There is a lot of buzz about the realm of digital assets. However, the popularity of cryptocurrency has spurred criminals to devise new techniques to steal your money. In the last 18 months, tens of thousands of investors have fallen victim to cryptocurrency fraud. This article will go over some common crypto scams, how they work, and what precautions you can take to protect yourself.
Spotting a Scam
You should already be scrutinising anything you read online, especially anything related to Bitcoin. It may be rather clear at times. At times, fraudsters are skilled at blurring the line between reality and fiction. Here are several crucial red flags that should alert you to a scam straight away:
- Excessively favourable feedback on such postings.
- Riddles in messages or postings with poor spelling and grammar.
- Anyone asking for your login information.
- Offers that are too good to be true, such as promises of rapid riches.
- Websites that lack SSL certificates.
- Payment requests for cryptocurrency from strangers on the internet.
To prevent being duped, it is critical to constantly conduct research on a cryptocurrency, especially if it is not one of the more popular ones. Find real web reviews to see what others have to say. Investigate who runs it and whether or not you should trust them. In addition, only deal with genuine websites or download software from legitimate channels such as the official store.
7 Common Crypto Scams
If you’ve included cryptocurrency in your financial portfolio or are considering investing in Bitcoin or Ethereum in the future, and with bitcoin frauds on the rise, here are some frequent scams and red flags to be aware of.
How to Avoid Cryptojacking:
- Install software only from reputable sources.
- Ensure that all existing software and devices have the most recent updates and fixes.
- Avoid phishing emails and texts.
2. Pig Butchering Scams
The pig butchering scam is a unique hybrid of investment and romantic frauds. A con artist may approach a victim like in a romance scam and build a love connection with them in pig butchering schemes. Once the fraudster has ‘won’ the victim’s confidence, they will persuade the victim to invest in cryptocurrency as a method of achieving financial freedom. The trap closes when the fraudster takes the victim to a fraudulent site where they may invest their money. Once the victim has given the fraudster as much money as they feel they can get, in some circumstances, the bogus platform — vanish.
How to Avoid Pig Butchering Scams:
- Avoid investing in untrustworthy sites that are unknown and uncontrolled.
- Inform the individual that you do not have spare funds to invest and are not interested in bitcoin investments; if they depart, it is probable that their intentions were not real.
- Do not be swayed into investing by anybody, especially if the profits are ‘guaranteed’ or excessively high.
- The golden rule: If anything sounds too good to be true, it most often is.
3. Remittance/Withdrawal Scams
In these scams, the fraudster will claim that they are unable to withdraw or remit cash and will beg the victim’s aid in exchange for a portion of the funds. It may seek assistance with the withdrawal of actual funds from a wallet owned by the scammer, who may even provide the victim access to the wallet while alleging withdrawal issues.
How to Avoid Remittance Scams
- Avoid any ‘under-the-table operations, no matter how simple or lucrative they appear, since you may lose money or violate applicable laws in your country.
- If you are given the seed phrase to a wallet and told to take whatever is inside, identify it to be true.
4. Investment/ ‘Get Rich Quick’ Scams
One of the most prevalent Investment or ‘Get Rich Quick’ scams includes the fraudster claiming to represent a specific platform and reaching out to people in crypto forums. Scammers may also employ realistic-looking websites to catch as many naive visitors as possible, and they frequently alter SEO results and/or advertising for their platforms. This sort of fraud can occur on any scale, from scammers obtaining little sums from a vast pool of naive victims to big-scale investment schemes.
How to Avoid ‘Get Rich Quick Scams:
- Before opting to invest your money, conduct thorough research from reliable sources.
- If an investment seems too good to be true, probably it would be.
- Check that the website you are viewing is authentic and that the URL has not been tampered with in order to appear legitimate.
- Take note of the last section of the URL.
5. Romance Scams
Social engineering techniques are used in romance scams to obtain money or cryptocurrencies from victims. Scammers frequently contact victims using dating apps or social media sites. Once the scammer has gained the victim’s confidence, he or she will either ask them to give a particular quantity of cryptocurrencies or inform them about a great trading investment that will make them a lot of money.
How to Avoid Romance Scams:
- If you come across someone whose behaviour meets the description above, think sensibly rather than emotionally.
- A warning sign for fraud is never seeing the individual during the relationship.
- Relationships that develop fast are another source of concern that might indicate this sort of deception.
- Use a reverse image search to discover whether the fraudster is using someone else’s image.
- To conceal their name and location, the fraudster sometimes requires payments to be delivered in cryptocurrency or other non-traceable financial instruments such as prepaid or gift cards.
6. Phishing Scams
This is another fraud that has existed since the beginning of the Internet and has now been adapted to crypto. In this fraud, a person gets ‘phished’ after being approached by an apparently credible platform in an untrained view. Email, SMS, instant messaging applications, social media, and even phone conversations can all be used to perpetrate phishing. Phishing attacks are designed to persuade users to click a link and/or enter their credentials in order to get access to their accounts and finances.
How to Avoid Phishing Scams:
- The email contains some official words. If the email does not include the such phrase, consider it is not real.
- Do not click any links you receive by SMS or e-mail until you verify they are legal.
- Do not enter your passwords anywhere other than the official apps and/or websites.
- If someone contacts you through an instant messaging app, social media, or phone, consider they are not an authorised representative of the platform.
7. Rug Pulls
Rug pulls are among the most difficult to detect and intricately constructed. Rug pulls are often in the form of a new crypto project, such as a decentralised finance (Defi) platform or project, or, in certain circumstances, an NFT project. At first sight, these initiatives may appear legitimate, with professional-looking websites, white papers, roadmaps, and even substantial online communities. Scammers will begin shilling the project and artificially inflating its price by making purchases with their funds. The high demand for the project inflates the price of the related asset in the rush to acquire.
How to Avoid Rug Pulls:
- Do your own research at all times. Check the project’s white paper to ensure it is not a carbon copy of another project’s white paper.
- Seek out the project team. Are they doxxed or anonymous? The latter might be a warning sign.
- Avoid initiatives that offer overly high profits.
- Is there proof to back up the project’s claims of relationships or affiliations with respected entities?
More Crypto Scams (in General) to take Precautions from
Pump and dump schemes
Pump-and-dump tactics, a long-standing kind of economic fraud in the stock market, are becoming more common in the crypto sector. Pump and dump strategies are a method of inflating the price of a currency or token. This may be accomplished through the use of hype and the dissemination of false information on social media and messaging applications, with scammers pushing traders to stock up on certain currencies, hence boosting the price. Once the price has increased to a desirable level, the con artists sell their own assets for the higher price, resulting in a sharp decline in the value of the currency or token.
These entail the scammer contacting victims and assuring them that they have damning information about them and that they will publicise it unless the victim transfers them a particular number of cryptocurrencies.
Fake apps and websites
Cybercriminals frequently use fake websites and applications to defraud victims. They may be for fraudulent or false exchanges, while some may spoof legitimate bitcoin exchanges. A false app or website may deceive users in a variety of ways, including phishing techniques that trick users into disclosing their wallet or bank account information.
Social media scams
As the name implies, these are social media postings promoting anything related to bitcoin. This may be everything from endorsements of fake celebrities to hacked friends or phoney freebies. These articles will most likely direct you to fraudulent websites or applications designed to steal your money.
Investing in cryptocurrencies might be dangerous. Fortunately, there are steps you may do to avoid being tricked. It is prudent to exercise care before placing entire faith in any business that is still creating laws and regulations. If you want to invest in cryptocurrencies responsibly, critical thinking is essential. You should be able to secure your cash if you are aware with typical scams and crucial warning flags.