Crypto is a volatile market, and you need to be careful due to changing prices, coin-based scams, and misinformation spread by influencers.
According to Elliptic, a firm that tracks the movement of funds on digital ledgers supporting crypto assets, losses due to DeFi exploits so far in 2021 total $12 billion. $10.5 billion of that total was due to fraud and theft, a sevenfold increase over last year.
Many scams are pretty obvious, but others are harder to spot. Since fiat currencies like the US dollar do not have the protections in place for crypto, once the money is gone, it’s gone forever.
How to avoid getting scammed, and what to look out for.
Cryptocurrencies are constantly being created. When new coins appear on the blockchain, they’re referred to as initial coin offerings (ICOs). ICOs, however, also offer scam opportunities.
An individual or company may advertise a once-in-a-lifetime chance to get 1,000% returns on investment in new crypto. Then they might pressure you into adding lots of new coins to an already compromised digital wallet or force you to “pump and dump” by buying up the coin and then selling it when the price explodes.
There are some scam companies that launch new crypto assets, claiming that they will meet some critical unmet needs in the market. They will pitch their product and ask you to invest in their coin, claiming it will pay off a hundredfold later on then, they will disappear. A perfect example of this is the coin based on the Squid Game.
Check what the company does to protect its customers on its website before you invest. Watch out for errors in grammar and spelling, which can indicate a scam. Review public sources for verified reviews. Start by searching for “review” or “scam” in the company name.
Offers that are heavily marketed and promoted
Fraudsters also use heavy marketing to attract people to their business. The most effective methods to raise money fast include full-page ads in newspapers, large banner ads on websites, and a horde of paid bloggers.
As crypto coin offerings grow and develop naturally, they will not need to advertise or expand so rapidly.
Members of the team who are unidentified, vague, or even non-existent
A crypto-asset should be easy to find out who runs it, including every member of the team, just like any other business or investment.
By doing this, you can then look at their background, their social media profiles, how old the accounts are, who follows them, and so on.
It may seem like a lot of work, but if the team members cannot be identified or contacted, and you do not receive a response when you contact them, then you might be better off passing off.
A crypto phishing scam tries to steal your keys to your crypto wallet instead of your email or banking login credentials. In some cases, these scams are called “technical support scams” because the scammer often poses as a tech support agent.
Companies or people claiming to be from legitimate companies will contact you and ask for your login credentials in order to assist with the management of your crypto. In addition to remote access, they may also ask you to send crypto to a suspicious wallet address or request you to send them remote access to your computer or other devices.
No matter how convincing or urgent they may seem, you should never give out sensitive information to people who contact you without your permission. You should double-check their information if they claim to be with a legit company.
Scams involving giveaways
Scammers can make money off people by organizing fake giveaways using celebrities’ names and likenesses since many of them mention crypto on their social media accounts.
You might even see other fake accounts respond to the giveaway post in order to make it appear legitimate. Hackers used bogus crypto promotions to compromise the Twitter accounts of high-profile users. Beware of suspicious offers.
Often, scam posts include fake screenshots along with a link (or even a QR code) to a fake giveaway website. Your wallet address has to be “verified” once, thereby sending payment. It is never a good idea to pay to enter giveaways.
You should ignore any message asking for your cryptocurrency on social media or messaging apps like Telegram. You will never receive an unsolicited payment request or log-in details from legitimate companies.
The world of crypto is currently experiencing many new and evolving risks, even for the most advanced and enthusiastic experts.
Most financial experts recommend that passive investors don’t own more than 5% of crypto-related assets, and they shouldn’t invest in crypto-related assets at the expense of saving for emergencies or paying off high-interest debt.