Common Cryptocurrency Scams and How to Avoid them
Common Cryptocurrency Scams and How to Avoid Them-Scammers are constantly seeking for new ways to steal money, and the recent explosive growth of cryptocurrencies has made fraud more common.
According to a report by blockchain intelligence company Chainalysis, thieves stole $14 billion worth of cryptocurrency in 2021, setting a new record for cryptocurrency crime.
It’s crucial to be aware of the risks if you’re interested in cryptocurrencies. Continue reading to learn more about typical cryptocurrency scams, how to recognise them, and how to prevent them.
Cryptocurrency Investment Scams
Cryptocurrency scams come in a variety of forms. Among the most typical are:
Phony websites
- In order to deceive their victims, scammers may develop phony cryptocurrency trading websites or imitations of legitimate cryptocurrency wallets.
- These phony websites frequently have domain names that are somewhat similar to those of the real websites they are meant to imitate.
- It can be challenging to distinguish them from authentic websites since they resemble them so closely.
Fake crypto sites often operate in one of two ways:
- As phishing pages: The scammers gain access to all the information you provide, including your crypto wallet’s password, recovery phrase, and other financial details.
- As an obvious theft: You might be able to withdraw a little sum of money at first through the website.
- You might increase your investment in the site as your current investments appear to be doing well.
- However, the site either closes down or rejects your request when you later wish to withdraw your money.
Ponzi schemes
- Online wallet information is a common target of cryptocurrency phishing scams.
- Private keys for crypto wallets, which are needed to access the wallet’s funds, are the target of scammers.
- They operate in a similar way to previous phishing scams and are associated with the fictitious websites mentioned above.
- To entice recipients to a specifically designed website where they are asked to provide private key information, they send an email.
- The cryptocurrency in those wallets is then stoling by the hackers once they know this information.
Pump-and-dump tactics
- Through an email blast or social media sites like Twitter, Facebook, or Telegram, con artists will hype up a certain coin or token.
- Tradesmen hurry to purchase the coins because they don’t want to miss out, which raises the cost.
- After successfully driving up the price, the con artists liquidate their shares, which leads to a crash as the asset’s value rapidly drops. This can occur in a matter of minutes.
Fake apps
- Scammers frequently use bogus apps that can be downloading from Google Play and the Apple App Store to deceive cryptocurrency investors.
- These bogus apps are swiftly identifiing and taken down, but that doesn’t mean they aren’t having an effect on many bottom lines. Numerous people have downloaded phoney cryptocurrency applications.
Giving-away fraud
- In what is knoing as a giveaway scam, the con artists here claim to equal or multiply the cryptocurrency handing to them.
- Clever messaging from what frequently appears to be a legitimate social media account can engender a sense of legitimacy and urgency.
- People may send money rapidly in the hopes of receiving an immediate return because this opportunity is supposedly a “once in a lifetime” chance.
Extortion and Blackmail schemes
- Blackmail is another technique scammers employ.
- They send emails threatening to reveal the user’s history of visiting adult websites unless the recipient shares their private keys or transfers money to the scammer.
Fraudulent cloud mining
- Cloud mining refers to businesses that let you rent mining equipment they run in return for a set charge and a percentage of the profits you will allegedly make.
- Theoretically, this enables anyone to mine remotely without investing in costly mining hardware.
- In contrast, a lot of cloud mining businesses are frauds or. At best, unproductive, causing you to lose money or make less than expected.
Initial coin offerings that are fake (ICOs)
- Initial coin offerings, or ICOs, are a mechanism for budding cryptocurrency businesses to solicit funding from potential customers.
- Customers are frequently giving the option to seing active cryptocurrencies. Like bitcoin or another well-knowing cryptocurrency in exchange for a discount on the new crypto coins.
- Many initial coin offerings (ICOs) have proven to be fraudulent, with criminals going to elaborate efforts to defraud investors. Examples include hiring up bogus offices and producing upscale marketing materials.
Also Read: Cryptocurrency Mobile Mining
