The crypto market has grown considerably in the past few years. Today, millions of people are investing in cryptocurrencies and blockchain technologies. However, not everyone is doing it with good intentions. Crypto scams are so common that the FBI has issued a warning about them. To put it in perspective, over 1 billion dollars have been stolen through scams since 2021.
Crypto scams are also likely to become even more prevalent as the market continues to grow and more people buy in. As such, you must know how to protect yourself from cryptocurrency scams and stay safe when choosing your next investment.
What Are Crypto Scams?
Cryptocurrency scams are a form of fraud that involves the use of digital currency to steal funds from investors. Crypto cons range from simple Ponzi schemes to sophisticated hacking attacks that can steal funds from your wallet and send them to a hacker’s account.
To avoid being scammed, you need to be aware of the signs that something is off and take action before it’s too late.
In the following section, we will take a look at the top cryptocurrency scams and how you can avoid them.
Let’s dive right in!
Phishing scams are one of the most common scams in the crypto industry. They are also quite easy to fall for because they usually look legitimate.
Phishing scams can take many different forms, but what they have in common is that they’re designed to trick you into giving up your private keys. These keys can be used to access the cryptocurrency in your wallet.
Here’s how to protect yourself from these scams:
- Always go directly to any crypto website and avoid clicking on links or attachments from unknown sources.
- Keep a close eye on your crypto wallet and make sure it’s always up-to-date and secure.
- Monitor transactions regularly and report anything suspicious immediately!
Rug Pull Scams
A rug pull scam is when someone launches a low-value coin and ‘pumps it up’, purporting that it’s worth more than it is. This is so they can trick you into buying it at an inflated price. After getting the money, the scammers “dump” the coins, leaving you with a worthless investment.
In most cases, the programming of these scams prevents people from selling once they get into that market. An example is the Squid Game Coin rug pull scam.
The first thing we recommend to protect yourself from a rug pull is that you stick with established coins. If a coin is new, chances are it’s not worth much, and it could turn out to be worthless. It’s better to stick with an established coin that has already proven itself as a viable currency. Secondly, ensure that you are using a reputable exchange to complete all your cryptocurrency transactions. Lastly, do your research (DYOR).
Giveaway scams take advantage of the fact that a lot of people are looking to make money on crypto. In most cases, a scammer will take over or impersonate a social media account of a celebrity and come up with a fake offer.
For example, scammers have lured unsuspecting victims by claiming that if they send a certain amount of crypto to a certain wallet, they will get back double. Don’t fall for this lie!
So what can you do? Here are some tips:
- Don’t trust random people on social media or email.
- Investigate and verify all information about giveaways by contacting the project directly.
It’s important to note, however, that there are also legimtate crypto giveaways. Especially on social media platforms like Twitter, crypto companies, such as bitcoin casinos, often give away crypto for engaging with a tweet, completing a task, or as a sign up bonus.
A Ponzi scheme is a fraud that operates on the premise of paying older investors with money from new investors. The main goal of these scams is to lure investors into believing that they will receive returns on their investments. But in exchange for their money and the promised profits, they have to recruit new investors to be added to the scheme. In the end, the fraudsters make away with all the money, leaving out everyone else.
One of the most elaborate crypto Ponzi schemes in history was the OneCoin Ponzi scheme.
To protect yourself from Ponzi Schemes, be sure to do your research on a project before investing in it. This involves:
- Reading their whitepaper to see if they are solving a real problem.
- Checking out their list of private investors.
- Scrutinizing their roadmap, team, etc.
Crypto is a new and exciting industry, but it also comes with serious risks. It’s easy to get excited about the potential profits that crypto offers, but it’s important to remember that if something sounds too good to be true—it probably is.
Thankfully, by being aware of the types of scams out there, you can see them coming before you become a victim.