Crypto Scams: Cryptocurrency scams and schemes come in many forms. Some of the more common ones go hand-in-hand with cyber crime. These include:
Fake websites and similar project URL names
Scammers will sometimes create a cryptocurrency trading platform which is meant to entice investors, and others create fake versions of genuine projects. These fake domains are designed to trick investors to enter the important information (such as the password to a wallet’s private keys and recovery phrase) which will give the scammer access to the victim’s information.
Other sites might allow you to withdraw a little money initially, but as you put more money into the fake account, it will decline the request of withdrawal and steal the money you invest.
Phishing scams are not new in the digital space, but with cryptocurrency falling for a phishing scam can result in the emptying of your cryptocurrency wallet. Since there is no reversal in the blockchain-based assets, once your tokens are gone (whether you sent them to a false address or whether they were stolen), there is no chance of them being recovered.
Some scammers will use fake websites, sent through an email or direct link to a website specifically designed to take your information. Once the scammers have your information, they can steal your tokens and empty your wallet.
Pump and dump schemes and rug pulls
A pump and dump is generally an orchestrated increase in the price by several individuals and may or may not include the founders. The idea is that people artificially stimulate the buy market with lots of orders, set sell orders at a multiple above and then dump everything very quickly
Fake media promotions and celebrity endorsements
Some scammers will claim that a celebrity has backed their project and try to gain from the influence to attract fans to buy their cryptocurrency. Often this is either a fake endorsement – and by the time the information comes to light, it is too late – or it is a paid endorsement and the celebrity doesn’t genuinely back the project.
Some scammers will promise to match the cryptocurrency to investors who send them money. It is known as a giveaway scam because it promises that a person will get something in return for their funds, and is made to look genuine with clever messaging and marketing from projects that are created to look genuine. With a sense of urgency and “do-not-miss-this-opportunity” angles, people are enticed to make a quick decision to get an instant return for their money only to find the project quickly shut down once they’ve sent their money.
To avoid cryptocurrency scams
Protect your wallet
Keeping your private keys private with secure storage can help you avoid losing your entire crypto contents to a scammer. “Not your keys, not your crypto” is a vital warning to crypto investors to keep their private keys and pertinent information to themselves. Automated trading applications provide a safe way to protect your wallet, however, not all of these apps have safe storage features. This is why it is important to do your homework. Bitcoin Method for example highlights the trading applications security features and gives you a good indication of what you can expect on the app.
Invest in projects you understand
If it’s hard to understand what it is a project does, EVEN if it sounds like a great opportunity, it might not be a great investment. Doing research and deciding on a potential investment before throwing money at it is a solid step to protect your crypto from potential scams that are designed to sound clever through overly technical jargon.
Don’t fall for urgency
In all industries, scammers will try and pressurize victims to act quickly before thinking – in cryptocurrency this is not different. The market movements means that there are better – and worse – times to act, but no project should be funded because of any urgency from the founders, marketers or development team.
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Review Common crypto Scams & How to Avoid Them.