How To Avoid Falling Victim To Common Cryptocurrency Scams
Updated: Aug 15, 2022
by Lewis Anderton
Cryptocurrency has become the new gold rush during the last few years. Even though it's difficult to repeat the success of Bitcoin investors who earned thousands if not millions of dollars, it's still possible.
However, there is a serious downside to cryptocurrency popularity. Everyone wants to invest in a digital coin and gain great profit. That's when scammers enter the scene. The statistics claim that crypto scams are the top way to a crypto loss.
However, it doesn't mean users should stop investing in cryptocurrency altogether. We've prepared this article for you to spot and avoid crypto scams. Keep reading to be able to identify the most common scams.
The Most Typical Crypto Scams
Before investing in a specific cryptocurrency, it's critical to analyze the coin. For example, you can check out the ICOholder website that gives access to valuable cryptocurrency data.
However, it's also critical to learn more about various common scams. If you know what to look out for, you should be able to avoid a situation when scammers steal your money. Below are the most popular scams in 2022.
Phishing is one of the most popular ways of scamming Internet users. No wonder scammers use phishing in crypto fraud. The idea of phishing is simple. It requires social engineering to trick users into getting their personal information.
Suppose a scammer gets personal or financial information. They get access to your account! For example, one user lost more than $50,000 because of a phishing scam after providing his personal information on one of the most popular electronic wallets.
Scammers tend to create fake websites that seem like real trading platforms. Typically, they use popular platforms but change the name, so it's similar but not identical. The address of the platform is different, and it always has an insecure connection to the Internet due to not having an SSL certificate.
Some scammers send emails to potential victims containing links to these fraud platforms. A victim believes it's a legitimate company since it has a recognizable name. So, they click on the link and enter their financial information, such as a private key that gives access to crypto funds.
What happens next: the scammer logs in to the victim's account and sends crypto to their wallet. From that point, it's impossible to return your funds. So, avoid clicking on links in your email. Always ensure you are using a legit website, not a fraudulent website.
Typically, a scammer buys a specific type of cryptocurrency. Then they go to social media and start promoting this coin to attract investors' attention. People begin buying this coin so that its value increases. Then the scammer sells the currency at a much higher price.
This is just like the pump-and-dump of stocks. See this story when such scheme is combined with a romance scam.
Let's be honest. We all want to find the "next Bitcoin." It means that most of us want to invest in a cryptocurrency that will skyrocket in price just like Bitcoin did. That's why some of us take too much risk when investing in an unknown coin, hoping it will blow up in price in the future.
Scammers play into the desire of these people to invest. They create fake projects that promise to change the world. Naturally, people believe that investing in these projects would be beneficial in the future when a coin's value increases. Unfortunately, this never happens. That's why it's always critical to check the company's background that offers significant profit.
Mobile App Scams
Another scam is similar to phishing. Scammers create fake mobile apps that impersonate well-known cryptocurrency trading platforms. An unsuspecting user downloads and installs the app, not knowing it's a fraud. The app then requests the login and password to access crypto funds.
Another common outcome is getting your phone infected with malware that will copy all your data when you log in to different apps, including internet banking apps.
The most common situation is when users join mining pools or use cloud mining. Any mining pool requires a fee, but you still get cryptocurrency from combined miners' effort. Fake pools ask for a fee and then disappear into the horizon.
Cud mining is similar. Legit websites request you to pay for a specific amount of coins, and miners mine these coins for you within a set period. However, fake websites take your money without giving you cryptocurrency. You can check more details about such scams here.
Technical Support Impersonation
Banks and other financial institutions keep reminding users that bank employees never ask clients to reveal personal information to user accounts, such as passwords and logins. The same rule applies to the trading platform's technical support.
So, how does the scam work? A scammer contacts you and impersonates a support team member. This person asks you to provide your private key, login, password, or other data (or all these details).
The scammer can give any reason - your account might get blocked if you don't provide personal data so that the employee verifies your account. Scammers become highly creative when it comes to reasons why users should give them access to their accounts.
If you give this data, your cryptocurrency will be lost. The best thing to do is to make screenshots and report this situation to the actual support team.
Fake Giveaways Or Gifts
Another common practice among scammers is offering a giveaway. Sounds nice, right? No. A scammer convinces a user to invest the cryptocurrency or send coins to a specific wallet. The promise is to get significant returns for a small investment. In reality, users get nothing except a loss of money.
Ensure never to share your financial data with anyone. If a scammer gets your private key, they receive access to your crypto wallet or trading platform. Moreover, it's critical to always double and triple-check the company or project you want to invest in to avoid being scammed.
Before investing in cryptocurrency, research and learn more about how crypto works. These mentioned simple rules should keep your money safe.
If you find our work valuable, please consider donating to our cause. GASO is self-funded and mostly run by scam victims who volunteer their time. GASO is currently applying for tax-exempt charity status in the US that will allow tax-deductible contributions soon.