Cryptocurrency scams are rampant: How you can protect your assets

The recent popularity of NFTs, with prices rising tenfold or even dozens of times, has driven many investors into a frenzy. However, NFT transactions are not without risks of scams and information leaks.
Some scammers will implant fraudulent websites in hidden links of NFTs . When collectors enter the fraudulent website, the wallet password can be stolen through some technical means, and the assets will disappear.

Before that, digital currencies such as Bitcoin, Monero, Ethereum and Dogecoin were all over the Internet. The soaring value of some projects brought a lot of wealth to investors.

The wealth gained from mining virtual currencies can be compared to the gold rush of the 1800s. A range of scams targeting cryptocurrencies are also emerging .

In fact, if you’re interested in cryptocurrencies today, you’re likely at significant risk of being scammed. It’s an unregulated world, and bad actors can often take advantage of you when you’re least prepared . Fraud prevention rules are essential.

Everything you read online should be carefully scrutinized and fact-checked. Don’t believe the hype and you’ll have a great chance of staying safe.

  Why are cryptocurrency scams on the rise?

Fraudsters are masters at using current events and popular trends to deceive their victims. The malicious hype by some media has a pernicious effect, forming an endless cycle of malicious hype of virtual currencies.

As a result, according to the FTC, American civilians lost approximately $80 million (€71 million) to thousands of cryptocurrency scams between October 2020 and May 2021.

In the UK, the figures are even higher: police say victims lost more than £146 million (€172 million) in the first nine months of 2021 .

Why are there more and more scams? Because:

Compared to traditional stock markets, there are few regulations governing the cryptocurrency market for investors

Massive amounts of media dissemination of information have become a means of assisting phishing and fraud

Surging cryptocurrency prices lure investors looking to get rich quick

Social media amplifies false news

There is also the lure of liquidity gains, which phishers can use as bait

  What are the most common cryptocurrency scams?

If you store your virtual currency securely on a cryptocurrency exchange, you may also be vulnerable to hacking . In many cases, threat actors have successfully extracted funds from these businesses, sometimes making off with hundreds of millions of dollars .

However, usually in real life, SoV companies promise to compensate their innocent users. Unfortunately, for victims of cryptocurrency fraud, there are no such guarantees .

So it's important to be aware of these scams . Here are some of the most common ones:

Ponzi Scheme

It's an investment scam where victims are tricked into investing in non-existent companies or "get-rich-quick schemes" that actually do nothing more than line the scammer's pocket.

Cryptocurrencies are well suited to this, as fraudsters are always inventing new, unspecified “cutting-edge” technologies to lure investors and generate greater virtual profits . In any case, when the currency is virtual, it is easy to falsify data.

Based on false information, scammers encourage investors to buy shares in little-known cryptocurrency companies. The share price then rises, and the fraudsters sell their shares for a tidy profit , leaving the victims with nothing.

Fake celebrity endorsements

Scammers hijack celebrity social media accounts or create fake accounts and encourage followers to invest in said fake schemes. In this case, the scammers made off with around $2 million, and they even put Elon Musk’s name into the Bitcoin address to make the ruse more believable.

It looks like someone has hacked the Indian Medical Association’s Twitter account and is impersonating Elon Musk in a crypto giveaway scam. @elonmusk #CryptoScam pic.twitter.com/fkCZHh1uOC — Sidhartha Shukla (@sidcoins) January 2, 2022

Fake payment redirect

Fraudsters send emails and messages offering victims access to their assets stored on cryptocurrency exchanges . The only problem is that users usually have to pay a small fee first . In the end, the exchange doesn’t exist and their money is lost forever .

Imposter App

Cybercriminals upload malicious programs to app stores disguised as malware. If you install one, it could steal personal or financial details or plant malware on your device . Others might trick users into paying for non-existent services or try to steal login information for your cryptocurrency wallets.

Fake news propaganda scam

Sometimes the stories behind the fake news are pretty sordid. Scammers will create fake press releases designed to drive up prices and then sell them at a high price, just to lure people in .

Phishing

Phishing is one of the most popular ways for fraudsters to operate. Emails, texts, and social media messages are disguised to appear to be sent from a legitimate, trusted source. Sometimes, that source is a credit card provider, bank, or government, and when they ask for something to be paid in cryptocurrency, or through a private channel , something is not right.

  How to avoid becoming a victim

The best weapon against fraud is skepticism. Unfortunately, we live in an age where not all information is true. And a lot of it is explicitly designed to deceive, to sneak in, and to steal. With that in mind, try the following tips to avoid being scammed:

Never proactively give personal details to someone you don't know about via email, text, social media, etc. It could actually be a hacker who has hijacked their email or social account.

If something seems too good to be true, it usually is. Treat any investment proposal with a large dose of skepticism.

Turn on two-factor authentication for any cryptocurrency accounts you own

Forgo any investment “opportunities” that require upfront payment

Never use unofficial app stores

Download security software to your device from a reputable provider

No matter how enthusiastic the people around you are about investing, please remember to stay calm and stay away from hype and scams.