Safeguarding Against Crypto Scams - America's Bitcoin ATM
March 15, 2022 9:11 am in

Safeguarding Against Crypto Scams

The introduction and rapid adoption of cryptocurrency has disrupted the entire financial market. Not only has the emergence of digital currency or digital assets boosted access to finance worldwide but also lowered transaction fees. With digital currency, making a transaction is also faster and more secure.

Being a relatively new technology, cryptocurrency has become a soft target for scammers and fraudsters. Most of the mechanisms used to propagate conventional financial crime and fraud have forcibly found their way into the crypto landscape.

As this happens, new crypto users can end up losing their money to cybercriminals. Additionally, crypto transactions cannot be reversed thanks to the staple volatility of the crypto market. The provision, however, effectively reduces your chances of ever recovering the losses incurred to nil.

Before exchanging your fiat money into bitcoins, it is imperative that you know the risks involved and how you can avoid falling prey to crypto scams.

What to know before venturing into crypto

The crypto market is currently vulnerable due to its many loopholes, which scam artists leverage to exploit unsuspecting investors. All these loopholes sprout from the nature of the market itself or the digital asset traded.

Some of the characteristics of the crypto market that make it a soft target for cyberattacks include:

  • Digitized transactions. Crypto coins are purely digital, thus making the fraudsters’ work easier. All they need is an internet-enabled computer to hack their way through virtual wallets and crypto platforms by launching malware, phishing, or hacking attacks.
  • Volatile pricing. This may sound good when you are gaining, but when the reverse happens, it can be devastating. Because investors are drawn to the potential of volatility favoring them, they often make impulsive decisions and wind up in a fraud snare.
  • Irreversible transactions. Crypto transactions cannot be reversed. Reversing a fraudulent transaction is almost impossible.
  • Decentralized control. Cryptocurrencies are not controlled. This means that when fraud happens there is no legal recourse.

What are the red flags to look out for in crypto scams?

So, how do crypto scams occur?:

  • Email deception
  • Phone-based fraud
  • Online impersonation scams or imposter websites
  • Giveaway tricks
  • Ponzi schemes
  • Hacking theft

When buying crypto, a scam artist can use any of the above ways to trick you into losing your digital cash easily. For instance, by using a stolen credit card and fake identity information, the fraudster can pay for the cryptocurrencies (trading fiat currency for crypto) while bypassing the KYC checks.

That means crypto scammers are aware of the latest regulations in the crypto world and are constantly devising ways to penetrate the system. They disguise themselves as legitimate customers using stolen information to get past Anti-Money Laundering and Know Your Customer checks. Eventually, they successfully register into crypto platforms.

One of the commonest ways that cybercriminals obtain the user information is through impersonation. They simply pretend to be legitimate websites that entice unsuspecting persons with offers or ads that ultimately prompt them to surrender personal information unwittingly.

So, what are the key red flags that you should keep an eye out for when considering a crypto investment:

  • An overly aggressive or unrealistic marketing approach
  • Relentless efforts to contact you via multiple media, such as social media, email, phone, or specific ads
  • Rushed prompts to purchase crypto before a stated deadline backed by irresistible incentives
  • Promises of incentives to recruit other people into crypto buying
  • Ambiguous company details on the website (doubtful team information or missing registration/address information for verification)
  • Lack of transparency on who’s behind the technology or platform (absent LinkedIn profile)
  • Insufficient product or service details (withdrawing crypto assets, funds storage safety, value of the crypto to the holder)

All these red flags call for due diligence on the part of the investor. Always note that listing a crypto platform on an exchange, currently undergoing regulatory licensing, or possessing membership in a trade body is no guarantee of the authenticity of a crypto platform.

How can you avoid crypto scams?

Here are some concrete tips to help you out.

Robust due diligence

As new entrants in the vast world of finance, cryptocurrency and blockchain have found traction online and this includes “influencers” throwing hype on the latest crypto.

While it may be quite hard to just ignore their advice, avoid taking their hype at face value. After all, much of it could be sponsored content. Underneath all the publicity, do your own in-depth research because this is your money at risk, not theirs.

There are plenty of legitimate guides online that can reliably point you to the right insight on the purchase, sale, and management of cryptocurrency. Be especially wary of investments that sound too good to be true.

Don’t throw caution to the wind

Trust is an integral part of any investment decision and shouldn’t be served to anyone. Cryptocurrency is no exception when it comes to trust issues.

Watch out for direct contacts from anonymous people or sources asking for payments in cryptocurrency. When someone contacts you proposing an investment opportunity, treat it with extreme caution.

All requests to pay via crypto, bills, utilities should be ignored.

Keep your crypto wallet safe

If you lose control of the virtual wallet tied to your crypto account, you lose some or all of your crypto. Keep your crypto wallet safe at all times.

That principally entails keeping your seed phrase or private key private! To avoid the risk of sharing that information unconsciously or unknowingly, always store it in some space offline.

Never rule out two-factor authentication

As crypto scammers grow more sophisticated in their attacks, so should you. Enable multi-factor authentication.

This provides an extra layer of protection to your digital wallet by requiring additional identity information when accessing your crypto account.

Double-check crypto URLs

While legitimate websites exist, phishing fraudsters have perfected the art of subtly modifying known websites so that you can’t tell the difference.

It may be something as insignificant as swapping out a single URL number or letter. Make sure the site is secure and use antivirus software to detect and block all phishing and malicious attempts.

Be wary of crypto offers that are “too sweet”

Most larger-than-life crypto investment opportunities are outright scams.

Find out how the platform enacts investor protection in addition to inspecting their privacy policy.

Final thoughts

The nature of cryptocurrencies and blockchain makes it a conducive environment for get-rich-quick scams. Scam artists leverage all loopholes to manufacture endless investor-oriented tricks, such as counterfeit trading platforms, fake coins, and Ponzi schemes.

Financial fraud is preventable if you do your due diligence, no offer or incentive is worth throwing caution to the wind.


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