Many different types of cryptocurrency fraud exist.
Scammers want your cryptocurrency and will do anything to obtain it, just like they would with the money in your bank account.
Knowing when and how to be targeted, as well as what to do if you think a cryptocurrency and communications associated to it are fraudulent, can help you secure your bitcoin investments.
Cryptocurrency scams are very difficult to identify. Most of the time, they use the hype surrounding Bitcoin and other cryptocurrencies to take advantage of the lower volatility and less regulated environment. Cryptocurrency investment scammers often advertise on social media platforms claiming to offer great returns from cryptocurrency. These scammers usually use Discord and Telegram to contact their victims. They will ask for money to send to a company for them to act on their behalf or claim to be a skilled investor. The data will be fake and will show you how to make money or lose money. It will also prevent you from withdrawing any money. The scammers will tell you that your withdrawal has been delayed, or that the platform is closed.
Types of Cryptocurrency Scams
Generally speaking, cryptocurrency scams fall into two different categories:
1. Initiatives seeking to gain access to a target’s digital wallet or authentication credentials. This means that con artists strive to obtain data that would grant them access to a digital wallet or other kinds of confidential information, including security codes. Access to actual hardware may be part of this in some circumstances.
2. Transferring cryptocurrency directly to a scammer due to impersonation, fraudulent investment or business opportunities, or other malicious means.
Social Engineering Scams
Scammers manage crucial data pertaining to user accounts through psychological manipulation and deceit in social engineering scams. These frauds lead victims to believe they are interacting with a reputable organization, such as a reputable company, tech support, a member of the community, a coworker, or a friend. In order to acquire the trust of a potential victim and get them to give their keys or send money to the scammer’s digital wallet, scammers frequently use any strategy or take as much time as necessary. Any time one of these “reliable” organisations requests cryptocurrency, it is a scam.
Scammers frequently use dating services to lead gullible victims to believe they are partners in a committed relationship.
Once trust has been established, the topic of rich cryptocurrency prospects and the eventual transfer of either money or account identification credentials frequently comes up in conversation. According to the Federal Trade Commission (FTC), almost 20% of the reported losses from romance scams were made in bitcoin.
Imposter and Giveaway Scams
Scammers also attempt to assume the personas of famous persons, corporate leaders, or bitcoin influencers as they move down the sphere of influence. In what is known as a giveaway scam, many con artists claim to match or multiply the cryptocurrency provided to them in order to attract the attention of potential targets.
Well-crafted messaging from what frequently appears to be an existing social media account may frequently engender a sense of legitimacy and urgency.
People may transfer money rapidly in the expectation of receiving an immediate return because of this fictitious “once-in-a-lifetime” chance.
Impersonators posing as representatives of bitcoin exchange assistance and security have contacted many crypto owners.
Phishing scams target data related to online wallets in the context of the bitcoin sector. Private keys for crypto wallets, which are needed to access bitcoin, are of particular interest to scammers. Their approach is typical of many common scams; they send an email with links that take recipients to a specially made website where they are prompted to enter secret keys.
With this knowledge, the hackers can take the cryptocurrency.
Blackmail and Extortion Scams
Email blackmail is another common social engineering technique scammers employ.
Scammers threaten to expose adult websites or other illegal websites visited by the user in such emails unless the recipient shares their private keys or sends money to the scammer. These incidents reflect a criminal effort at extortion and ought to be reported to a law enforcement organization like the FBI.
Investment or Business Opportunity Scams
The old saying, “If it seems too good to be true, it generally is,” still holds true today. Anyone embarking into investing should keep this in mind.
It holds true for cryptocurrencies in particular. Numerous profit-seeking speculators visit deceptive websites that provide supposedly guaranteed returns or other schemes that require investors to put up big sums of money in exchange for even larger assured returns.
Unfortunately, when people attempt to withdraw their money and are unsuccessful, these false pledges frequently result in financial ruin.
New Crypto-Based Opportunities: ICOs and NFTs
Initial coin offers (ICOs) and non-fungible tokens (NFTs), which are cryptocurrency-based investments, have expanded the number of ways scammers might get access to your money. It’s crucial to understand that although investments or business prospects based on cryptocurrencies may seem attractive, they don’t necessarily correspond to reality.
For instance, some con artists make bogus ICO websites and direct people to add cryptocurrency to a compromised wallet.
In other cases, it’s possible that the ICO is at fault. Founders might disseminate unrestricted tokens or deceive investors with deceptive advertising about their goods.
A rug pull happens when project participants raise money or cryptocurrency to finance a project, then abruptly remove all of the liquidity and vanish. Investors forfeit all of their contributions when the project is abandoned.
Cloud Mining Scams
Platforms will advertise to retail customers and investors to persuade them to deposit money up front in order to guarantee a steady supply of mining power and rewards.
After receiving your down payment, these sites will not fulfil the benefits since they do not genuinely possess the hash rate they claim to. Although cloud mining is not always a scam, careful research on the site is required before investing.