Scammers are continuously searching for the latest methods to steal their cryptocurrencies, and the enormous upswing of crypto has also increased the potential risk of scams. Crypto-related crimes broke all the records in the year 2021. Check out how Bitcoin investment thought of additional profitability. There was a theft of 14 billion dollars of crypto that yea,r as per the disclosure of Chainalysis – a blockchain data firm. If you are indulged in cryptocurrency, it is crucial to know the potential risks.
Types Of Cryptocurrency Scams
- Bogus Websites
Cryptocurrency scammers often establish fictitious cryptocurrency trading sites or pirated versions of formal cryptocurrency wallets to trap unaware victims. These fictitious platforms come up with almost the same but little different names of the domain to the sites they try to impersonate. They seem the same as the original sites, and it is difficult to spot the difference between them.
- Phishing Scams
These scams mainly target internet-based wallet-related details. Scammers try to get the private keys of those wallets needed to access the holdings in the wallet. Their modus operandi resembles other phishing attacks and is similar to the bogus websites mentioned above. Scammers use an email to trap receivers to a specifically designed platform where they demand details related to the private key. After getting these details, scammers drain those wallets.
- Pumping & Dumping
In this scheme, scammers create hype about a specific cryptocurrency using email blasts and various social media platforms like Facebook, Twitter, etc. Fear Of Missing Out (FOMO) forces the traders to buy those particular tokens/coins, increasing prices. After succeeding in driving up the price, these scammers return to the market to sell what they possess in the form of crypto, leading to a crash with a sharp drop in the value of an asset.
- Fictitious Applications
Scammers also use fictitious applications to trap investors. These applications are downloadable from play/app stores. While these fictitious applications are immediately detected and removed, it does not indicate that these applications are not affecting various bottom lines.
- Crypto Giveaway
Giveaway scams are common among scammers in which they lure recipients that they will get additional cryptocurrency. Sensible and appropriate texting from a legitimate social media profile may establish a sense of validity and urgency. This perceived once-in-a-lifetime chance influences individuals to transmit their funds speedily, looking for a quick return.
How To Spot Crypto Scammers?
- A Faulty Or Non-Existent Whitepaper
Each crypto must possess a whitepaper, as it is one of the mandatory aspects of an ICO. It should describe the development, design, and working of the cryptocurrency. If the whitepaper is vague, makes no sense, or does not even exist, then you have to shuffle watchfully.
All the organizations promote their businesses (products & services). But one method by which scammers trick individuals is by investing heavily in marketing, internet-based ads, hired influencers, and physical or tangible promotion. It is developed to reach the maximum number of people in the shortest time for direct fundraising.
As in most investment businesses, the identity of critical people must be publicly available. Typically, it means easily searchable biographies of the individuals running the investments and playing a vital role on social media sites. If you cannot find out the founder or developer of a cryptocurrency, be careful.
Whether you are dealing in fiat or digital money, any investment scheme that offers free money is probably fake. For instance, if an investment scheme offers free Bitcoin – the most valuable cryptocurrency conveniently tradable via Bitcoin Trading Software – do not go for it.
How To Protect From Crypto Scammers?
A crypto wallet with private keys is mandatory for crypto trading. Do not fall for scams that ask for private keys. You have to keep your private keys safe.
- Put Money In Understandable Things Only
In case you are ambiguous about the operations of a specific cryptocurrency, the most appropriate thing you can do is to hold off and do complete homework, including research, before deciding on an investment.
- Be Careful With Social Media Advertising
Scammers often promote their fictitious schemes through social media platforms. Therefore, keep up a sound skepticism if you see an advertisement regarding the crypto project on any of these sites.