Cryptocurrency investments have significantly increased over the past few years. As a result, many novice traders have joined the bandwagon and are actively engaged in crypto trading.
Due to the recent growth of the crypto sector, scammers have also become more active and are using different strategies to trick naïve traders. As an investor, you must be aware of all potential scams to which you may be susceptible. Let’s take a look at four of today’s most popular cryptocurrency frauds.
1. Phishing
Scammers have long used phishing scams to their advantage. Fraudsters want access to your account information, notably your crypto keys. Phishing criminals frequently trick you into following a link to a fake website, where they can steal your account information. They can pose as well-known firms, such as your bank, utility companies, and maybe even government authorities.
They post URLs on social media or approach you directly. Scammers may send you a link to a website where they can steal your account details and log in to collect assets. Never submit sensitive data from an email link to prevent phishing attacks. No matter how authentic the site or URL looks, always go straight to the website.
2. Bitcoin Investment Scam
In this type of scam, a fraudster claims to be an investment management expert. They will say that they have made millions investing in cryptocurrency and can help you make a lot of cash by partnering with you. They will request an upfront fee. However, instead of helping you make money, they will run away with your cash. The scammers may also request you provide personal identification information, such as credit card details. They will use this information to steal your money.
3. Romance Scams
Crypto frauds are not uncommon on dating apps. These scams feature long-distance or entirely virtual relationships in which one party will take time to earn the trust of the other. Fraudsters create fake dating accounts on apps and other social media platforms such as Instagram and Facebook. They then contact others on the applications to form a relationship. The fraudster may claim to be from a foreign nation, but they want to meet and take the relationship further.
They may advise you to transfer your interaction to a private channel, such as emails or a chat application. Then, when the time comes, the fraudster will make an emergency plea for help, requesting that you transmit money using prepaid debit cards, gift vouchers, or crypto assets. According to the FTC, almost 20% of the lost revenue in romance scams between October 2020 and March 2021 was transferred in cryptocurrency.
4. Investment Schemes
New types of cryptocurrency are continually being created, and when new currencies are added to the blockchain, it is referred to as an initial coin offering (ICO). However, ICOs can also be used to commit fraud. A corporation or an individual may claim to have a chance to invest in a new type of cryptocurrency with high returns. They may then force you to put a large number of fresh coins into a corrupted digital wallet.
Pump-and-dump schemes are another type of investment fraud. A scammer allures you to buy unknown cryptocurrency at a low price, promising that the asset’s worth will soon skyrocket. When you purchase, the prices increase, and the fraudster dumps their holdings at a higher cost, causing the price to drop and leaving you swamped.
Final Thoughts
Cryptocurrency frauds are not easy to recognize. However, you should remember that legitimate cryptocurrencies have complete information on the blockchain and related tokens. Moreover, you must avoid clicking on any links shared by others on social media or email messages. You should invest in crypto after investigating thoroughly and keep an eye out for all of these scams to save money.
