Cryptocurrencies are a valuable asset, and fraud is an integral part of the existing reality present in any industry, especially where there is a lot of income.
There will always be those who are ready to use others’ incompetence and their desire to get quick returns. There is always a risk of being duped by a fraudster. But you can avoid it, or at least reduce it, and we will help you with that.
The LATOKEN team has prepared a list of the most common and well-known fraudulent schemes popular in cryptocurrency. We hope this information helps you avoid any problems.
Fake exchanges, wallets, and projects
It is one of the most straightforward types of fraud. Scammers offer a product or service designed specifically to swindle money out of a person.
There have been quite a few scam exchanges, fake wallets, and coins that cost nothing literally in recent years. Sometimes they look like a well-known, recognizable company. Others are just trying to look professional to earn trust. In any case, once they receive your money, you will not hear anything more about them.
The best way to protect yourself from these scams is to take your time and check everything thoroughly. Follow only trusted links you know, track community comments, and listen to what other people say about these services.
Another popular form of scam is “giveaways” on Twitter and other social networks. Fraudsters often copy the account of a well-known person: a developer, the whole company, or even a celebrity — and promise to transfer money to those who register in the “program.”
You may most likely send a certain amount of coins to the specified address or provide personal information. In any case, it’s always a scam. Nobody ever gives out coins for free. Cryptocurrency scams have become popular due to the ability to remain anonymous. Whatever you are promised, you should never believe it.
In a significant show of force, scammers breached some of the most prominent Twitter accounts. It happened in July 2020.
Some of the USA’s biggest names, including Joseph R. Biden Jr., Barack Obama, Kanye West, Bill Gates, and Elon Musk, posted similar tweets: “Send Bitcoin, and we will send your money back doubled.”
Remember that if LATOKEN or any other entity decides to host a giveaway or organize a competition, the legitimate ones will never ask you to send money first.
A pyramid is a type of fraud that requires a constant influx of new “investors.” Typically they ask for an initial investment and promise great returns. But in fact, only the first investors get profit because they bring new participants to the scheme. But sooner or later, the pyramid will collapse.
As the money flows through the funnel, the creator of the pyramid receives the principal amount. Most people are left without any profit or money.
One of the most famous examples of this kind of scam is BitConnect. The project that turned out to be a financial pyramid collected billions of dollars from investors and left them with useless coins.
The referral program proposed by the BitСonnect providers no longer exists, but the cryptocurrency space is still full of such schemes. The best defense here is a careful study of the project. Take the time to learn all about where you are going to invest your money. Unrealistically high and fast profits should set off the alarm bells.
Modern scams are usually not much different from those that have been used to deceive investors for years. These can be phone calls, emails, or text messages promising rewards for participating in various competitions or worse, threatening with lawsuits, and even blackmailing. In any case, this is all a deception and an attempt to lure or intimidate unsuspecting people into making them pay.
Despite everything, scare tactics are sometimes even more effective. Fraudsters can text on behalf of the tax or other regulatory authority. They can threaten to publish private videos made by the victim’s webcam unless they pay the blackmailer some bitcoin.
There are a million scenarios, but they are all like one big lie. LATOKEN or other authorities will never contact you in this way, and it is much more challenging to obtain sensitive personal information than to lie about it.
The text or email variation of this scam is known as phishing. The message looks like something formal and important and encourages the victim to follow the link for more details. A simple click on a link is usually enough to start the installation of some malicious software.
Even if the email you received looks absolutely similar to the one you’ve already received from a legitimate cryptocurrency company, check everything a few times. Are the logo and brand image identical? Is the email address legitimate? Is it official?
We come to the next important category of scams — viruses.
Viruses are programs that are designed to steal money or data from your device. The function principle can be different. Some people install a utility that records everything you type and transfers this information to a scammer. It’s the way they find out your logins and passwords.
Some programs scan the clipboard. When a wallet’s address appears there, the virus automatically changes it to a fraudster’s address. If you copy and paste the address, check it two-three times before transferring money.
Another type of malware is ransomware. Such viruses encrypt all of the user’s devices and promise to unblock only after the victim sends them a little (or a lot) of crypto. This type of malware often attacks large companies and even public authorities that find it easier to pay than lose their entire computer network.
Do you want to defend yourself against this kind of attack? Then don’t click on anything that you are not 100% sure of.
«Pump and Dump»
Another common fraud comes from small, organized groups that create buzz around little-known coins. They first buy them themselves and then launch a social media campaign to cause a stir around the project and attract investors.
It leads to a dramatic rise in prices and FOMO (fear of missing out on a good opportunity) as more and more people want to take advantage of an investment opportunity.
As soon as the fever reaches its peak, the scheme’s organizers dump their coins, which provokes its collapse and a massive exodus of investors who begin to realize they are losing money. Only scammers win. The obvious way to avoid this is not going into mass hysteria and, again, study the market very carefully.
We’ve brought you the most common forms of cryptocurrency scams. However, keep in mind that criminals are smart these days and are always looking for new ways to defraud unsuspecting investors.
LATOKEN’s best advice in this situation is not to rush and never invest quickly and emotionally. By following our advice, you will avoid any risks and dangers.
How to Avoid Crypto Scams: Essential Tips from LATOKEN was originally published in LATOKEN on Medium, where people are continuing the conversation by highlighting and responding to this story.