A new world of digital currency that is also referred to as cryptocurrency, comes with more and more sophisticated scams preying upon the consumer. More than 46,000 people reported losses of a whopping $1 billion in crypto scams from January 2021 through June 2022 alone to the Federal Trade Commission reflecting only those who reported to authorities.
What attracts people to cryptocurrency is actually its decentralized nature, which makes it a very inviting platform for scammers. Crypto transactions are unprotected by law and governmental control; hence the crypto transactions cannot be reversed leaving consumers at large risk of financial losses.
If you are considering investing in crypto or already have digital assets, it is extremely important to get familiar with crypto scams.
This article is meant to shed light on the most common types of crypto scams, the way they work, and the previous scams.
Keep reading, keep learning!
Blackmail and Extortion Scams
Blackmail and Extortion Scams
The Federal Trade Commission has warned that many scammers use blackmail to get crypto transfers from the victimes. Maybe they will say they have really embarrassing personal information and threaten to share it if you do not pay them. If this happens, report it right away to the Law Agency, and do not respond or send cryptocurrency to the scammer.
Business Opportunity Scams
Business Opportunity Scams
Another common crypto scam involves business opportunities guaranteeing returns or even doubling and tripling Crypto assets overnight. Remember that there is no guarantee with investment returns, much less in this highly volatile crypto market.
Fake Identity Scams
Fake Identity Scams
Impersonation scams are also common in the crypto world. A scammer may call you claiming to be a celebrity, an influencer, or even someone from the government or law enforcement agencies to help you. Such scammers can request that you pay in crypto or usually lure you to their investment schemes. Never share sensitive information or make crypto swaps with some unknown guy. Verify the identity of a person or organization before doing so.
Phishing Scams
Phishing Scams
Other risks that lurk in the crypto realm include phishing scams. Scammers may email or message something that looks official, asking you to log in to an account or download an app to secure your assets. Be careful and only log in to your crypto accounts through the official website or trusted apps.
Romance Scams
Romance Scams
Romance scams, while not so specific to the crypto world, are also quite common in this space. Cyber criminals may pose as people with whom the target may have a date or eventually develop a romantic relationship whose aim is to establish a sense of intimacy or affection; in this case, the criminal gets the target to provide access to cryptocurrency payment or investment services. As pointed out earlier, if an offer sounds like something that can hardly be real, then it most definitely is a con.
Some Big Previous Crypto Scams that Shook the Crypto World
Some big previous Crypto Scams that shook the crypto world
Some of the previous crypto-scams would include the now-famous Bitconnect which ran as a pyramid or a Ponzi scheme before collapsing in 2018 and took billions from investors. It promised large returns for investment in its own lending and trading platform, eventually crumbling into a heap of fraudulent malfeasance.
One of the frauds that occurred in the past was the OneCoin pyramid scheme, a scam that was touted between 2014 and 2017 as a legitimate investment, but in fact was a multi-exchange and non-listed security trading shadow market that in the end caused the world’s investors a loss of entire billion dollars to financial fraud.
In the year 2021 more than 600 million dollars’ worth of cryptocurrency got stolen by hackers of the decentralized finance platform Poly Network. Although eventually the hacker returned the money that showed how weak DeFi platforms are about protection.
More recently in the year 2022, cryptocurrency exchange FTX fell apart. Ordinary investors lost billions. FTX was one of the most extensive exchanges for cryptos but found it had mismanaged the funds of customers. It was involved in fraudulent activities.
These high-profile scams remind us of the need for proper research into the investment we want to give our money for in any cryptocurrency project or platform. Be aware of the risks involved in crypto investments. Never invest more than you can afford to lose.
Conclusion
The scams against such unsuspecting investors will only rise as cryptocurrency market continues to expand. Keep yourself educated. Be aware of precautions. Follow advice on how best to secure your digital assets. These can reduce your risks against very sophisticated schemes. You just remember one thing: if something seems too good to be true, then it is, more than likely, a scam.
Moreover one should never respond to unwanted messages. Always check a person’s or the company’s identity before divulging sensitive information or doing business with them.
