Cryptocurrency Scams: Everything You Need to Know
Compared to its early days, the digital currency has become a widespread phenomenon. Unfortunately, Crypto frauds have also risen in tandem with the rise of digital currencies. A swindle accompanies almost every new coin.
Scams involving cryptocurrency have been rising recently, regularly falling victim to their schemes, investors, and beginners alike. The promise of quick riches has enthralled investors and newcomers to make it easy for scammers to prey on them.
What are cryptocurrency scams?
Cryptocurrency is a currency or digital asset that can be exchanged for goods and services with other currencies and US dollars. The cryptocurrency is not under regulation by either the government or any bank.
The cryptocurrency scam is where hackers and scammers lure you to invest in crypto through their app or website and then run away with your funds. Therefore, it is also wise to know some firms that offer cryptocurrency scam recovery services. These entities entail experts who will ensure that you get your money back. Before approaching the scammer, these experts aim to collect all the information they can use against the scammer. They are also highly experienced in dealing with such scam cases.
Types of cryptocurrency scams
Despite its high-tech appearance, many scams related to cryptocurrencies are the updated variations of old scams. Following are some patterns/types of cryptocurrency scams to be on the lookout for:
- Fake Websites: Scammers tend to set up a website either with fake or copied testimonials and fancy promises. They also offer huge guarantees and high returns.
- Giveaway scams: The giveaway scam is a type of cryptocurrency fraud. Scammers imitate a well-known figure and promise to give you twice as much cryptocurrency if you transfer them a certain amount of cryptocurrency.
- Phishing: Phishing is one of the most common forms of a cryptocurrency scam and is a similar marketing method to various con artists. This scam aims to steal information about online wallets, specifically crypto and private keys. They send an email that directs recipients to a custom-built website where they must submit personal critical details. Once the hackers obtain this information, they will be able to extract the cryptocurrency stored in the wallets.
- Extortion: Another popular cryptocurrency scam is the Extortion scam, also known as “Blackmail.” This scam includes the scammer claiming to have a record of websites, be it illegal or adult-related, and threatening to post it online on social media unless you share your essential private information with him.
- Apps: For transferring the currency, each cryptocurrency has its app. Scammers take advantage of this to duplicate the programs. They may be insignificant, but they are still phony digital wallets. And investors who are unaware of this risk downloading a fake version and depositing their funds in the scammers’ accounts rather than the legitimate market.
- Ponzi scheme: A Ponzi scheme is a sort of investment scam in which money obtained from potential investors is used to pay existing investors. Organizers of Ponzi schemes typically claim that they would invest your money and earn high returns with little or no risk. However, because they have little or no actual earnings, Ponzi schemes require a steady inflow of new funds. As a result, these schemes usually fail once it becomes hard to recruit potential buyers or even when numerous shareholders withdraw their investment.
- DeFi Rug Pulls scheme: The DeFi Rug Pulls hoax is the most recent in a long line of cryptocurrency scams. After the scammers have stolen the money from the investors, he abandons the project and flees in this scam.
Tips to safeguard yourself from cryptocurrency scams
Following are some pointers to protect yourself from crypto scams:
- Before investing, analyze and research the potential possibility. It’s a probable red flag if there aren’t many investors and only a small group of people are likely to gain.
- Check for the broker on the Commodity Futures Trading Commission (CFTC) website, especially its RED List. He may be a scammer. Hence, taking precautions is necessary.
- Don’t take everything you’re told at face value. Instead, evaluate any investment claims, particularly if they seem too good to be true or promise significant returns in a short period.
- Do not engage anybody who approaches you directly and requests bitcoin payments or offers you an “investment scheme,” whether a government official, a public figure or a stranger.
- Double- and triple-check webpage URLs. To pull off a phishing scam, scammers will replicate the URLs of legal websites and swap letters and numbers—for example, an “l” for “1” or a “0” for the letter “O.”
- Any offer demands upfront payment, regardless of the amount, especially if you need to pay through cryptocurrencies.
- If a company attempts to make, you invest right away. Unfortunately, some con artists offer perks or discounts to urge you to contribute immediately. So before you invest any funds, take your time and do your homework.
- Scammers frequently pitch phony cryptocurrency investment possibilities on social media. Some also utilize photographs of celebs and high-profile people to ‘endorse’ their company to make their investment appear legitimate, frequently without their agreement.
Before investing, conduct extensive research, and don’t be fooled by hearsay. Invest in well-known coins with a proven track record. Before jumping into a new endeavor, do some background study on the persons involved. Then, weigh all your options, take your time, and invest only when you are sure. And be careful and do not fall for any scams.