Crypto Scams – Types and Methods to Stay Safe From Them

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Crypto scams are like any other scams but in this money is not involved but digital currencies are. As the market and the trend of using cryptocurrencies occupy the market, so does the increase in crypto scams. There are many types of crypto scams, some common ones are discussed below in the article along with ways to stay safe from them.

Alert yourself with categories of crypto scams

Cryptocurrency scams include various categories, the most popular of which are romance scams, impostor and donation scams, blackmail and extortion scams, investment and business opportunity scams. These days, new crypto-based opportunities, rug draws, and crypto-mining scams are also on the rise.

In all of the above scams, the motive is to gain access to the target’s digital wallet or to fish for personal information by gaining trust. Later, the impostor uses this information for blackmail and other malicious acts.

Romance scams highlight the use of dating sites to unsuspectedly target character by creating an emotional connection. They cultivate trust between them. Going deeper, the lucrative talks turn to cryptocurrency opportunities and even the transfer of digital assets. According to reports from the Federal Trade Commission (FTC), about 20% of cryptocurrency scams are done through dating sites.

Imposter and giveaway scams involve someone imposing themselves as a celebrity or any influential person. Sometimes they act as if they come from a cryptocurrency exchange. And, they guarantee others to double their digital currency. Also, they send, give mails and messages. The posts are so well-crafted that it looks like they were pushed from existing, well-established social media accounts. This gives a sense of validity and thus increases reliability. They mostly cite it as a once-in-a-lifetime opportunity. This drives people to transfer money.

In a blackmail scam, the scammer sends blackmail messages and emails. The mail usually claims that they have records of adult websites or pages visited by the user. They threaten to expose by sharing the information. And with that, they further demand access to private cryptocurrency keys or cryptocurrency transfer.

Other means include investment or business opportunity scams where profit-seeking visitors turn to deceptive websites offering lucrative returns. This ultimately results in fraud.

New crypto-based opportunities like initial coin offerings (ICOs) and non-fungible tokens (NFTs) have increased the risk of scams. They mislead users about their products through false advertising and even distribute unregulated tokens.

Carpet pulls, on the other hand, encourage people to fund and raise capital for the project. They suddenly disappear, removing liquidity. Thus, investors lose money.

Similarly, cloud mining encourages investors to invest money to secure mining streams and collect rewards. Basically, they don’t own the hash rate, but say they do.

Where there is a scam, there is definitely a way to spot that scam. Everyone can get their digital currency safely. The very first way is to read the white paper carefully. It definitely understands the protocols, formulas and explains how the whole network will work. Fake cryptocurrencies usually do not publish them. Their white papers are poorly written.

Identify the team members behind the cryptocurrency. It is possible that the crypto project did not name any developers. Most of the coding, comments, and discussions can be viewed on GitHub or GitLab. Some projects also use Discord to chat.

Keep an eye out if there is a promise of free coins in your wallet. Pay attention to the marketing style. Generally valid crypto does not show up as the next best crypto on social media. They do not market the part. Instead, they describe the purpose.

Therefore, by staying vigilant, cryptocurrency scams can be avoided. Always ignore requests to share private keys, never pay attention to lucrative messages offering multiple returns. Ignore requests from celebrities because a celebrity will never request cryptocurrency or access to digital assets.

Remember to report fraudsters and fraud to the FTC, the FBI Internet Crime Complaint Center, and the United States Securities And Exchange Commission.

Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and away from traditional currency exchange systems. She is also intrigued by blockchain technology and how it works.

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