Crypto Scams and How to Spot Them?
To maximize the benefits of cryptocurrencies, one needs to be aware of the different scams in the space.
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Bitcoin and other cryptocurrencies have some great advantages, like fast transaction speeds, low fees, and the convenience of sending money worldwide. Unfortunately, since the creation of crypto, many scammers have taken advantage of it for money laundering and cyber theft, and the number of scams is only increasing.
To stay safe and protect your funds, it’s crucial to be extra careful when buying, sending, or using crypto. Here are some common crypto scams you should be aware of:
Often, celebrities and influencers are tapped to promote a project, but just because someone has thousands of online followers doesn’t mean the project itself is legitimate. That person may simply have been paid to endorse it, and you should always be careful of any advice you receive online.
There may be impersonators that pretend to be famous personalities or representatives of a government or financial institution. Their social media profiles and stolen content may look legitimate, but the comments section is full of spam, and most of their followers are bot accounts.
These impersonators may pretend to be affiliated with an established crypto project. After winning your trust, they invite you to a private group offering you supposedly better deals or fake investment opportunities.
One form of this scam is a new token that is advertised as the next Bitcoin or revolutionary crypto. Investors are guaranteed that each coin will be worth up to a hundred times more someday, regardless of market conditions.
Another variation is an investment scam that asks you to invest in a project for a period of time. After some time, you can withdraw cash or crypto payouts worth several times your invested amount.
In reality, no one can predict how the market will behave in the future. Unlike government-backed currencies, there is no guarantee that you will get a fixed amount of cash in return for every dollar you invest.
While games that reward you in crypto really exist, they only pay you in very small increments each time. You certainly cannot get rich from using these apps. What’s worse is that some of these apps contain malware that can steal your crypto, compromise your wallet, or infect your device.
Other apps seem to reward you with crypto cashbacks, but when the time comes when you’re ready to withdraw the funds, the app prevents you from doing so.
When a new type of crypto is offered on the market, the founders of these projects may artificially inflate the price by generating fake demand for the coin. When enough people invest in their tokens, they run away with the cash and shut down the project, leaving the investors unable to get their money back.
Other projects are built by founders with legitimate intentions; however, they are exploited by scammers looking for a quick cash grab. Once the price of the crypto token goes up with demand, they immediately sell all their tokens, causing the price of the coin to collapse. They get to pocket the extra cash, while the other investors are left with a worthless coin no one wants to buy.
Beware if you receive a message from someone who claims to be experiencing difficulties when withdrawing funds from a wallet. That person offers to give you their private key and asks you to send crypto to pay for gas fees or help them transfer funds from a wallet that keeps glitching. In exchange for your help, you are promised a reward of several dollars. Of course, this is a scam, and once you send the funds, you cannot get them back.
Once you connect your wallet to phishing sites and malicious apps, malware will compromise it and steal your funds, either in small increments so you don’t realize it, or all at once. To be safe, use a burner wallet whenever you connect to a new site, and always double-check the website URL. Do not click on links sent to you by someone you do not trust, even if that person is a member of the same community. When in doubt, run the link through a URL scanner, use a separate device to inspect it, or do not click it at all.
Someone claims that your account has been hacked and that the only way to reactivate your account and get your funds back is by sending crypto to a certain wallet. Crypto transactions are hard to track and almost impossible to reverse. This is why crypto is often involved in extortion scams.
You may be on a dating site when someone connects with you and tries to win your trust. After a long conversation, that person tries to get you to invest in a crypto scam. A similar scheme happens in job boards, where a potential employer connects with you but requires you to pay in crypto first or download a file containing malware.
This type of scam encourages you to refer to as many friends as possible. You pay a certain amount to join and earn crypto each time you successfully invite a new member, but eventually, the project collapses, and the latest recruits are left with nothing.
Always remember this: when something appears too good to be true, it probably is. As a rule of thumb, if a project focuses only on building hype but has no useful use cases, then there is a good chance that it is not sustainable in the long run.
Always stay vigilant and do your own research!
