies online and lack of regulatory oversight, some investors are enticed by the allure of substantial profits within a brief timeframe. The prospect of triple-digit percentage gains in a short span attracts those seeking quick returns, leading them to join the trend. To identify potential investment scams, it’s crucial to be vigilant for assurances of extraordinary profits or guaranteed risk-free investments.
These schemes commonly originate on social media platforms or even online dating websites. Caution is advised when receiving unsolicited messages from individuals discussing your cryptocurrency holdings. Similarly, exercise caution if you encounter individuals promoting specific cryptocurrencies on platforms like Reddit or other social media channels. These are often referred to as socially-engineered scams.
Phishing Scam
Phishing scams remain a popular choice among scammers, as they aim to gain unauthorized access to your account information, including your cryptocurrency keys. As any cryptocurrency user understands, the possessor of the cryptographic key holds control over the associated cryptocurrency assets.
Phishing scammers often employ tactics that entice you to click on a link directing you to a counterfeit website. Once there, they can steal your account particulars. These scammers might assume the identities of reputable entities such as Amazon, banks, utility providers, or even governmental agencies. Their approaches may involve sharing links on social media platforms or reaching out to you directly.
For instance, they could send you an email or text message alleging the initiation of a withdrawal and provide a link to supposedly cancel the transaction. It’s important to exercise caution to avoid falling victim to such scams.
The provided link guides individuals to a deceitful website where the scammer collects the investor’s account credentials. This unauthorized access enables the thieves to log in and proceed to withdraw the held assets. Phishing scams have the potential to ensnare anyone, and they can target any type of digital asset. An illustration of this vulnerability occurred earlier this year when actor and film producer Seth Green experienced it firsthand as four of his Bored Ape NFTs were stolen.
Upgrade Scams
Given the regular updates in software, including cryptocurrency platforms, scammers exploit this familiarity with upgrades in the digital era to manipulate cryptocurrency holders into divulging their private keys under the pretense of an “upgrade.”
These fraudulent upgrade attempts can take advantage of genuine transitions, as exemplified by the recent Ethereum merge. This occurrence prompted both the Ethereum Foundation and Robinhood to express concern and caution users to remain vigilant against potential upgrade scams.
SIM-Swap Scams
Among the more recent cryptocurrency scams observed today are SIM-swap scams. In these incidents, scammers acquire a duplicate of your SIM card, granting them access to all the data on your phone. This obtained information is then exploited to acquire and employ the two-step authentication codes necessary to gain entry to cryptocurrency wallets and other accounts, all without the victim’s awareness.
Subsequently, once this occurs, the scammer gains unauthorized access to the victim’s cryptocurrency accounts and can proceed to drain them without any form of communication with the victim.
Fake Crypto Exchanges and Crypto Wallets
While perusing your social media accounts, you might encounter platforms promoting discounted Bitcoin (BTC), warns Martin Leinweber, a digital asset product strategist at MarketVector Indexes. These sites might advertise cryptocurrencies at a price 5% lower than the market rate, tempting buyers with the promise of substantial savings. However, it’s crucial to be cautious, as some of these platforms are fraudulent and offer counterfeit crypto products.
These deceptive crypto offerings often present extravagant investment returns, typically requiring users to pay a significant initial fee and subsequently urging them to make further investments.
Regrettably, once an attempt is made to withdraw funds, they often mysteriously disappear. A fabricated crypto wallet can be a type of malware scam. Scammers employ this approach to infect computers, ultimately stealing the user’s private key or password. To steer clear of such scams, it’s advisable to rely on well-established exchanges and wallets with a proven track record. If a wallet’s website mimics a reputable brand, it’s wise to view it as a scam and proceed with caution.
