How to Avoid a Cryptocurrency Scam

November 08, 2023 0 Comments

Cryptocurrency scam is a type of fraudulent scheme in which fraudsters target people interested in investing or trading cryptocurrencies like Bitcoin and other digital assets. They usually do so by pretending to be a trusted cryptocurrency exchange or claiming to have inside information about the crypto market. The scammers typically ask people to send money or cryptocurrency and often promise large returns. Some of the most common types of crypto scams include:

Investment opportunity - A fake "investment manager" contacts you out of the blue and promises to grow your money if you invest in their platform. They often direct you to a website that looks real but is actually a phishing page that captures your login details. Then they lock you out of your account, close the site and disappear with your money.

Fake initial coin offerings (ICOs) - Scammers create a new cryptocurrency and hype it up through social media or email blasts. Unsuspecting investors then rush to buy the coin, driving up the price. Once the price is high enough, the scammers sell their holdings, causing the price to crash. Pump and dump coins are often worthless penny stocks or meme coins that have no unique use case.

Failing to secure your crypto wallet - Scammers can steal your digital crypto keys through malware on your computer or by hacking into your online wallets. This makes it essential to keep your computer and software up to date, install anti-malware and secure your wallets.

False apps on Google Play and the Cryptocurrency scam Apple App Store - Fraudsters often create fake crypto apps that mimic the look of legitimate ones to trick people into downloading them. Once the fake apps are downloaded, the fraudsters can take control of the victim's cryptocurrency investments or wallets.

Requests for payment in crypto - A fake celebrity or financial services firm promotes a work from home job that requires you to transfer large amounts of crypto for 'payment'. This can be a money laundering scheme.

Blackmail/extortion - Fraudsters tell you they have your internet browsing history or compromising photos and demand that you pay them in crypto.

Never give your private crypto keys to anyone. Only you should have access to your digital wallet and any passwords or two-factor authentication codes should be kept secret. Always research any crypto investment or trading platform before transferring your funds. Also, be wary of anyone who asks for your social media or email login details. This is a clear red flag for fraud.