Did you know that more than 20% of adults in the United States are investing money in cryptocurrency?
Cryptocurrency is a digital currency that people exchange for other forms of money and crypto.
If you are interested in investing your money, you should first learn about cryptocurrency scams.
Keep reading to discover the most common crypto scams that could clear your bank account!
Table of Contents
One of the worst crypto scams that people experience is rug-pull scams, which involve a new project.
Scammers try to source investments from people interested in a new project or type of currency and then take the money. This can be a tough scam to identify since it often involves excellent marketing online and through social media. If you can’t find any info about the currency outside of social media, you might want to hold onto your money.
Once the scammers get the money from investors, the project pages disappear and your money is gone before you can track the person down.
The Squid coin scam is largely known for this problem. After the currency gained attraction when the show Squid Games came out, they stopped trading and took all of the money. Squid coin scammers stole more than $2 million from investors in 2021.
If you also trade NFTs, you may be familiar with this scam.
If an investment manager ever contacts you about crypto, be careful how you proceed.
Bitcoin scams involve investors contacting people. They claim that they can help manage their investments.
These offers are often appealing to beginners since there is a lot to learn about crypto. Investment managers try to convince people of paying for their services by explaining how much money they’ve made. They use examples of past investments, which are often false.
You can tell that someone is trying to scam you if they ask for upfront payments for their services. Typically, these people take the money and don’t offer any help. It’s difficult to hold them accountable since they can fake documents and referrals.
Management schemes may also request personal information from you. If they ask for social security numbers or bank information, you should verify their legitimacy. Keep in mind that not all crypto managers are trying to scam you.
Celebrity Fraud Accounts
Have you ever seen celebrity endorsements for crypto investments?
Fraud accounts get created and scammers present as celebrities. They use their information and real photographs. Ads and news articles often include these celebrities claiming that they’ve made a lot of money off of their investments.
These endorsements are false and misleading, which could risk the safety of your investment.
Although these ads may look legitimate, the endorsements are often fake. News channels use these endorsements to encourage people to invest in a specific type of cryptocurrency.
The best way to make investment decisions is to look at the fakes. Try to avoid letting popularity make an impact on your choice and look for reputable sources.
The Romance Scam
One of the worst things that could happen is you meet and fall in love with someone through a dating app, only to get scammed.
People from around the world are joining dating apps and starting to build trust with their partners. As time goes on and the trust grows, they begin to ask the other person for help with bills, money, or gifts. Giving money or cryptocurrency to someone could be a scam, even if you’ve been talking to someone for months.
These scammers are heartless and have no intentions are building a relationship. They tell people what they want to hear so that they blindly fall in love and want to provide. Once the person gets the money that they want, they disappear and you can’t find them again.
Avoid sending any money or cryptocurrency to people through dating apps since you might get exploited. Around 40% of couples from a survey said that they met their partners online last year. Keep your heart open for love, just keep your wallet closed.
Bitcoin trader scams are often spread through phishing links.
Scammers send malicious links through emails and websites. They try to get personal information from people.
They cover their hidden agendas with email subjects about your cryptocurrency wallet and balance. This is one of the most common types of scams online, even outside of the crypto industry.
Another piece of information that scammers will try to obtain is your crypto key information. Instead of passwords, private keys are used to enter digital currency wallets and make changes.
When scammers steal your key info, they can access your digital wallet and make transfers from your account. Since this typically can’t get traced or resolved, most people are left having to recreate a wallet.
Never input your info on unsecured emails and website links. You should also verify that the spelling is correct and not try to deceive you into thinking it’s another organization.
Another type of crypto fraud can happen without you even knowing.
Man-in-the-middle attacks occur when a scammer intercepts you logging into your crypto wallet. They can also do this on other sites and platforms to enter your accounts and gain control of your money. When the scammers intercept the log-in process, they learn the username and passwords.
Depending on the extent of the scammer’s work, they could also discover answers to your log-in questions when using a new device. These attacks usually occur on insecure and public networks. Always monitor the network you are connecting with and fully log out of accounts when you’re done.
The scammers can intercept your logging process through Wi-Fi signals and VPNs. If you are within close proximity to a scammer, they can access your info more easily.
Using a private VPN can help protect your information and ensure that scammers don’t access your digital wallet. Stealing cryptocurrency is becoming more common for hackers since it’s so difficult to track.
Social media can be a dangerous place online because you can’t tell the difference between marketing and scams.
Giveaway scams are often done through social media and emails. Companies make promises to give away bitcoin and other cryptocurrencies to encourage business. You can check https://www.bytefederal.com/dogecoin-vs-bitcoin-whats-the-difference to learn more about this.
Fake celebrity accounts and impressive promotions help lure people into these scams. When people click on the links to access their free bitcoin, they get taken to an insecure site. The verification page may ask for digital wallet login details or personal info.
If a giveaway seems too good to be true, you should hold back on signing up. If you aren’t sure, you can usually go to the company website to find more formal promotional materials.
Often mistaken for pyramid schemes, Ponzi schemes involve scammers stealing currency from victims.
During these schemes, the scammers will ask for an investment in their cryptocurrency and promise a return at a later date. Unlike pyramid schemes, though, there’s no way to make money from recruiting others into crypto.
Ponzi schemers look for beginner crypto investors that are interested in bitcoin. People will contact you with intriguing offers for investments that seem like they will have little risk. After you’re convinced and invest the money, they offer the anticipated rewards.
When you invest money in a type of cryptocurrency, you are vulnerable to not getting anything in return. Bitcoin theft doesn’t have to be so blatant and can just exploit the lack of knowledge from first-timers.
Exchanging cryptocurrency is a common task, especially if you want to have a diverse investment.
Some scammers develop fake crypto exchange sites with exceptional exchange rates. People are often convinced to use these exchange sites in hopes of earning a few extra coins. Unfortunately, people don’t realize they have been scammed until after they send their money.
Thinking that the money will get exchanged upon transferring it, people are often surprised to see a blank page. CashApp, Crypto.com, and Coinbase are some of the most reputable exchange sites to use.
If you’re considering using another exchange platform, do research. Ensure that the company is legit before sharing your information.
Getting random texts and emails for a job you didn’t apply for should be a red flag.
Some businesses even display job postings online to look legitimate! Many crypto scammers try to present themselves as job recruiters and try to exploit you through an intriguing job offer.
Unless you are expecting to hear back from a legitimate company, be careful of where you apply to. Scammers will try to contact you and set you up with cryptocurrency at their company as a form of payment. Instead of paying you, however, they intend to clear the accounts.
Research the companies that you are applying to so that you can avoid this issue.
Employment can also be a problem with crypto when hiring remote staff.
An example of fraudulent staff is IT freelancers based in North Korea. Freelancers present great resumes and try to discover confidential info by getting hired under a false pretense. It’s common for people to apply for crypto companies to gain details that can help them hack the system and steal money.
Many companies fall for this type of fraud and lose money through exchanges. When the companies go to exchange cryptocurrency, the staff hack into the system and gain access to their account info.
Frequent background checks are the best solution for companies to stop this type of fraud.
Pump & Dump Scheme
The pump and dump scheme is comparable to market manipulation.
Owners of a specific crypto company raise stock and drive up the price as high as they can. Once they think that the stock prices are about to peak, they sell their stocks and earn a profit.
The pump and dump scheme is challenging for beginners to identify cause the losses don’t get discovered until the money is already gone. The best way to protect yourself is by researching the crypto companies that you are investing in and how long they’ve been established.
Start-up cryptocurrency companies are notorious for running this scheme. The owners use aggressive marketing to lure people in and invest in the stock. They do this within a short time so that they can quickly escape.
Conducting research online can expose you to the intentions of the owners. This can save you a lot of money and will spoil a scammer’s plan.
Don’t Let These Crypto Scams Fool You
Learning about the types of crypto scams occurring can help you protect your investments and family.
Instead of getting lured in by celebrity endorsements and special promotions, you will have your guard up. Although some of the promotional materials for crypto companies may be misleading, some of them are legitimate. By researching the companies you exchange with, you can ensure that your money doesn’t go missing.
The internet provides a mask for scammers, and some of them can access your info from behind the scenes. Be smart when using technology, and avoid clicking on links and insecure links. As a beginner, you don’t want to fall for misleading marketing attempts.
Don’t be afraid to talk to a financial advisor if you are looking for guidance. Always check their legitimacy though, so that you don’t fall for a management scheme.
Be sure to read our blog for more information about cryptocurrency and the best ways to invest your money!
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