Cryptocurrency has become a major trump-card for fraudsters, given its decentralization, irreversible transactions, and almost anonymous characteristics.
As crypto users interact through wallet addresses and not their legal names, it's hard to identify and trace them when they're attempting to stay hidden. Therefore, It is vital for crypto enthusiasts to do their own research before investing in any crypto project.
Here are Ten of the most common crypto scams you should avoid in 2023:
1. The ICO Scam (Initial Coin Offering):
This happens when the creators of a new crypto project raise capital by selling their coins to investors and guarantee them enormous returns, however, the developers pocket the money by selling all the tokens or just abandon the project without fulfilling their promise, leaving the investors with nothing but worthless coins.
2. Crypto Ponzi Schemes.
These are crypto investment sites that guarantee high returns with little to no risk. They work by using the capital of new investors to pay those who invested in the earlier stages.
The platform continues to operate until the rate of new investors reduces and there isn't enough money to go around. This then leads to the platform collapsing and leaving new investors with little to no profit.
3. Phishing Scams.
Phishing is a prevalent fraud where scammers will send you a link via email or social media to a fake website that looks genuine or legitimate with the motive of getting your personal information, like the private key of your wallet or the login details of your crypto trading accounts. Once a phisher has access to any of this information, they can easily steal whatever funds are present in your crypto wallet or trading account.
4. Pump And Dump Scheme
Pump and dump schemes are a form of fraud where an individual or a group of people buy a cryptocurrency with low trading volume, usually when its value is low. Subsequently, they spread false information about it to gain public interest, leading to more people buying the coin, and thus, causing the price to rise (pump phase). After this, the scammers will sell all their coins and run away, resulting in the coin's value dropping drastically (dump phase).
5. Crypto Romance Scams.
Romance scams, otherwise known as "pig butchering," are among the most frequent deceptions. Scammers use fake accounts on social media and dating apps to reach out to people, pretending to be affluent investors or businessmen, and exaggerating how much wealth they possess and how luxurious their lives are.
To entice their targets, they bombard them with compliments and flirtatious words. Then, they fabricate evidence of their supposed riches and show it to their target. Subsequently, they try to make their victims feel like they can make a lot of money if they invest, which is their main objective. and when the victims make a deposit, the scammers may disappear or further scam them by asking for a payment before they can withdraw. This is when the victims will get to realize they have been conned.
6. Multi-Signature Wallet Scam.
Here’s An additional type of crypto fraud, to be aware of. Scammers will get in touch with individuals through social media or any other contact app posing as novices in cryptocurrency and then share a wallet private key, saying that there is USDT inside the wallet, but they can't withdraw it or have difficulty taking it out. When you access the wallet using the private key provided, you will find a large amount of USDT, typically trc20 or other tokens. For those who are easily tempted, your initial reaction may be to try and remove the USDT in the wallet. As USDT is a trc20 token, you will need to deposit some tron for the transaction fee as there will be no tron in the wallet or the tron in the wallet would not be sufficient to complete the transaction. After making a deposit and attempting to withdraw the USDT, you will receive an error message indicating you do not have permission to make the transaction. and it’s impossible to retrieve your tron or USDT since a Multi signature wallet needs more than one wallet key to sign off on transactions, and since you only have one key, there is no possible way to complete the withdrawal.
7. Crypto Giveaway Scams.
Cryptocurrency giveaway scams generally involve the perpetrator fabricating a popular crypto exchange or copying a famous person's identity with claims of a giveaway. The perpetrator will require that you pay a certain amount of cryptocurrency for a transaction fee before you can get the reward of the giveaway. After you pay the fee, you will not receive the promised reward and, due to the anonymous nature of cryptocurrency, you won't be able to recover your funds or find out the individual or group behind the scam.
8. Crypto Employment Scams
When it comes to these, scam artists mostly focus on people who are looking for jobs. They will pretend to be online employment recruiters and then offer a promising job, such as a chat assistant or a social media manager. They will then ask for an upfront training fee, often in the form of cryptocurrency but other payment modes are also accepted. Unfortunately, once the fee is paid using cryptocurrency, the money is gone, and the job seeker will not be getting anything in return.
9. Fraudulent Crypto Apps
Fraudulent applications are another regular cryptocurrency deception to be mindful of. In such cases, the developers will create an application and post it to app stores. It could be a cloud mining or trading app, and then they will get in touch with you via social media to encourage you to download the app. These apps have one thing in common: they always offer very enticing investment opportunities. If you invest in any of these applications, you will not be able to make a withdrawal.
10. Fake Investment Websites Bait
A scammer could contact you via SMS or Social Media, providing you with a link to a fake website that looks legitimate. They will tell you that there is a total of $9899 USD or more in the account, they’ll share their login details, requesting your help to manage the account. When you log in, you will observe a substantial amount of money in the balance, but you won't be able to make a withdrawal as it requires a trade key. It is plausible to transfer the funds to another account on the website without the need for authentication or trading keys, however, the account you transfer the money to must be a VIP account. Even if you create a new account on the website, you will still need to make a deposit to upgrade to a VIP account. Once you do, you will not be able to move the money from the VIP account to your personal account. In any event, you will not be able to access your earnings from the investment. Subsequently, your money will be lost.
How to Avoid Falling Victim to Crypto Scams
- Avoid investing in platforms that promise high yields and profits regardless of market conditions.
- Before you invest, make an effort to find out if a particular investment has been registered with the Security Exchange Commission (SEC).
- Protect your wallet's private key, keep it a secret, and avoid entering critical information into links that are randomly delivered to you by email or a contact app.
- Before joining any cryptocurrency project, always do your homework. You can utilize a variety of websites to check the legitimacy of a website or app by performing a Google search.
- When a stranger contacts you via email or a social networking app with an investment offer or a giveaway that seems too good to be true, dismiss them. You can report the email as spam or block the sender to prevent further contact from happening.
- Your trading accounts will be more safe and less vulnerable to phishing attacks if you use two-factor authentication and always use a complex password.
- Make informed decisions when trading cryptocurrencies by staying up to date on market movements and news.
- By investing in a variety of coins and tokens, you may diversify your portfolio such that even if one asset underperforms, you still have other assets that could produce profits.
- Always keep in mind that investing in cryptocurrencies carries a significant level of risk, so don't invest more than you can afford to lose.
- Pay close attention to website URLs, and confirm that the website is secure before inputting critical information.
How and where to report a scam.
- The online complaint portal for crimes
- The wallet or exchange you used to complete the transaction.
- F.T.C
- S.E.C
- C.F.T.C. .
