Cryptocurrency scams: How to avoid them

The development in cryptocurrency’s popularity has given scammers greater opportunities to take advantage of the industry’s vulnerabilities and scam unwary users. According to a report by Chainalysis, crypto hackers have already stolen $1.9 billion in cryptocurrency during the first seven months of 2022, a 37% rise from the same period last year. So, if you’re interested in cryptocurrency, you should be aware of the risks. Continue reading to learn more about frequent cryptocurrency scams and how to avoid them.

Common types of cryptocurrency scams

Fake websites

Scammers occasionally develop counterfeit cryptocurrency trading websites to deceive unwary visitors. These sites usually seem to be similar to genuine ones. Even the domain names of bogus websites are somewhat alike to those of real websites.

Any information customers provide to access a scam project, such as crypto wallet passwords, recovery phrases, or other financial information, is gained by scammers. Some fake platforms might even permit customers to withdraw a small sum of money at first. Thinking the investment is going well, users may choose to invest more. Then, the website either shuts down or rejects requests when users want to withdraw money.

Phishing

Cryptocurrency phishing typically focuses on data from online wallets. Scammers target cryptocurrency wallets’ private keys, which are required to access the wallet’s funds. Connected to the questionable websites described above, they send victims an email asking them to click on a link and share private key information. The asset that was stored in those wallets gets stolen once the hackers have access to this data.

A pump-and-dump strategy

Through email marketing campaigns or social media platforms like Twitter, Facebook, or Telegram, scammers may advertise a particular coin or token. People rush to buy the coins as a result of FOMO (fear of missing out), which raises the asset’s price. Then, before selling their shares, scammers raise the price by means of deception, which causes a collapse when the asset’s value falls sharply. This could happen in a few minutes.

Fake apps

Another common method used by fraudsters to trick cryptocurrency investors is through fake apps that can be downloaded from Google Play and the Apple Store. The fact that these fake apps are quickly found and removed doesn’t mean that they aren’t having a negative impact on people’s assets. The most recent FBI fraud report claims that hackers are stealing money from inexperienced cryptocurrency investors through false crypto apps. It focuses on the fact that scammers using fake apps have defrauded American investors out of almost $42.7 million.

Fake celebrity endorsements

Cryptocurrency fraudsters will occasionally assume the persona of a famous person, a successful businessperson, or an influential person, or they will use their endorsements in order to draw in potential prey. This usually involves selling gullible investors fake coins that don’t exist. One variant of these scams uses glitzy websites and brochures to impersonate well-known individuals like Elon Musk in order to obtain fake celebrity endorsements.

Giveaway fraud

Giveaway scams are a type of social engineering in which a fraudster tries to trick a cryptocurrency investor into thinking a well-known cryptocurrency exchange or a famous person is holding a giveaway. The catch is that in order to enter the giveaway, you must first send a particular amount of cryptocurrency to a giveaway address in order to validate your wallet address and claim your prize. However, due to the irreversible nature of bitcoin transactions, once a victim sends money to the scammer’s address, there is no way to retrieve it back, and the scammer has profited.

Blackmail scams

Blackmail is yet another trick scammers use. They send emails threatening to divulge the recipient’s history of accessing adult websites unless they transfer money to the con artist or share their private keys.

How to avoid cryptocurrency scams

Stick with known exchanges

There may be many dubious exchanges and platforms available because the cryptocurrency industry is mainly unregulated. Despite the fact that you can open accounts and trade on a variety of them, it may be wise to stick with those that are well-known or generally recognized.

Protect your passwords or private keys

Even if you are positive that the person you are speaking to is a reliable party (such as a wallet or cryptocurrency provider), be careful and hold off on disclosing private information. Do not divulge this information to anyone unless you really need to know it to complete the transaction, or access the account, or wallet.

Double-check each domain name and URL

Check the domain name or URL before sending money or information to someone posing as a respectable person or business on social media or through a website. Verify the account’s validity and, if necessary, look for any obvious spelling mistakes.

Suppose that a suspicious copycat account contacts you, send a message to the social media platform’s official channel to inquire as to whether the aforementioned account is legitimate.

Avoid deals that appear too good to be true

If you are promised a return on investment that looks too good to be true, it is usually a scam. Despite the fact that investing cryptocurrencies can be a great opportunity, no one can guarantee quick returns. Nobody should believe such promises, regardless of who makes them.

Do your research before sending cryptocurrency

Just as you wouldn’t send money to an arbitrary bank account that you don’t have access to, you should only send cryptocurrency to wallets that you control or that are under the authority of reliable third parties. A very easy question you might ask yourself is whether the other party appears to be a trustworthy business or person.

Make sure they are a legitimate business if they represent themselves as a firm by conducting a fast Google search. You can see how long they have been in business, whether they have received favorable evaluations and their reputation.

Don’t respond threatening texts

If the person you are in contact with is sending you messages that contain threats or warnings, they are probably trying to convince you to send cryptocurrency immediately without carefully considering the situation. When acting out of fear, you’re less inclined to weigh all the options and more likely to take snap judgments.

To conclude, cryptocurrency scams are very common. Since they exist in different ways, cryptocurrency investors should know and take measures to protect themselves.

Disclaimer: The information herein is for educational purposes only and should not be considered financial, investment, or trading advice. Please conduct your own research and due diligence before making investment decisions. You understand that you are using the Information provided at your own risk.