According to a 2022 Crypto Crime
report, an extensive rise
in scams and theft resulted in 79% global increases in crypto-related crimes.
Crypto scams purpose to get private data like security codes or lure
unsuspecting individuals into directing their digital tokens to compromised
wallets. Knowing the common crypto scams and how to identify/ spot them can
help keep you from getting conned while safeguarding your crypto investment.
Outlined below are four common cryptocurrency scams.
1.
Bitcoin investment
scams
When it comes to Bitcoin investment schemes, fraudsters usually
reach out to investors or traders pretending to be experienced crypto
investment managers. These fake managers purport to have earned millions of
dollars in crypto and guarantee their unsuspecting victims that investing in
crypto will make them a lot of money. These scammers might begin by demanding
an upfront fee and then steal it. Also, they can request personal
identification details in the guise of depositing or transferring funds to
access your crypto.
Jeffrey Nadrich of Nadrich Law notes that pig butchering scams have also increased in recent years. Pig butchering scams involve a fraudster convincing an unsuspecting victim to invest increasing amounts of money into a crypto exchange a.k.a. "fattening the pig." The fraudster "butchers" the victim by absconding with the invested funds never to be heard from again. Globally, victims have lost billions of dollars through this scam.
Fraudulent celebrity endorsements are
another Bitcoin investment scam where fraudsters take authentic pictures and
put them on fake ads and accounts to make it seem like a celebrity is marketing
a substantial financial gain from crypto investment. While the claim sources
appear legit by using trustworthy company names and professionally-looking
logos and sites, the endorsement is fraudulent. Consider using a reputable
crypto exchange and check their BTC to USD converter to ensure you're converting your tokens using the
best rates.
2.
Crypto phishing
scams
Crypto phishing scams involve luring
victims into sharing their personal data or giving up their private keys. The
scammer poses as a legit person or entity to gain a victim's trust. Upon
scamming you, they use those details to steal your crypto money. Phishing scams
have become quite common as cyberattacks and cybercriminals become more
advanced. These scams target crypto exchanges, initial coin offerings, and
wallets. As such, you, as a cryptocurrency user, should know how they operate
to safeguard yourself and your funds.
A phishing scam often begins with the
fraudster sending mass emails to possible victims. It usually seems like it's
from a trustworthy source. The emails usually have links to a fake site that
appears similar to the genuine one. Since phishing emails are hard to identify,
look for grammar/ spelling mistakes and copycatting. Also, they contain
misleading links.
3.
Rug pull scams
Rug pull is a common crypto scheme where fraudsters
develop fake tokens, inflate their worth to entice buyers then escape with your
money once the token gets to the peak price. As a crypto investor, you may
encounter the following rug pull scams:
● Stealing liquidity: Cryptocurrency projects
on decentralized platforms require a liquidity pool. Fraudsters usually entice
early investors to make contributions toward the liquidity pool and then
withdraw all the funds
● Develop a token that cannot be sold:
Scammers create a coding trick that, once activated, makes it impossible for
investors to sell their tokens
Consider checking whether a project is
legit before investing.
4.
Fake crypto
exchanges
Fake, unregulated crypto exchanges con
potential victims by passing themselves off as authentic exchanges. These
exchanges normally entice users using unsolicited phone calls or celebrity
endorsements. A reliable crypto exchange should have a substantial social media
presence and a website. Their employees should be verifiable. Beware of
unsought phone calls pressuring you to invest.
Endnote
Scams aren't new to the crypto world. As
such, understanding the common cryptocurrency scams and how to avoid them can
help secure your investments, plus personal and financial data.
