Fear, Fraud, and Fortune: Navigating the Crypto Scam Minefield

“Scams and fraud will only end when people decide it’s time to put a stop to them. Until then, education and raising awareness are our most powerful tools.”

Introduction

Americans lost $5.6 billion to cryptocurrency scammers last year, up 45% from 2022, according to the FBI’s Cryptocurrency Fraud Report 2023.

Even in cases where there hasn’t been any money loss, FBI Director Christopher Wray stated that reporting such crimes to the FBI’s Internet Crime Complaint Centre is the greatest method to prevent cryptocurrency scammers.

The study states that the centre received over 69,000 complaints about cryptocurrency-related financial fraud and cybercrime last year.

According to Wray, frauds aimed at cryptocurrency investors are “growing incredibly quickly in severity and complexity.”

According to the survey, frauds involving cryptocurrency investments are the most common, with $3.9 billion taken.

Scams involving identity theft came in second, with losses exceeding $490 million.

With over 16,000 reports totalling over $1.6 billion in losses, those over 60 reported the greatest number of crypto fraud incidents and suffered the greatest losses.

The survey states that although 55 to 64-year-olds are more vulnerable to internet investment scams, Generation Z loses the most money to these types of schemes.

Most victims of cryptocurrency scams involving kiosks or cryptocurrency ATMs were older than 60.

Individuals in that age range lost over $124 million to cryptocurrency ATM scams.

The second-largest loss was over $11 million, incurred by those in the 50–59 age range.

The FBI provides tips for avoiding crypto scams, including verifying that the call originates from the business’ phone number and monitoring for differences in the domain names of phony emails and websites.

Let me start by asking you a question: have you previously invested in cryptocurrency or are you considering doing so.

Have you ever been concerned about your cryptocurrency asset’s security?

Not only has the popularity of cryptocurrency increased, but frauds and negative news have also increased.

Even astute investors are finding it harder and harder to recognise scams in the cryptocurrency space due to their increasing sophistication.

So how do you go over those dark, unknown waters?

How do you spot a trap and a good opportunity?

Let’s discuss this subject in brief.

What exactly is a cryptocurrency scam?

This is a scam that aims to steal your personal data or digital assets.

These scams include fake investment opportunities, schemes that lure you into disclosing your private passkeys, and schemes that involve delivering cryptocurrency to a fraudster are just a few examples of these scams.

So, how can you tell the difference between a real offer and a scam?

Everything is covered in detail.

Reputable cryptocurrency initiatives typically provide comprehensive, transparent details about their technology, personnel, and objectives.

A track record of growth, community involvement, and adherence to legal requirements frequently support them.

Scams, on the other hand, can demand hasty decisions, provide guaranteed large profits, or provide scant information.

Being able to distinguish between cryptocurrency may be your first line of defence.

Always keep in mind that if something appears excessively favourable, it usually is not as it seems.

Cryptocurrency scam types

Although the cryptocurrency industry has a lot of promise, there are also many frauds.

Here’s a closer look at a few typical varieties:

Phishing schemes

In these types of frauds, con artists create phoney emails or websites that mimic trustworthy sources. They request the entry of sensitive data, including login passwords or wallet keys.

For instance, you may receive an email asking you to confirm your account details, which appears to be from a reliable exchange. The goal is to obtain your cryptocurrency holdings and pilfer your information.

Ponzi and pyramid schemes

Named after well-known con artists, Ponzi and pyramid schemes offer substantial returns on investment.

A Ponzi scheme uses capital from newer investors, not profits, to pay returns to earlier investors.

The primary way that participants make money from the program is by bringing in new members.

Both are unfeasible and frequently collapse, leaving investors with losses when they invest later.

COs

Initial Coin Offerings, or ICOs for short, are a way for new cryptocurrency companies to raise money.

However, scammers profit from investors’ interests in initial coin offerings by fabricating fake ones. If they lacked the necessary resources (team or technology), they could create complex webpages and white papers.

These fraudulent initial coin offerings frequently leave investors with useless tokens.

Pump and dump schemes

These involve inflating the price of a cryptocurrency artificially (“pump”) through false and deceptive positive remarks, followed by the sale of overvalued assets (“dump”).

Small investors are frequently drawn in by the increasing price without realising that it is artificially inflated, and when the organiser is sold, they are left with assets that have lost value.

Using names of celebrities

Scammers can mimic the names of celebrities or well-known figures in the cryptocurrency space or create phony referrals.

This is frequently done to increase the legitimacy and appeal of particular cryptocurrencies or ICOs to gullible investors.

Being aware of these scams is the first line of defence.

Do your research before making an investment and proceed cautiously when considering new investment options.

Identifying crypto scams

Being able to spot fraud is essential to safeguarding your finances.

These are the principal cautionary tales and red flags:

• Great returns with no risk.
• Be cautious when taking on any project that offers great returns with no risk at all.
• Such claims are implausible in the erratic crypto market.

Absence of clear information

Trustworthy initiatives typically offer comprehensive details. A warning sign is when a project is opaque about its technology, team, or objectives.

Pressure to move fast

Scams frequently instil a sense of urgency, compelling you to invest right away to prevent losing out. Genuine investments don’t call for this kind of urgency.

Manipulative marketing strategies

Overzealous commercials, the use of celebrity endorsements, or eye-catching images devoid of any substance can all be indicators of fraud.

Unsolicited offers

Be cautious when you receive unsolicited investment proposals, particularly through email or social media.

Keep in mind that in the world of cryptocurrency, education equates to protection.

Educated = Protected

Know what to do if you come across a crypto scam

What should you do if you suspect fraud?

• Stop all communication with the suspected scammer immediately. Avoid disclosing any additional personal information or cash.
• Protect your property: If you have provided sensitive data, secure it as quickly as feasible.
• This could entail transferring funds to a new, more secure wallet and or changing passwords and security settings.
• Document everything. Keep a record of all communications, transactions, and other pertinent information. This documentation will be crucial for reporting fraud.

Report instances of fraud and scam

• Inform all cryptocurrency exchanges or wallet providers about the scam.
• Report the incident on the platform if the fraud was carried out via a website or social media account, report the incident on the platform. As a result, you can suspend the fraudulent user’s account.
• To alert others, share your experience in cryptocurrency communities. To better protect the community, keep an eye out for similar frauds.

Remember that crypto criminals adapt quickly to new technologies.

They modify their strategies as awareness and security increase, resulting in new sorts of frauds.

Every development in the crypto market, such as a new digital asset or blockchain update, prompts fraudsters to devise new strategies.

Follow credible news sources, participate in crypto forums, and attend relevant webinars or seminars to keep your understanding about crypto fraud up to date.

This post was written by Mario Bekes