Beware of scams, make sure you do your homework. These are some of the most common pieces of advice given to new crypto currency investors. But how do you identify a scam and be sure you don’t lose your hard-earned cash to a scammer. Here are some common crypto scams and how to avoid getting caught up in them.
Beware of scams, sure you’ve heard this before. Yes, scams and con artists have been around forever. However, because of crypto currency’s novelty, crypto scams offer a new chance for an old trick and sometimes even an opportunity for investors to fall for a new trick as well. There are different types of crypto currency scams on the Internet. Sources say that around 4.3 billion dollars was stolen in 2019 alone. So crypto scams are definitely profitable for these con artists from fake giveaway scams to fishing to impersonation to Ponzi schemes. There are a bunch of different scams out there. Here is a break down to show you how to avoid them. You should know how to avoid falling victim to these scammers.
A common scam known to many in the crypto world, especially this year, is the notorious giveaway scam. In this type of scam, a scammer tries to dupe innocent victims into sending crypto currency with a promise that they’ll send multiple times the amount of crypto currency back for merely participating in the giveaway. For example, the fraud will say something like this, any amount of BTC sent to this address will be sent back double. These types of scams are pretty effective. They’re some of the longest running scams in crypto currency. They have new forms popping up every few years. Twitter is a hotbed for these types of scams because of its massive reach. Not to mention the last few years Twitter has been known as the most widely used social media platform amongst world leaders. Scammers love this, they typically try to impersonate someone famous with deceptive techniques such as using a copy of a famous profile.
In 2018 scammers used this tactic to impersonate celebrities like Elon Musk, John McAfee and Vitalik Buterin. In response to this scam Vitalik changed his Twitter handle to read “Vitalik no I’m not giving away anything Buterin” and has only recently changed back. Occasionally the verified accounts will be hacked and used to perpetrate this scam.
Probably one of the most famous examples happened when some of the world’s top a-listers like Jeff Bezos, Bill Gates, Kim Kardashian, Elon Musk and Barack Obama had their personal Twitter accounts hacked. The hacked accounts put up a message asking people to send BTC to a specific address with the promise to double the amount of BTC to be sent back in return. The scam was shut down quickly but the scammers still received over a hundred and twenty thousand dollars from their victims. These scams have become less common on Twitter due to the fact that the social media platform has started to crack down on them. Unfortunately, that only means that the scammers will have to adapt and they are starting to make their way over to Youtube, using videos of a live stream or an interview with someone famous in the crypto world. While Youtube has taken notes out of Twitter’s playbook and started to crack down on these scams, it’s still critical that you know how to recognize these scams so you don’t end up losing your valuable crypto currency.
Phishing is an old scam on the internet world however, crypto currency is now a new breeding ground for this scam. Phishing is when a scammer tries to get personal information from you by disguising themselves as a legitimate third-party business. There can be multiple types of this one. Using phishing tactics for emails, text messages and even phishing websites are on the rise. Most of the time phishing websites are duplicates of real websites. You’ll log in as if it were the real website and then the phony site will steal your login credentials and or install ransomware on your computer. Phishing emails and text messages on the other hand are messages sent by what seems like a company you know and trust but the email or text actually is trying to get you to give up your personal information or reply or trying to send you to a phishing website. Always check the return address and the URL. Make sure it’s legit and not a phishing scam.
Another clever scam that you need to be on the lookout for is the bogus investment scam. These scams are very intricate because they employ a very personal technique to give the potential victims confidence in their investment. Sometimes they will take the form of the “long con”, interacting with their mark for days, weeks and sometimes months in order to gain their confidence. They get the victim to part with their money. They are constantly looking for different channels to use in order to lure their victims into their scam. A colleague of mine was nearly duped into this scam by a girl he matched with on Tinder. They matched on there, chatted for a bit and eventually they moved on to Whatsapp, always a scary app to be on. The long con took place over the course of a few weeks. She even had photoshop charts from trading, showing the crypto currency having huge gains in a very short period of time. He eventually contacted me when she started to put the pressure on him to invest in this one crypto currency. Seeking my advice about it when the only information he could find was on what he deemed to be fake news websites about the coin. She promised that his investment of one thousand dollars was guaranteed to become twelve thousand dollars immediately. She was trying to get him to sign up for a fake exchange to purchase the coin saying that there was a special deal that wouldn’t be available tomorrow. Luckily, he saw the red flags and had a knowledgeable crypto friend like me to inform him of the scam and keep him from falling victim to it. Not everyone is so lucky and that’s why we are here to try to help you know the signs of a scam, so you can spot these types of scams and protect yourself.
Here are some obvious red flags that you can look out for the person or company that contacts you out of the blue. This can be done with a message on social media, an email or even a text to your phone. With all the data breaches of major corporations you’d be surprised how easy it is to get your personal information on the dark web. Scammers may try to pressure you to make a “rushed decision”. This pressure is in the form of a special limited time offer or a deadline to sign up. Scammers will sometimes ask you to keep the investment a secret. They will tell you that the opportunity is only for you. The biggest red flag of all is that the investment seems too good to be true. The old saying is still around for a reason because it’s usually correct when something is too good to be true it usually is! This means that they make the investment seem to have an extremely low risk with an incredibly high return which is the gold standard for a scam. Perhaps one of the oldest types of crypto currency scams is the Ponzi scheme. This is actually one of the oldest scams in general with the earliest recorded Ponzi’s dating back to the late 1860’s in Germany and the U.S. However, one of the most famous examples was perpetrated by Italian swindler Charles Ponzi in the 1920’s. The way that these schemes operate is actually very simple. The scammer uses money from new investors to pay old investors. This helps to maintain the illusion of it being a legitimate investment and it can keep operating as long as there is a steady stream of new investors or that is until they get caught. Oftentimes these investments will advertise a type of bonus or incentive for bringing in new investors. The other common term for a Ponzi scheme is called a pyramid scheme.
Con artists have attempted thousands of notorious Ponzi schemes throughout the history of the world so there are numerous examples to choose from. Of course, crypto currency Ponzi schemes leave a big impression on everyone. One Coin was founded by the Bulgarian crypto queen Ruja Ignatova. One Coin is not only the biggest cryptos game in history, it’s one of the biggest scams in history. While it’s hard to get precise information about how much money Onecl Coin took from people, it is thought to be around 4.4 billion dollars with some estimates even going as high as 19.4 billion dollars. The scam has attracted so much attention internationally that it inspired a book, a BBC podcast and even an upcoming Hollywood movie about it.
How will cryptos games and scams evolve in the next few years? Will scammers become even more advanced? Will thieves start deep faking face imagery to hack digital bank accounts? The future is pretty wild and unpredictable in our digital world.
Just be safe before you invest. Take the time to do your research. Good luck, with the right platform, there is money to be made.
Thanks for your blog, nice to read. Do not stop.
Great article!