Common cryptocurrency scams and how to avoid them

Scammers are constantly looking for raw ways to steal your money, and the massive growth of cryptocurrency in recent years has created batch of opportunities for fraud. Cryptocurrency crime had a record-breaking year in 2021 – according to a report by blockchain data firm Chainalysis, fraudsters stole $ 14 billion of crypto that year. If you ’ re interest in crypto, it ’ south crucial to be aware of the risks. Read on to find out more about common crypto scams, how to spot them, and how to avoid them .

Cryptocurrency investment scams

There are many types of crypto scams. Some of the most common admit :
Fake websites
Scammers sometimes create talk through one’s hat cryptocurrency trade platforms or fake versions of official crypto wallets to trick unsuspecting victims. These imposter websites normally have alike but slightly different domain names from the sites they attempt to mimic. They look very similar to legitimate sites, making it difficult to tell the remainder. Fake crypto sites much operate in one of two ways :

  • As phishing pages: All the details you enter, such as your crypto wallet’s password and recovery phrase and other financial information, end up in the scammers’ hands.
  • As straightforward theft: Initially, the site may allow you to withdraw a small amount of money. As your investments seem to perform well, you might invest more money in the site. However, when you subsequently want to withdraw your money, the site either shuts down or declines the request.

Phishing scams
Crypto phishing scams much target information refer to online wallets. Scammers target crypto wallet secret keys, which are required to access funds within the wallet. Their method acting of working is like to early phishing attempts and related to the juke websites described above. They send an e-mail to lure recipients to a particularly created web site asking them to enter private key information. Once the hackers have acquired this information, they steal the cryptocurrency in those wallets .
Pump and dump schemes
This involves a finical coin or token being hyped by fraudsters through an electronic mail blast or social media such as Twitter, Facebook, or Telegram. not wanting to miss out, traders rush to buy the coins, driving up the price. Having succeeded in inflating the price, the scammers then sell their holdings – which causes a crash as the asset ‘s value sharply declines. This can happen within minutes .
Fake apps
Another common manner scammers trick cryptocurrency investors is through forge apps available for download through Google Play and the Apple App Store. Although these talk through one’s hat apps are promptly found and removed, that does n’t mean the apps are n’t impacting many penetrate lines. Thousands of people have downloaded fudge cryptocurrency apps .
Fake celebrity endorsements
Crypto scammers sometimes pose as or claim endorsements from celebrities, business people, or influencers to capture the attention of potential targets. sometimes, this involves selling apparition cryptocurrencies that do n’t exist to novitiate investors. These scams can be sophisticated, involving glossy websites and brochures that appear to show fame endorsements from family names such as Elon Musk .
Giveaway scams
This is where scammers promise to match or multiply the cryptocurrency sent to them in what is known as a game show scam. Clever messaging from what often looks like a valid social media account can create a smell of authenticity and spark a sense of urgency. This supposed ‘ once-in-a-lifetime ’ opportunity can lead people to transfer funds cursorily in the hope of an instantaneous return .

Blackmail and extortion scams

Another method acting scammers use is blackmail. They send emails that claim to have a criminal record of adult websites visited by the user and threaten to expose them unless they contribution private keys or send cryptocurrency to the swindler .

Cloud mining scams

Cloud mining refers to companies that allow you to rent mining hardware they operate in exchange for a sterilize fee and a share of the gross you will purportedly make. In hypothesis, this allows people to mine remotely without buying expensive mining hardware. however, many cloud mining companies are victimize or, at best, ineffective – in that you end up losing money or earning less than was implied .
Fraudulent initial coin offerings (ICOs)
An initial coin propose or ICO is a way for start-up crypto companies to raise money from future users. typically, customers are promised a deduction on the new crypto coins in central for sending active cryptocurrencies like bitcoin or another popular cryptocurrency. several ICOs have turned out to be deceitful, with criminals going to elaborate lengths to deceive investors, such as renting imposter offices and creating high-end market materials .

How to spot cryptocurrency scams

so, how to spot a crypto victimize ? Warning signs to look out for include :
Promises of guaranteed returns: No fiscal investment can guarantee future returns because investments can go down adenine well as up. Any crypto volunteer that promises you will decidedly make money is a crimson flag .
A poor or non-existent whitepaper: Every cryptocurrency should have a whitepaper since this is one of the most critical aspects of an initial coin offering. The whitepaper should explain how the cryptocurrency has been designed and how it will work. If the whitepaper doesn ’ t make smell – or worse, doesn ’ deoxythymidine monophosphate exist – then tread cautiously.

Excessive marketing: All businesses promote themselves. But one way that crypto fraudsters attract people is by investing in heavy commercialize – on-line advertising, paid influencers, offline forwarding, and therefore on. This is designed to reach as many people as possible in the short fourth dimension possible – to raise money fast. If you feel that the commercialize for a crypto offering seems heavy-handed or makes extravagant claims without backing them up, pause and do further inquiry .
Unnamed team members: With most investment businesses, it should be possible to find out who the key people behind it are. normally, this means easy-to-find biographies of the people who run the investment plus an active presence on social media. If you can ’ t find out who is running a cryptocurrency, be timid .
Free money : Whether in cash or cryptocurrency, any investment opportunity promising barren money is probably to be talk through one’s hat .
Is crypto a scam?

How to protect yourself from cryptocurrency scams

many crypto frauds are sophisticate and convincing. here are some steps you can take to protect yourself :
Protect your wallet: To invest in cryptocurrency, you need a wallet with private keys. If a firm asks you to share your keys to participate in an investment opportunity, it ’ second highly probably to be a scam. Keep your wallet keys private .
Keep an eye on your wallet app: The first time you transfer money, send only a small total to confirm the authenticity of a crypto wallet app. If you ’ re updating your wallet app and you notice leery behavior, terminate the update, and uninstall the app .
Only invest in things you understand: If it ’ randomness not clear to you how a particular cryptocurrency works, then it ’ sulfur best to pause and do further research before you decide whether to invest .
Take your time: Scammers frequently use hard-hitting tactics to get you to invest your money quickly – for example, by promising bonuses or discounts if you participate straightaway. Take your time and carry out your own research before investing any money .
Be wary of social media adverts: Crypto scammers frequently use social media to promote their deceitful schemes. They may use unauthorized images of celebrities or high-profile business people to create a common sense of legitimacy, or they may promise giveaways or complimentary cash. Maintain a healthy agnosticism when you see crypto opportunities promoted on social media and do your ascribable diligence .
Ignore cold calls: If person contacts you out of the blue to sell you a crypto investment opportunity, it ’ randomness probably a victimize. Never disclose personal information or transfer money to person who contacts you in this manner .
Only download apps from official platforms: Although fudge apps can end up in the Google Play Store or Apple App Store, it is safer to download apps from these platforms than elsewhere .
Do your research: The most democratic cryptocurrencies are not victimize. But if you haven ’ deoxythymidine monophosphate listen of a detail cryptocurrency, research it – see if there is a whitepaper you can read, find out who runs it and how it operates, and count for genuine reviews and testimonials. Look for an up-to-date and credible forge cryptocurrency list to check for scams .
Is it too good to be true: Companies that promise guaranteed returns or to make you rich overnight are likely to be scams. If something seems besides good to be true, tread cautiously .
ultimately, as with any investment opportunity, never invest money you can ’ t afford to lose. even if you ‘re not being scammed, cryptocurrency is explosive and inquisitive, so it ‘s all-important to understand the risks .

What to do if you fall victim to a crypto scam

Falling victim to a cryptocurrency scam can be annihilative, and it ‘s essential to act promptly if you have made a payment or disclosed personal information .
Contact your bank immediately if you have :

  • Made a payment using a debit or credit card.
  • Made a payment via bank transfer.
  • Shared personal details about yourself.

Crypto fraudsters frequently sell the details they have captured to other criminals. so, it ’ randomness substantive to change your usernames and passwords across the board, to prevent farther damage. If you are the victim of a social media crypto victimize, you can report it to the relevant sociable media platform. Depending on where you live, you can report frauds to the relevant body in your jurisdiction – for example, in the US, that would be the Federal Trade Commission. other countries have their own equivalents.

FAQs about common crypto scams

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