Public interest in cryptocurrencies like Bitcoin, Dogecoin and Ethereum has increased over the last year to the point that many consumers either want to learn more about them or use and invest in them. This form of peer-to-peer money exchange rather than bank-and-business money exchange offers investors a lot of benefits. They can utilize crypto for purchases without dealing with traditional financial institutions or associated transaction fees. They can handle transactions more privately as well.
Yet, the use of cryptocurrencies also poses a lot of risks. Their value currently changes much more frequently, rapidly and drastically than any other financial exchange system outside of the stock market. Regulations to protect crypto owners are nearly non-existent since governments and financial institutions have no involvement. Many people also lose their digital crypto wallet security details or important associated hardware and then substantial amounts of money.
Of course, crypto owners often deal with thieves. This guide outlines the top scams investigated by security experts over the last year and the steps that you can take today to avoid these traps:
Current Crypto Scams to Be Aware Of
Good Samaritan Scam
A person posts on a social media account that they’re feeling generous and offer crypto, instead of other forms of more stable and protected forms of currency, as a contest prize or gift to the first so many people who message them. They might also state that if a person sends them one unit of a popular cryptocurrency, they promise to send that person two of the same back in a specific amount of time.
In the summer of 2020, hackers used this same scheme. They found a way to temporarily take over Verified Twitter accounts held by popular, influential people and businesses and tweet requests for charitable Bitcoin donations. Knowing that they could use an accountholder’s name, celebrity status and reputation as proof of trustworthiness, they promised to match and double the amount of any donation as long as donors transferred their Bitcoin donations to a specific address that they used to commit the theft.
Another version of this scam involves a thief claiming that they had a great week or month with their cryptocurrency investments and want to pay it forward with an act of kindness to the first person or people who tells them why they legitimately need or want the crypto. With this scheme, they convince people to give them wallet access and then steal the coins from it.
Helpful Support Scam
After joining a crypto forum or other social group online and asking a question or admitting to lacking knowledge about crypto, a new or inexperienced crypto user receives a reply or, more commonly, a direct message from someone claiming to represent the official customer or technical support for a coin exchange. They might offer to “help” a new user find deals or special crypto prizes and then give them a link to a fake website that looks like it’s a place to buy and sell crypto. They falsify data to make themselves look official so that someone trusts them enough to use traditional money or crypto and wallet security details via their platform. They might even create a URL that looks almost exactly like the official one. It might only be off by a letter or lack “https” or a “secure connection” padlock icon.
They might also offer technical support if the victim agrees to share their screen remotely, which gives the thief access to the victim’s computer to download data-mining software. In some cases, the thief performs an email or text phishing scam. They send a message that displays a forged address and written and other forms of content from what appears to be a known, safe source. They might link to their fake platform, offer an app loaded with malware or use an embedded link to auto-download hidden data-mining software onto their victim’s computer or phone.
Social Promotion Scam
A person on a social media account announces, possibly with press materials or even a link to a professional-looking website, that they developed or they’re helping to promote a new cryptocurrency. They might even imply that this digital token is somehow related to an existing form of cryptocurrency. Well-known social influencers can also get roped into these scams after they’re approached by someone claiming to have developed a new coin and offering them the ability to invest at a rock-bottom price. When influencers promote these new coin offerings, they can make it harder for crypto owners to recognize a scam.
What’s wrong with promoting a new coin? If the coin requires this type of promotion early on, then it’s likely an unsafe, unstable investment. Targeted marketing on social media can manipulate people and influence them enough that they buy new coins that turn out to be worth less than other more well-known ones. In some cases, the coins don’t even exist and the investment is an elaborate scheme to steal crypto and other forms of currency.
Get Rich Quick Scam
Get rich quick schemes have been around a long time. Essentially, the thief promises to help the crypto owner or offers tips, tricks and other strategies to make a lot of money from crypto in a short period of time. They often promote this scam in social networking groups specifically designed for crypto users to help existing and new users make the most of this type of investment.
These self-proclaimed crypto gurus promise that if someone pays them using traditional currency, such as a debit or credit card, the person receives one-on-one consultations or access to one or more expert, time-saving cryptocurrency educational courses. When someone hands over their debit or credit card information, the thief steals it. They might also offer with this scam an opportunity for their “students” to buy a specific digital coin at a reduced price from them using traditional currency, which then leads to the same result.
Stealing From Thieves Scam
Some humans really can’t help themselves, which crypto criminals know very well. They set this trap by allowing the recovery or “seed” security phrase to a wallet that contains actual crypto to leak online. They then steal from people trying to steal from their wallet. The scam works because people who try to steal from the wallet test it and then see that they can’t remove the crypto from it without paying fees. Some of them decide to use coin from their wallet to transfer the crypto from the scam one. What happens instead? The wallet-holder thieves use a bot to pull money from their wallet almost as soon as it appears so that the wallet never contains enough coin to make any transfers possible.
Threatening Contact Scam
Thieves know that anxiety and fear can make people act on impulse in reckless ways. They might send a private social media or email message to a victim that states they plan to publish embarrassing details or photos about the person unless the crypto owner agrees to pay them off with crypto or other money. They might also download software to a victim’s computer that maliciously shuts it down until the person pays them a ransom of a certain amount of money. These threats are considered blackmail and extortion in the legal sense. They’re handled by local police and the Federal Bureau of Investigation.
Employment and Work Scam
A lot of people are currently on the hunt for traditional employment, at-home and gig work opportunities. Thieves know that they can appeal to the financial desperation that some job seekers experience because of work loss during hard times. One of these scams offers crypto owners or people with no cryptocurrency experience whatsoever the opportunity to work and learn from someone who they claim has extensive crypto experience. The victim is told that they must pay for the opportunity or any tools or study materials with crypto or another form of money. A crypto criminal might also claim to be a recruiter or represent a hiring agency and demand crypto as payment for their services or application fees.
Another common scam features a thief acting as an employer who claims that they can only pay the worker with crypto. They might ask for the worker’s wallet details with the excuse that they need that information to provide payment. They might also offer to pay the worker by check or deposit, provide too much money, ask the worker if they can send some back to them as crypto and then cancel the check or demand a refund. Lastly, they might ask the worker to set up a domestic bank account for their international business and then have the worker send money processed through it back to them as crypto, which is a form of money-laundering.
As you can see, the best way to avoid crypto scams is by researching regularly the type of tricks criminals use to manipulate their victims. It’s also important to keep a few simple rules in mind:
Never take what anyone tells you at face value and keep your private security codes to yourself. If someone offers you a deal that looks too good to really be true, then it’s probably a scam. Following a link from a stranger to any website or agreeing to a financial transaction with them outside of known safe platforms is likely going to end in financial losses.
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