To some people, cryptocurrency investment is the new oil-money, but it comes with lots of risks and the major challenges facing it is scams, which come in different forms.
Research indicates that existing scams persist, albeit with modified tactics aimed at deceiving cryptocurrency holders, especially during the Bitcoin boom.
For instance, scammers may be particularly active in targeting unsuspecting holders during times when Bitcoin surges past $61,000.
Table of Contents
During such periods, the most frequent scams you are likely to encounter include fake exchanges, impersonation, crypto transfer fraud, and phishing emails, among others.
Fake Exchanges
When you encounter exchanges offering extremely competitive market prices, it could be a sign of one of the fake exchanges targeting newbies or unsuspecting traders.
Before using any crypto exchange, it’s advisable to search for reviews online. You can typically find such reviews on platforms like Reddit or other popular forums.
Beware of fake crypto exchanges. If you notice prices that seem unreasonably low compared to rates on other platforms, consider it a red flag.
How to avoid this type of scam: Be sure to use a reputable exchange when buying and selling your crypto assets.
Free Giveaways
This occurs when scammers offer free giveaways in Bitcoin, Ethereum, and other coins in exchange for sending a small amount to register or providing personal information.
What to do when you see this form of crypto scam on social media: When someone is promising to send you free giveaways for registering on their exchange, it’s best to immediately report the content as fraudulent, so that others don’t fall victim.
Stolen Identity
Scammers create social media accounts to impersonate notable people such as celebrities and famous politicians with large social media followings.
They do this by using an account that is almost identical to the person they are impersonating.
Identity thieves also use fake accounts to trick others by sending unsolicited messages persuading them to take some kind of action in an attempt to defraud them.
Some time ago, a young lad Graham Ivan Clark hacked into the Twitter accounts of celebrities to run free giveaways and subsequently persuaded their millions of followers to send a certain amount of coins.
Users had lost thousands of dollars in digital currencies before he was blocked and arrested.
What to do: When you receive an unsolicited message that looks suspicious, double check to confirm the authenticity of such message or get the sender blocked immediately if it is an impersonated social handle.
Malware
This occurs when hackers distribute malware and conceal it within certain programs to propagate their malicious software. Once such harmful programs are installed, hackers may gain access to everything you do on your phone or personal device.
That’s why it’s crucial to double-check the Bitcoin address you’re sending funds to. Some malware programs, once installed, can alter legitimate Bitcoin addresses when they’re copied from a user’s clipboard. Consequently, the Bitcoin ends up being sent to the wrong address, belonging to the fraudster.
Once Bitcoin is sent to the wrong address, it becomes extremely difficult to initiate a chargeback.
Caution: Be wary of the programs you install. Pay close attention to the types of programs you grant administrator access to on your devices. Additionally, use an up-to-date and trustworthy virus scanner.
One-on-One transactions
This happens when the other party who is willing to buy or sell Bitcoin to you proposes that you should meet in person.
This is a very risky venture if you haven’t met before or if the other party isn’t a trusted party that you already know.
You could get robbed or injured, avoid this kind of proposition, you could lose your Bitcoin or other digital currencies.
Alternative to meet in person: Consider using a peer-to-peer platform such as Telegram Wallet P2P, Binance P2P (if it’s available in your country) to escrow the funds instead of meeting in person.
Blackmail
This is an old practice that is still being used by con-artists, whereby they try to blackmail you in an attempt to extort you.
They do this by coming up with cooked stories that they are in possession of highly confidential secrets of yours.
After getting your email address through whatever means they used, they begin to threaten you that they are in possession of your secret and request you to send Bitcoin or risk your data being circulated or broadcast on social media and other online platforms.
What to do: Report such threats to the right authorities in your country and junked and blocked the sender.
Bitcoin Transfer Fraud
When a stranger emails you, claiming they need help transferring Bitcoins or other digital currencies, promising compensation for your assistance and a share of the coins, beware.
For instance, they might ask you to assist in receiving 60 Bitcoins, promising you 40% (24 Bitcoins) of the total. Don’t fall for it; it’s one of the prevalent crypto scams that you might encounter on social media.
Advice: Ignore and block such senders.
Phishing Websites
This is when a replica of an original website is used by bad actors to obtain your private data. It is mostly designed to gain access to your wallets or digital assets.
The bad actors behind phishing websites may devise ways of promoting their phishing websites by appearing in sponsored results on search engines.
What to do: Don’t login or enter your personal details into websites you don’t trust or that look suspicious, unless you are 100% sure it isn’t a fake one.
Phishing Emails
This is similar to a phishing website. A fraudster does this by sending you an email containing a link, claiming that your password is no longer saved, and instructing you to take action, such as resetting your password or clicking through to provide some sort of interaction with regard to your crypto account.
Most of the time, it may be difficult to differentiate between a fake email and a legitimate one from the product you use.
What to do: When in doubt, check the email address of the sender. Or by forwarding it to the real company or by calling them on the telephone, or social media handles.
Crypto Ponzi Schemes
This is an organized crypto scam in which a group of people participate in offerings that promise a guaranteed return in exchange for an upfront deposit.
In such schemes, the principals of future depositors are often used to pay previous investors, similar to the infamous case of Bitconnect. The end result is often unfavorable, with investors ultimately losing their money.
Caution: Cryptocurrency is generally volatile. No one can guarantee a return on a crypto investment. The world has seen Bitcoin fall from over $60,000 to below $20,000 in the past.
No one can predict the future price of Bitcoin. At the time of publication, BTC is trading at $61,347.30, it might go up next or fall.
Scam Coins
There are more than eight thousand alternative coins also known as altcoins and more continue to emerge everyday. There may be scam coins among them, enticing users to invest via private sales, or with presale discounts.
One of the tricks associated with Scam coins is to feature flashy websites and boast of a large community just to create a fear of missing out effect on people who discover it.
Some of them offer free tokens (airdrops) to people in exchange for joining their communities.
Some scam coins use names of notable Crypto influencers to create impressions to entice new customers to buy into their ideas.
It is a good idea to dig deeper into their dealings, ask questions from forums, and do a quick search online about those behind the Altcoins.
Prize Giveaways
In cryptocurrency, prize giveaway scams are used to deceive people into taking action or to obtain personal information from others.
One of the most common methods involves the perpetrators asking individuals to provide their name, Bitcoin wallet address, physical address, email, and phone number in order to claim a prize.
The hackers’ objective with this scheme is to utilize the gathered information about you to attempt to gain access to your accounts by impersonating you. Alternatively, they may exploit this information to target your friends on social media.
Pump and Dumps
In crypto, some bad guys now engage in an old practice of pump and dump scheme, whereby a person tries to artificially drive up or pump the price so that they can dump their holdings for a profit.
Avoid as much as you can anyone who entices you to invest in cryptocurrency because they claim that they know what the Bitcoin price is going to be.
This happens when Bitcoin price soars. But you must be extremely careful because Bitcoin and other digital assets are unpredictable.
Ransomware
Similar to malware, but in this case, hackers block your access to your computer and ask you to pay in Bitcoin Ethereum or other digital assets.
They do this by tricking you to download certain programs that are infected through which they block your access.
Talk to a computer expert instead of succumbing to the demands of the person behind the ransom.
Caution: Pay attention to the kind of applications you are downloading. Use the official site of the product you use to download their app. And pay special attention to the URLs.
False Profits
Another type of crypto scam is con artists displaying fake profits from crypto trading to lure their targets into entrusting them with their funds for trading assistance.
The intention behind this scheme is to solicit funds from you by promising to double your investment within a short period.
However, it’s important to note that no one can predict the future direction of Bitcoin or any other cryptocurrency price accurately. Don’t be carried away by their deceptive claims.