Beware of These Top Crypto Scams
In recent years, many technological advances like online banking and cryptocurrency have improved our lives, often with a cost. Cryptocurrency is a digital currency secured by cryptography, making it impossible to counterfeit.
One of the most popular and largest cryptocurrencies in the market is Bitcoin. The history of Bitcoin is short, but many people are now already using this virtual currency. Many stores accept Bitcoin as a form of payment for products and services. The use of Bitcoin involves recording every transaction publicly, so it’s difficult to copy or make fake bitcoins or spend ones that aren’t yours.
But just like real money, there are plenty of scams when it comes to cryptocurrencies. Crypto scams are a real and present threat, and they can result in millions of dollars being lost every year. Despite efforts from crypto security experts, fraudsters are becoming more and more sophisticated.
Here are some of the crypto scams you should be aware of and how to avoid them.
Fake crypto exchanges
Fake crypto exchanges offer a bogus cryptocurrency as an alternative to legitimate ones. In some fake crypto exchanges, scammers pose as an affiliate branch of a respectable and legitimate organization. Another scam involving crypto exchanges is where the buying and selling of cryptocurrencies is done under the guise of a trading platform. Since some countries have no regulatory bodies that oversee these exchanges, perpetrators are able to carry out their illegal trade.
Tip: Stick with popular, well-known crypto exchanges and forums. Do not be fooled by those that present themselves as part of a trading platform. Check the URL addresses for legitimacy. Do not visit unsecure websites. Some exchanges even promise heavy discounts on bitcoins to lure victims—do not fall for these.
Another common scam regarding cryptocurrencies is the sale of a wallet with a compromised pre-configured seed phrase. This security issue allows hackers to steal funds from the victim.
A hardware wallet is a physical device that allows crypto investors to protect their virtual currencies via offline means. Knowing this, fraudsters have branched out into selling compromised wallets that they can hack. Once the wallet is activated via a backdoor, scammers can steal its funds.
Another form of scam related to cryptocurrency wallets involves apps, which users use to manage their cryptocurrency portfolios. Fraudsters clone crypto-wallet apps, and when the money goes in, the scammers will then take them.
Tip: Many of these fake apps have been discovered on Google Play Store, and the company is making the necessary efforts in rooting these out. Despite this development, there are still hundreds of illegal apps that need to be filtered out. If you are going to download a crypto-wallet app, check its legitimacy by doing proper research. The same goes for hardware wallets. Buy ones from trusted sources only.
Ponzi schemes and pyramid schemes
Ponzi schemes are a form of investment fraud that pays existing investors with money collected from new investors. Fraudsters will promise to invest money, but it is not their money that they’re using. Instead, fraudsters solicit money from investors, and in exchange, they promise investors with shares from cryptocurrency mining pools.
Another form of Ponzi scheme is the pyramid scheme. This scheme involves recruiting investors who are willing to pay or invest upfront, and then have them recruit more investors. Some fraudsters are willing to have adverts made and published by credible publications, put ads on Facebook and other social media pages, and even use a picture of well-known celebrities and entrepreneurs and claim these to be among their investors.
Tip: Do proper research before committing to invest in any company or getting involved in any project. You can also check the social media pages of these celebrities to determine if they really do endorse such activities or are affiliated with certain cryptocurrencies.
Impersonation takes on a lot of forms. Phishing is when fraudsters create a website or social media account to imitate a reputable company or high-profile exchange. Then there’s spoofing, which is when scammers manipulate a phone number to make the victim believe that they are communicating with a legitimate crypto exchange.
Another form of impersonation is when fraudsters contact someone claiming to be from official organizations and telling that person that he/she owes a substantial amount of back taxes. Scammers go as far as threatening their victims with fines unless they pay with their crypt assets.
Tip: Always double-check the URL or number that scammers used to contact you. Watch out for typographical errors in the address or the social media page created. If you received a call demanding money for back taxes or fines, contact the company and ask them if someone placed a call from their office. Be ready to provide specific details about the call, too.
Malware is software designed to disrupt, damage, or gain unauthorized access to a computer system. Fraudsters will use malware to steal confidential information such as credit card details, and in the case of Bitcoin and other cryptocurrencies, drain the wallets of crypto users. This kind of scam happens when the victim inadvertently clicks on a suspicious download link included in an email or other forms of online communication.
Ransomware is another software that scammers use that locks the victim’s computer until they pay a fee using Bitcoin. Scammers also use this to target big organizations and companies for blackmail, promising them that they can regain control of their system or data once they pay the hackers.
Tip: Basic precautions must be done to prevent any of these from happening. Boost your online security and conduct transactions from a secure endpoint. Make sure that passwords are protected and only log into legitimate websites. Do not download or click suspicious-looking links or ads. If you’ve encountered a suspicious link, run a quick scan on your computer’s system to root out lingering Bitcoin miners.
Beware of Crypto Scams
When it comes to money and investment matters, always proceed with caution. If something sounds too good to be true, then it probably isn’t something to enter into. Do not accept crypto trading with companies or startups that are not powered by blockchain. In the case of Bitcoin, you can check the Bitcoin’s authenticity being offered to you since all transactions are on a public ledger.