The crypto industry is a perfect way to boost finances and build an outstanding investment portfolio but is also a pool full of scammers.
The FTC report shows how business imposters are capitalizing on the crypto craze. The victims of romance scammers reported a whopping $417 million in cryptocurrency was lost to fraud plaguing social media from January 1, 2021, through March 31, 2022.
The increasing prevalence of scams has apparent reasons: no government obligation, crypto price volatility, and too susceptible entry-level users.
Since a government doesn’t back the blockchain technology as any other traditional currency, scammers seize this opportunity and look for victims.
In this guide, I’ll discuss some ways to help you spot and avoid falling prey to standard crypto scam practices and offer several tips to protect yourself beforehand against undesirable fraudulent activities.
What Are the Different Types of Crypto Scamming?
The scam techniques are boundless, but most deceivers use the same approach. They make crypto scamming appear as an opportunity that happens only once in a lifetime, leading people to transfer funds without thinking about the consequences. However, to be more precise, these are the most common ways people are tricked in crypto.
Cybercriminals pretend to offer cryptocurrency as gifts on social networks and do it from a valid and reliable account that looks legitimate at first glance. Then, lure victims by promising the moon or strong earning possibilities. The scams involve many cryptocurrencies such as Bitcoin, Ethereum, Dogecoin, Cardano, Ripple, Shiba Inu, and others.
Fake websites surge as virtual currencies get popular. Having blended into the scene, they become tough to spot. Scammers frequently create an artificial cryptocurrency trading platform. Some can even copy a version of an existing, legitimate crypto wallet app or website that has an almost indistinguishable domain name and interface for an unsuspecting user’s eye. Fake crypto sites operate in either of these ways:
- These websites are phishing and target personal information related to online crypto wallets, such as a recovery phrase, password, or any other financial information.
- A fake website that pretends to be from MetaMask. These are very tricky because even the Google ad system fails to identify them.
Pump and Dump Schemes
Fraudsters often release a new cryptocurrency and create excessive hype around it. You will see a blast of posts, emails, or threads featuring this coin and no valuable technical information or stats. Having created that hype, traders fall for this pump and dump ploy and invest in the tokens that result in its price inflation. Once it reaches the pinnacle of its worth, the holdings are sold, and its value significantly drops.
How to Identify Cryptocurrency Scams?
Since cryptocurrency is an unknown territory for many people, it is no wonder why fraudulent activities are continually reaching record numbers. Take a moment to learn about warning signs that can help you save money or avoid fishy practices.
Find the White Paper of the Cryptocurrency Project
This is the best way to understand that the cryptocurrency project you are investing in is trustworthy and genuine. For transparency, every token must have a “white paper” explaining all the underlying fundamentals of its creation, technology, and the mechanism of work. Usually, it can be found on the official website of the developer of the blockchain. If the content of the white paper is missing or looks far-fetched, you should be concerned.
Follow the Creators and Team
It is essential to know the creators, developers, and management team. Moreover, having names and accounts on social media isn’t enough. There should be a comprehensive set of information and an active presence in the media. If you can’t find any details about a crypto wallet’s founder or team running a particular cryptocurrency, tread carefully.
Pay Attention to Excessive Marketing
You may first think there is nothing wrong with marketing. All businesses indeed invest a lot of resources in promotions. Despite this, crypto fraudsters also use marketing power to catch people’s eyes through influencer promotions, celebrity endorsements, advertising, and so on. It helps them raise awareness of the project and earn credibility in the eyes of cryptocurrency traders.
How to Protect Yourself From Cryptocurrency Scams?
Cryptocurrency investments involve taking risks, but these shouldn’t be connected to malicious intents from scammers. Knowing ways to avert evil traps and protect yourself is always better. Forewarned is forearmed.
- Please do your research: It’s in your interest to dig for information that proves the legitimacy of a trading platform or a specific token. It will take less time than recovering your finances or hacking sensitive data. Check genuine reviews, documentation, testimonials, etc. There are also black lists with fake cryptocurrencies or scam websites that you can look through carefully —- all of this information is accessible to everyone.
- Choose a secure crypto wallet: Make sure you pick a wallet or trading platform with the most robust security features. Give yourself peace of mind by knowing that your cryptocurrencies are held safe with MyCointainer rewarding wallet.
- Never use the same passwords: Many individuals create their accounts with repeated passwords. It is more convenient to memorize for you, I understand. But in the meantime, you give a scammer a perfect opportunity to access your account. Do the basic things such as using a password manager to generate and store highly secure passwords and consistently implementing two-factor authentication.
The Bottom Line
The cryptocurrency market is attracting more and more investor interest, and a bunch of new crypto projects are thrown into the market almost every month. This interest also attracts badly intentioned individuals who want to maliciously profit from the current buzz around cryptocurrency and massive money inflows. Unfortunately, they perpetrate fraud on newbies or sometimes even crypto experts.
Well, luckily for you, there are some steps to avoid getting fooled. Be extra vigilant of what you use and who you do crypto business with. And remember to ask yourself if you are 100% sure it is safe.
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