Cryptocurrencies, digital currencies, are digital currencies that exist mainly electronically. They can be used as a medium for exchange and use cryptography (a branch of mathematics) to protect transactions. Cryptocurrencies can be described as a type of alternative currency, virtual currency or digital currency. Many people use cryptocurrency to make fast payments, avoid transaction fees charged by traditional banks, offer anonymity, and keep cryptocurrency as an investment with the hope of increasing its value. You can purchase cryptocurrency through an app, website, exchange or ATM. Scammers have also been attracted to the rapid rise in cryptocurrency over the last few years. Scammers are always on the lookout for new ways of stealing your money and cryptocurrency’s rapid growth has opened up many fraud opportunities. According to a report by a data company, cryptocurrency crime saw a record year in 2021. Scammers stole $14 billion worth of cryptocurrency that year. Scammers using cryptocurrency often seek to steal private information, such as security codes, or trick people into sending cryptocurrencies to compromised digital wallets.
Different types of cryptocurrency scams
To fool victims, scammers often create fake crypto trading platforms and fake versions of official cryptocurrency wallets. Fake websites can often look very similar to the legitimate ones, but have slightly different domain names. Fake websites look very similar to legitimate sites which makes it difficult to distinguish the difference. One of two methods is used by fake crypto sites:
As phishing Pages:
The scammers have all the information you provide, including your crypto wallet password, recovery phrase, and any other financial information.
It’s simple theft:
At first, you may be able to withdraw small amounts of cash. As your investments perform well, you can deposit more money to the site. The site rejects requests to withdraw money or closes your account.
Cyber phishing scams often target information regarding online wallets. Scammers are looking for crypto wallet private keys to gain access to funds in the wallet. They use similar phishing methods to other scammers and are closely related to the fake websites mentioned above. They send emails asking buyers for their private key information in order to lure them to a custom-built site. Once hackers have this information, they can steal cryptocurrency from these wallets.
Pump and dump schemes
Scammers can exaggerate a coin or token via email explosions or social media like Twitter, Facebook and Telegram. The price of the coins rises because traders rush to purchase them, not wanting to miss out. Fraudsters who inflate the prices then sell their holdings, causing a sharp drop in the asset’s price. This can happen in minutes.
Scammers also use fake apps to trick cryptocurrency investors. These apps can be downloaded from Google Play or the Apple App Store. These fake apps can be quickly removed but they can still have a significant impact on your bottom line.
Fake Celebrity Endorsements
Crypto scammers may pretend to be celebrities, businesspeople, influencers, or other people in order to attract their attention or get their approval. This can include selling fake cryptocurrencies to novice investors. These scams are often complex and include brochures featuring celebrity endorsements and glossy websites.
These scammers will promise to match or double the cryptocurrency they have received in what are known as giveaway scams. Intelligent messaging can give the impression of legitimacy and urgency from an account that appears to have a valid social network account. People may be tempted to transfer money fast in the hope of a quick return.
Scams of blackmail and extortion
Blackmail is another method that scammers use. Blackmail is another method used by scammers. They send emails to claim to have a list of websites visited by the victim and threaten to reveal them if they don’t share their private keys or send cryptocurrency to the fraudster.
Cloud Mining Scam
Cloud mining is a way to rent mining equipment from companies for a flat fee or a percentage of the revenue. This would theoretically allow you to mine remotely without needing expensive hardware. Many cloud mining companies are inefficient or fraudulent at best. You end up losing money and earning less than you expected.
Fraudulent Initial Coin Offerings (ICOS)
A ICO (initial coin offering) is a way for startups to raise capital from users. Customers are typically promised discounts on new coins in return for active cryptocurrencies, such as the popular cryptocurrency.
Airdrops can be used by organizations to promote their products or services. Many businesses want to launch new products, offer new coins, or promote their brand (signing up on a newsletter, following a Facebook account, etc.). Because of the appeal of free money, and FOMO (fear-of-losing), airdrops were very popular among early crypto investors.
Airdrops can be used to launch phishing campaigns. Users may be notified via email, SMS, or social media that an unknown cryptocurrency has been added in an airdrop. The victim is then directed to an exchange where they can sell the coin. After victims link their wallets, they are informed that their entire money has been withdrawn.
Phishing with Seed Phrase
The seed phrase, also known as a master key, unlocks all your crypto assets. It is similar to giving your password and bank account username to someone. Phishing scams can trick users into divulging seed phrases. This could lead to lost funds in crypto wallets.
Phishing on Ice is a new Web3 click-hacking scheme that allows users to delegate or assign approval of their token to a cybercriminal. Microsoft states that the smart contract interface is not clear enough for the victim to indicate that the transaction was tampered with. The attacker needs to replace the address of the spender with that of the attacker, then wait for the victim’s authorization to authorize the transaction and authorize the attacker to access the account. The attacker was able modify the smart-contract UI by attaching a malicious script on the smart contract frontend.
How to Identify Cryptocurrency Scams ?
Guaranteed returns: Future returns are not guaranteed. Investments can fluctuate. Any promise that you will make money with crypto is a red flag.
Poor or inexistent whitepaper: A whitepaper is essential for every cryptocurrency. The whitepaper should describe how the cryptocurrency was designed and how it will function. You should proceed cautiously if the whitepaper is not clear or is not available.
Excessive marketing: Businesses advertise themselves. One way that crypto-scammers can attract people is to invest heavily in marketing, such as online advertising, paid influencers and offline promotion. This is done to reach as many people possible quickly and raise money fast. You should not be surprised if a crypto offering is difficult to market, or that makes exaggerated claims with no supporting evidence.
Unnamed Team Members: It should be possible to identify the key people behind most investment companies. This means it is easy to find the biographies and active social media accounts of the people who are running the investment. Be careful if you are unable to find the person running the cryptocurrency.
Free money: Investment opportunities that promise free money in crypto or cash are likely to be phony.
There are many ways that scammers can steal your money with cryptocurrency. You need to be aware of the following things to avoid falling for a cryptocurrency scam.
• Only scammers will demand payment in cryptocurrency. To avoid being scammed and to protect your money, no legitimate business will ask you to send cryptocurrency in advance. This is a fraud.
• Scammers cannot guarantee big profits. Don’t believe anyone who promises to make easy and quick money in crypto markets.
• Online dating and investment advice should never be combined. It’s a scam if someone you meet on a dating app or site wants to teach you how to invest or ask you to send crypto to them.
How can you avoid being swindled by cryptocurrency scams?
Many scams involving crypto currencies are complex and plausible. These are steps to take to protect yourself.
You need to protect your wallet: To invest in cryptocurrency you will need a wallet that has private keys.
It is very likely that a company will ask you for your keys in order to invest in a cryptocurrency opportunity. Your wallet keys should remain private.
Pay attention to your wallet application: Only send a small amount when you first transfer funds to verify that the wallet app is legitimate. If you notice unusual behavior while updating your wallet app, stop the update and uninstall it.
Invest only what you know: Before investing in a cryptocurrency, stop and learn more about it.
Be patient: Scammers will often try to convince you to invest quickly. Before you invest any money, take your time.
Social media ads are a red flag. Crypto-scammers use social media to market their schemes. To create legitimacy, they may post unauthorized photos of celebrities or prominent businesspeople or offer cash giveaways. When you see cryptocurrency opportunities advertised on social media, be skeptical and do your research.
Avoid cold calls. If someone contacts you suddenly to offer you a crypto investment opportunity it is likely a scam. Do not give out personal information to anyone or transfer money to them.
Only download apps from official platforms. Fake apps can end up in the Google Play Store and Apple App Store. However, it is safer to download apps from these platforms than from other sources.
Research is key: Most popular cryptocurrency aren’t scams. If you don’t know anything about a cryptocurrency, you should research it. You can find a whitepaper, learn more about the person behind it and see real testimonials and reviews. To avoid scams, make sure you have a reliable and up-to-date list of fake cryptocurrency.
It’s possible to fall for scammers offering guaranteed returns and instant riches. Be cautious if you believe something is too good to be true.
Never invest money that you cannot afford to lose. You should be aware that cryptocurrency can be volatile and speculative even if you don’t get scammed.
What can you do if you are a victim of a cryptocurrency scam?
A cryptocurrency scam can make your life miserable.
If you have any questions, contact your bank immediately
• Paid using a debit/credit card.
• Payment made via bank transfer.
• You have shared personal information about yourself.
Many criminals are able to sell the details that they have seized from crypto scammers. To prevent further damage, it is important to change all passwords and usernames. You can report any social media scams to the appropriate social media platform if you’ve been exposed. You may be able, depending on your location, to report scams the appropriate agency in that jurisdiction.