As we all know, scams in the field of digital currency are not new, but cryptocurrency scammers have become more prevalent in this era of innovation and digitization. In addition, a decentralized management system utilized by cryptocurrency and a lack of regulation has made this platform more vulnerable to scammers. Though the safety and security of Cryptocurrencies are determined by an encryption algorithm, scammers come up with new and different ways every day to penetrate defenses.
To stay ahead of the threats posed by cryptocurrency scammers, investors must educate themselves about all the typical methods perpetrators of cryptocurrency scams use to trick the investors for their own profit. Some of these methods are discussed in this article.
Some of the popular schemes cryptocurrency scammers use to fool investors,
- Fraudulent websites
- Phishing or Email scams
- Pump and Dump scams
- Affinity Fraudulence
- Extortion scams
- Impersonating Government agencies
- Initial Coin Offering (ICO) scams
- Online dating scams
Ingenious scammers resort to fictitious websites to deceive crypto investors into transferring crypto coins into scammers’ digital wallets. They develop fake websites that look identical to genuine websites that deal with crypto coins. They not only copy the domain names of legitimate websites but also mimic their design so that investors mistake these fake websites for legitimate ones and end up giving their crypto coins in the hands of scammers. Sometimes scammers who resort to fictitious websites are not intended to steal the coins but to steal investors’ personal information, to later sell them into the black market for profit.
Phishing or Email Scams:
A phishing scam is a common method, most popular among crypto scammers. In this method, scammers send an email to their targets, providing a malicious link that redirects them to their fraudulent websites. Sometimes they claim to be contacting a company that deals with mining and managing cryptocurrencies and ask for personal information in order to safeguard their targets’ digital wallets. Sometimes scammers lure investors with lucrative offers and eventually steal their crypto coins. Apart from malicious links, scammers sometimes utilize spyware to garner their targets’ personal information, which they disperse through PDF files or other attachments sent in the emails.
Pump and Dump Scams:
The pump and dump scheme is the strategy that almost every investor is aware of or even faces. In this scheme, crypto scammers buy a particular cryptocurrency in bulk in order to inflate the price of the crypto. Once they have successfully pumped the price of the crypto, they sell them, leading to a price crash that compels the investors to sell their crypto coins at a loss. They sometimes even spread false news in order to pump the value of their cryptocurrencies.
Scammers of affinity fraud target groups or organizations that share a common interest. These affinity fraudulence scammers usually target authority figures of the group or organization that other members of the group follow. Scammers believe that it is easy to mold the interest of members of a group if they can successfully manage to manipulate the leader. They join the group pretending to be one of them, and work their way through it.
Extortion scams occur when scammers try to steal crypto coins or garner their targets’ personal information by forcing their targets or by threatening them. Scammers who are intended to blackmail investors first target and garner their private data and use it to get access to victims’ digital wallets. They directly contact victims and threaten them with this information. Be wary of these ingenious scammers as they sometimes randomly call victims and falsely claim to have their personal information when they do not even have it.
Impersonating Government Agencies:
Scammers disguise themselves as government agencies, as very few people think twice before sharing any private information when asked by government agencies. A cryptocurrency investor should always be aware that everything related to cryptocurrencies is totally managed and maintained by decentralized systems, and a centralized system like banks and the government does not deal with any part of it. When a government agent contacts you and asks for your private data related to your crypto wallet in order to safeguard it is definitely someone who is up to perpetrating a cryptocurrency scam. Avoid such calls and messages and steer clear of these threats.
Initial Coin Offering (ICO) Scams:
Some cryptocurrency start-up companies resort to Initial Coin Offerings or, in short, ICO to raise money to mine a new coin. They usually offer the advantage of high returns in exchange for upfront money. Unfortunately, perpetrators of cryptocurrency scams consider this as an opportunity to perpetrate forgery and contact investors, pretending to be such a company, asking for upfront money, claiming that they will provide an incredible return. Be wary of such offers, as scammers disappear with the money as soon as they get access to it.
Online Dating Scams:
The online dating platform is also packed with crypto scammers. They deceive people by pretending to be someone who is an expert in passive income coming from sources like cryptocurrencies and stocks, or shows great interest in them. They initiate conversations on online dating sites and establish a relationship with their targets. When they sense that trust has been built between them, they try to mold their interest in cryptocurrencies and make them invest in cryptocurrencies too. Then somehow, they manipulate them into sharing their crypto wallet information and eventually steal their crypto coins.
A cryptocurrency investor needs to be extra careful to eliminate these scammers, before they rinse their targets out of money. A zero-trust approach is effective in preventing such forgeries. Moreover, there are plenty of organizations available on the internet that help cryptocurrency scams victims to recover funds lost to such fraud. Victims can easily find them on the internet and seek their help.