Have you ever heard of crypto scams? Scammers are always finding new ways to trick your money, and the vast growth of cryptocoins in recent years has increased the chances of fraud. However, the cryptocoin scams have had a record-breaking year, where fraudsters stole around $14 billion of crypto. If you are interested in investing in crypto, it’s essential to be aware of the threats. In this blog, I will let you know about cryptocurrency scams and how you should prevent them.
However, crypto and blockchain have advanced ways to trace the taken funds via risk monitoring firms, but once you send the funds, there is no way to get them back. As crypto transactions are one-way, if you transfer the money to a person, you don’t get it back. So the only way to secure yourself is to be aware of all types of scams.
There are lots of scams in the cryptocurrency world, and for people who are new to this world, it must be difficult for them to spot scams. But don’t worry; Read on further to learn about these cryptoscams and safety measures to secure money.
5 Common Crypto Scams to Know Before You Start Investing
Scammers are using some other true tactics to steal your money. Investments scams are the most common trick to force you to buy cryptocurrency & sending it on to imposters. However, there are lots of scams going on, so always use common sense and be vigilant. Some of the common scams are:
1. Rug Pull Scams
A rug pull scam happens when project members raise crypto-funds for a project and then abruptly erase all of the liquidity & varnish. And investors lose everything they have invested. Hence, these bad actors can list tokens on a decentralized exchange, pair them with a genuine cryptocurrency, and lure the interest of the investors. Once they got enough funds, the developers abandoned the project and vanished.
These scams plague the beginners who think they may get early success, but in reality, they are scammed. This scam is also common for NFTs, which are a kind of digital asset. So always double-check the sites and third parties, and don’t depend on comments on social media.
Tips: always do your own research and read the project’s white paper. Check the project team and be careful of plans promising huge returns.
2. Extortion Scams
Imposters will usually use information sourced from data breaches at other sites to trap you into thinking that they have more details about you. For instance, they may show you old pin codes that they may have used to insist that their scam is valid. If you become a victim of this scam, try out these measures:
- Run a secure malware scan on your system using a reputable tool.
- If you know any Pin codes included in the extortion email as the one, you currently use, modify it instantly across all sites.
- Report the spam email to your email provider.
- Get in touch with your local authorities & file a police report.
However, these messages can be disturbing, so always be aware of such scams.
3. Pump & Dump Schemes
A pump and Dump scheme involves a specific coin or token being overvalued by the scammers through an email or social media platforms such as Telegram, Facebook, or Twitter. So this lures the traders to buy the coins quickly.
When succeeding in inflating the price, the scammers then sell their holding, which grounds a crash as the asset’s value sharply falls. And all this happens within minutes.
Tips: don’t purchase anything during a coordinated pump. And do not fall for the pump which you see on social media platforms.
4. Fake Websites & Apps
Imposters sometimes make fake cryptocurrency trading platforms and fake apps of official crypto wallets to trap innocent people. These fake sites & apps are often similar but a little different domains name from the sites they attempt to mimic. Although these fake sites look so authentic making, it is challenging to tell the difference. These fake sites & apps usually work in one of two ways:
As Phishing Pages: All the detail you give, like your crypto wallet’s password, recovery phrase, and other financial details, end up in the imposter’s hands.
As Basic Theft: at first, the site may let you take out a small amount of money. As your investments seem to perform well, you may invest more money in the site. Later, when you wish to withdraw your money, the site either closes or refuses the request.
5. Fake Coin Offering (ICOs)
It is a way for start-up crypto firms to raise money from future users or investors. Usually, people are promised a discount on the new coins in exchange for sending active Crypto coins such as Bitcoin or other popular cryptocoins. They may force you into depositing plenty of new coins into a digital wallet that’s been compromised somehow. However, multiple ICOs have turned out to be deceptive and are quite similar to rug pulls, where scammers gather the funds of early investors only to discard the project.
Tip: the simplest way to detect an ICO scam is to check their white paper; if the company didn’t provide a white paper or gives a fake paper that misses out on essential details, that’s a warning.
How to Report Crypto Scams?
Falling for these scams can be disturbing, and you must act instantly if you have made a payment or revealed personal information. As these fraudsters usually sell the details to other criminals, so it’s quite necessary to alter your username or Passcode across different sites, to avoid further damage. If you are the victim of such scams, you can report it to the below-mentioned organizations:
- Report the Fraud at FTC
- And, Report scams to the US Securities & Exchange Commission (SEC)
- File a complaint to the internet crime complaint center (IC3)
- Also, report the scam to the Commodity futures trading commission (CFTC)
Moreover, you can also contact to crypto exchange you use; they may have scam prevention or other safety measures to secure your assets.
Red Flags of Cryptocurrency Fraud
However, most cryptocurrency scams are so convincing. Here are some red flags you can take to secure yourself.
- High promises to get high returns
- Hyped social media crypto coins schemes.
- Urgent payment request
- Asking your account credentials.
- Threatening emails.
- Misspellings and grammatical errors on posts and emails.
- Request to make multiple transactions in a day
It’s necessary not to underrate crypto scammers and their deceitful strategies. Always be careful of such imposters.
Protect Yourself From Crypto Scams
When you consider any investment in the crypto world, the first thing you have to know is what kind of coin it is. So to avoid getting scammed, be cautious about certain things:
- Make sure the coin is authentic.
- Check if there is any experienced team behind it with experience in their respective fields.
- Before investing, ask multiple questions about the company, its features, and how they operate.
- Oppose urgent appeals and transactions.
- Report doubtful activities quickly.
- Ensure before tapping on any link.
Scams are not a new thing; the only way to not get scammed is to rely on a legit source of details and thorough research. Be careful and use only safe, authentic, reputable platforms such as Crypto.com that offer powerful security features. Have you ever experienced any crypto scam? Share your experience with us.
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