Cryptocurrencies are a new and exciting way to invest in the future of technology and finance. However, they also come with many risks and challenges, especially when it comes to security and fraud. Scammers are always looking for new ways to steal your money, and the massive growth of cryptocurrency in recent years has created plenty of opportunities for fraud.
In this article, we will cover some of the most common crypto scams, how to spot them, and how to avoid them.
Common Crypto Scams
There are many types of crypto scams, but some of the most common include:
Fake websites: Scammers sometimes create fake cryptocurrency trading platforms or fake versions of official crypto wallets to trick unsuspecting victims. These fake websites usually have similar but slightly different domain names from the sites they attempt to mimic. They look very similar to legitimate sites, making it difficult to tell the difference. Fake crypto sites often operate in one of two ways:
As phishing pages: All the details you enter, such as your crypto wallet’s password and recovery phrase and other financial information, end up in the scammers’ hands.
As straightforward theft: Initially, the site may allow you to withdraw a small amount of money. As your investments seem to perform well, you might invest more money in the site. However, when you subsequently want to withdraw your money, the site either shuts down or declines the request.
Phishing scams: Crypto phishing scams often target information relating to online wallets. Scammers target crypto wallet private keys, which are required to access funds within the wallet. Their method of working is similar to other phishing attempts and related to the fake websites described above. They send an email to lure recipients to a specially created website asking them to enter private key information. Once the hackers have acquired this information, they steal the cryptocurrency in those wallets.
Pump and dump schemes: This involves a particular coin or token being hyped by fraudsters through an email blast or social media such as Twitter, Facebook, or Telegram. Not wanting to miss out, traders rush to buy the coins, driving up the price. Having succeeded in inflating the price, the scammers then sell their holdings – which causes a crash as the asset’s value sharply declines. This can happen within minutes.
Fake apps: Another common way scammers trick cryptocurrency investors is through fake apps available for download through Google Play and the Apple App Store. Although these fake apps are quickly found and removed, that doesn’t mean the apps aren’t impacting many bottom lines. Thousands of people have downloaded fake cryptocurrency apps.
Fake celebrity endorsements: Crypto scammers sometimes pose as or claim endorsements from celebrities, businesspeople, or influencers to capture the attention of potential targets
How to Protect Yourself from Crypto Scams
Many crypto frauds are sophisticated and convincing. Here are some steps you can take to protect yourself:
Protect your wallet: To invest in cryptocurrency, you need a wallet with private keys. You should never share your private keys with anyone or store them on unsecured devices or platforms. You should also use a reputable and secure wallet provider that offers features such as encryption, backup, and recovery options.
Check before you click: Don’t open hyperlinks or attachments from unfamiliar senders. Always verify the authenticity and legitimacy of any website, app, or platform that you use for crypto transactions. Look for HTTPS in the URL and check for spelling errors or suspicious domain names.
Keep accounts separate: Don’t use the same email address, password, or phone number for different crypto accounts or platforms. This will reduce the risk of compromising multiple accounts if one of them is hacked or phished.
Place a hold immediately: If you suspect that you have been scammed or hacked, act quickly and contact your wallet provider or exchange platform to freeze your account or transactions. You should also report the incident to the relevant authorities and seek legal advice if necessary.
Use reputable companies: Do your research before investing in any cryptocurrency or platform. Check reviews, ratings, reputation, and regulation status of any company or individual that you deal with. Avoid offers that sound too good to be true or promise unrealistic returns.
Use anti-phishing protection: Any site must be carefully checked to make sure it’s the real deal. Kaspersky Premium does this job for you, blocking visits to fake sites on both your computer and your phone2. It’s important to make sure that all platforms are protected, as phishing scams are just as dangerous for Apple devices as for Windows or Android.
Use a reliable VPN: By itself, a VPN won’t protect you from phishing or fraud, but it will protect you from website spoofing and spying — especially useful when you’re working with your cryptoassets in cafes, airports, hotels and other places with public Wi-Fi.
Conclusion
Cryptocurrencies are an exciting and innovative way to invest in the future, but they also come with many risks and challenges. Scammers are always looking for new ways to exploit the vulnerabilities and loopholes of the crypto space. Therefore, investors need to be vigilant and cautious when dealing with crypto transactions and platforms. By following the tips and advice in this article, you can protect your crypto investment from scams and enjoy the benefits of this emerging technology.