What are the types of fraud in this field, how can you protect yourself from them, and can funds be recovered via the “Blockchain” structure for digital operations?
In light of the decentralization used by the Blockchain structure, there is no way to recover funds except with the intervention of government agencies with deep technical expertise.
A common type of scam is the launch of false cryptocurrencies posing as a new digital cryptocurrency promising to support hundreds of millions of dollars from investors. An example of this is the launch of the OneCoin currency in mid-2010, which positioned itself as an educational crypto trading service. It later became clear that this currency does not exist on the Blockchain network, which is considered the basis for dealing in cryptocurrencies. Thanks to it, the founders of this currency escaped with about $4 billion. PayCoin was also launched in 2019 to investors after confirming that it had received $100 million in reserve capital, which was not true, and investors lost their money. Fortunately, the founder of the coin was arrested and sentenced to 21 months in prison and compensation to investors.
We also mention the “DAO” currency, which was launched in April 2016. But it was hacked due to a security flaw in the cryptocurrency contract system, which led to a loss of more than 50 million US dollars and then the currency disappeared completely. More than $882 million in cryptocurrencies have been stolen since 2017 during online exchanges, and North Korean hackers have been accused of being behind it. Also, 56 percent of the ICO funds were stolen during 2017.
It is worth noting that trading these cryptocurrencies involves many risks, as their values are not subject to matters that the investor can control, such as a sharp rise or fall in their price due to a single tweet from a famous person, such as announcing their investment in it or abandoning it. This may result in the emergence of fraudulent operations bearing the name of that person without any connection to the matter, as groups of people impersonating Elon Musk, CEO of Tesla and SpaceX, were able to defraud investors. in cryptocurrencies and stole at least two million dollars by tricking them into sending their digital currencies to his account so that he could invest in them and then distribute the profits to them.
According to a report from the US Federal Trade Commission in May 2021, financial fraud in the cryptocurrency market has reached its highest levels ever, with more than $50 million lost during the first quarter of the current year, and more than $80 million between October (October) 2020 and May 2021.
-Fake software
We mention a group of malicious programs that steal cryptocurrencies by making users believe that they help them simply manage and trade cryptocurrencies, but they install malicious programs on users’ devices to steal their money. These fake applications were called Jamm, Kintum, eTrade, and DaoPoker, which can be downloaded from specialized sites. The last mentioned app uses a trick to play online and bet using cryptocurrencies, stealing users' coins.
These applications support the Windows, Mac, and Linux operating systems, and record what is entered via the keyboard at all times and save images of the user’s screen without his knowledge of it. They upload files from the storage unit to the Internet and download malicious files from the Internet to the device. The user, and even execute various commands on his computer without his knowledge. These programs can record cryptocurrency wallet keys and then steal accounts, and it is estimated that about 6,500 people have been infected.
- Tips for cryptocurrency traders
In order to avoid any mistakes and avoid losing your digital currencies and your money, you must search at length for the digital currency that is suitable for you and read a lot about it before investing in it, especially the new one, in order to know the credibility and reliability of those in charge of the currency. It is not recommended to invest in any currency in which nothing is known about the team that manages it, even if its trading price is high. It is also recommended to trade with low values in the beginning, in order to build confidence in the currency and the team that manages it and to avoid the risks of trading with large values.
It is also recommended to distribute your investment in this field across several cryptocurrencies, in order to avoid losing the value of your investment in one currency whose value may collapse due to random changes to it, or because it may be an elaborate trick. It is also recommended to move most of your cryptocurrencies to offline “cold” wallets, and keep low amounts in online wallets.
If any amount is stolen from your digital wallet, you must change the password immediately using a device different from the one you used to handle your wallet, in order to avoid copying the new password in the event that hackers have installed a program to steal what you type on the keyboard. It is also recommended to delete your digital wallet and create a new one to protect your other cryptocurrencies. If you use a brokerage company to manage currencies, you must contact them to stop the trading of your digital wallet currencies, and that company may be able to compensate you if they provide an anti-theft insurance service.
