Why There Are So Many Cryptocurrency Scams and How to Avoid Them

Terence Sathyanarayan

November 1, 2021

All, Cryptocurrency, Cybersecurity

Since Bitcoin has become mainstream, more and more people have come to realize that there is a lot of money to be made from cryptocurrencies, but one should be extremely careful about investing in a new cryptocurrency project. News reports covering Bitcoin trading activities shows that fraudsters are taking advantage of greedy people to quickly get rich by trading in cryptocurrencies.

There are high chances that you stumble across a project that was only there to rob unsuspecting investors of their money because it attracted too much media attention and has since disappeared; especially if it had a strong online presence at the beginning, such as Bitcoin, Ethereum, Litecoin or even Ethereum Classic.

black and yellow poison sign

It is so difficult for beginners to make money from cryptocurrencies because there is definitely such a big number of chances of becoming a victim to fraud, especially in the early stages of the cryptocurrency market. So what are some common cryptocurrency scams and how to avoid them? To help you avoid these crimes, here’s a look at the whys and the hows.
Beware! (and stay aware).

One of the reasons many new traders lose money to cryptocurrency scams is that they do not know much about how digital assets work.

Newcomers can easily be confused by the different types of cryptocurrencies, as some can be exchanged for US dollars while others have digital tokens to use. Since cryptocurrencies are not as prevalent as the established currencies, they are vulnerable to cybercrime tactics, both old and new.

Ciphertrace, a Silicon Valley-based cryptocurrency intelligence firm reported a theft of over $ 4 billion from cryptocurrency-related crimes. It’s latest Q2 2019 Cryptocurrency Anti-Laundering Money states that criminals and fraudsters stole approximately $4.26 billion for the first six months of the year 2019.

Impersonation

Fraudsters are putting fraudulent investments in unknown types of cryptocurrencies and tricking victims into sending them money. There are reports of victims being targeted via channels frequented by crypto-enthusiasts. It has also become a common practice for hackers to impersonate individuals or companies when they lure victims.

The jump into a new crypto-form can bring you a good part of the change with a little luck. But if the new crypto fraudsters come out and claim that they are fake, they will run out of money, and cryptocurrencies will rise and fall in popularity.

Research and Review

If you find a promising cryptocurrency tool or signalling provider, you should look at the ratings to fully commit to it. You may have read about a scam in which celebrities or companies like Twitter allegedly promised their followers to invest crypto in a particular wallet. It has even been reported that hackers may have captured bitcoin worth $120,000 or more in the scam.

False Promises

Finally, currency instability means that it is very easy to lose your original investment if you invest in the hope of making more money. If you ever meet someone who promises to double your investment in less than an hour, stay away.

As the price of cryptocurrencies has risen dramatically in recent years, fraudsters have targeted potential investors with these scams, particularly in recent years.

• They see investment opportunities in Bitcoin and other cryptocurrencies marketed on social media or by email, and they send you to fake exchanges that can often disappear overnight. There are fake Twitter accounts and impersonators, often personifying the likes of Elon Musk and Vitalik Buterin, who always seem to be giving gifts. These scammers even take the opportunity to show you a series of 0.1 BTC deposits on your wallet, as they do themselves, which lends you legitimacy and shows you what other people are actually doing. You send $0 and 1 BTC to the address you are contacting and you will get $1 BTC back.

• Other scammers create websites that look very similar to authentic websites, but the scam sites do not have a secure URL. It is quite clear that these scams are still working, otherwise, they would not be doing it any more. The imitations of these scammers are now quite easy to spot, and that is a good thing.

person in black hoodie wearing white mask

With this tactic, most fraudsters will ask you to deposit a certain amount of Bitcoin into a specific account. Remember, if an established cryptocurrency exchange like Binance, Kraken or Coinbase is running an action where you are rewarded for completing a certain number of tasks in crypto, they will also ask you to deposit money into certain accounts.

• First, there is definitely a wide range of scams for cryptocurrency investors, both good and bad. These cases raise questions about those who intend to invest in crypto-currencies or at least use them in their transactions.

• This is what tops our list of the most common cryptocurrency scams when fraudsters trick cryptocurrencies – getting investors to download fake mobile apps that are only available to download on their mobile phones or tablets.

They seem to work perfectly after downloading, but the specific intention is to steal your coins directly from your wallet by criminals. These are stolen cryptocurrencies such as Bitcoin, Ethereum, Litecoin, Dash and other popular cryptocurrencies.

These are the few ways of doing the worst scams in the cryptocurrency world and how to spot and avoid them. Armed with this knowledge, you can penetrate the crypto-world and earn millions by stopping the frauds from stealing right under your nose.

Did this article help you? Have you ever come across such fraudulent acts happening to you or your friends? Let us know in the comment section.