With the technological evolution in ways of communication, people with malicious intent found different ways to scam through lucrative offers to exploit any technical lapses. The cryptocurrency landscape is not void of scammers who are eyes on exploiting people in any possible way. Be it offering an astronomical growth of crypto portfolio or driving through mouthwatering advertisements to a scammy site and stealing confidential information, the scams are rampant and rising meteorically every day.
This article covers the top 5 common cryptocurrency scams that scammers usually resort to carrying out fraud.
1. Social Media Giveaway Scams
It’s incredible today that everyone is so generous on social media platforms like Twitter or Facebook. Look over the replies to tweets with high engagement, and you’ll be able to see the name of one of your most loved crypto influencers or companies with a contest. If you give them 1 bitcoin or Ethereum or any other cryptocurrency, you will get 10X of that amount! It’s almost too promising to be accurate. Stay cautious whenever any offer seems too good to be true. This is a reasonable rule to avert most of these ads through social media promotions.
Another most common fraud on social media is exploiting users by faking a big brand. The scammers create a social media page and a copy of the original brand and then attract users through lucrative offers. The rule of thumb is always to check if the social media page carries a blue tick. In other words, if they have verified their legitimacy. Moreover, any brand like FTX will not reach out directly to offer a winning prize or ask for your personal information.
2. Ponzi and Pyramid schemes
In less time, most people dreamt of a significant profit to fix their financial issues or gain financial freedom without being trapped in a 9 to 6 job. Ponzi or Pyramid schemes exploit this weak point of users.
Such schemes rely on a member who recruits new members for astronomical profits.
Ponzi schemes are not new, or the result of evolution in cryptocurrency; these scams have ripped off investors and everyday people for billions of dollars in the past 50 years. In Crypto, fraudster offers some scheme where you can deposit your coins for seemingly impossible returns. At the same time, there are many ways to get a return on your Crypto, such as staking, lending, automated trading, etc. These schemes use other unverifiable investments that yield enormous returns in no time. Stay alert if you come across any such offer, and do thorough research before giving away your Crypto in the hands of unknown fellas.
3. Fake Mobile Apps
It’s easy for people to ignore the warning signs of fake apps if you’re not cautious. Most of these scams encourage users to download malware apps – and some appear to be popular versions.
When a user installs malware-related apps, everything appears to work as planned. But, these applications are designed specifically to steal your cryptocurrency. In the cryptocurrency space, there have been instances when users downloaded malicious applications developed by people who claimed to be significant crypto firms. Recently, a iOS and Android apps that appeared just like Metamask or Coinbase crypto wallets carrying hidden malware and trojans used steal private keys of user’s blockchain wallets.
Always check that you are downloading any mobile apps from the verified portal, such as App Store or Google Play store. For android users, installing any .apk files outside of Google Play Store should be a big No.
Even those new to the crypto industry are likely to be familiar with the concept of Phishing. It usually involves scammers pretending to be a company or individual to collect personal information from victims. It could happen through several channels – telephone, emails, fake websites, and messaging software. Frauds in messaging apps are frequent in the cryptocurrency market.
To avoid falling prey to such scams, avoid clicking on any link whose authenticity is questionable. Moreover, never share personal information over email, SMS, or phone calls. Representatives of a company should never ask for such details. Also, never download any file you receive in an email you can not trust. These files could contain malicious programs that can infect your system and facilitate access to the scammer.
5. Vested Interests
When investing, do not trust someone’s word regarding the type of cryptocurrency or token to buy. It is impossible to know their actual motives. They could be compensated to promote a specific ICO or have money invested independently. This includes random people as well as famous, influential personalities and influencers. It is not guaranteed that any project will be successful. Most projects will be unsuccessful.
You could only avoid such scams by doing thorough research of the claims. An exhaustive check about the project can reveal the crucial information that s should know before investing.
The massive return yield by cryptocurrencies has brought a tremendous inflow of funds as everyone wants to make the most of the crypto boom. However, a third of these users know the right way to invest and make money through cryptocurrencies. Scammers usually exploit the greed and the knowledge gap to steal funds. The only way to steer clear of such instances is to stay vigilant and stay alert about any offer, scheme, sharing confidential information and never click on an untrustworthy link or install a file from a dubious source.
Always Do Your Own Research rather than believing in a third person for any information.
Gargi Sinha is working as Senior Journalist at Confea. She has completed her Masters in Journalism from Delhi University. She has interest in crypto and blockchain technology.