Cryptocurrency scams are fraudulent schemes that aim to steal money from people by promising high returns on investments. Scammers may use fake websites, social media, email or phone calls to lure victims into sending them money or revealing their private keys. Cryptocurrency scams are rampant and can cost you a lot of money and stress. In this article, we’ll discuss how to recognize cryptocurrency scams.
- Rug Pull Scams
In rug pull scammers put marketing behind fake coins to draw in early investors, then sell all their tokens and disappear with the money. Rug pull begins with the creation of a new cryptocurrency token that gets listed on a decentralized exchange and paired with a coin from a leading platform. Scammers then utilize the marketing powers of social media, launching a buzz-worthy, hype-filled promotional campaign across the channels to draw the attention of investors.
- Pump and dump
In Pump and dump a group of scammers get together and convince people to buy a specific coin at a specific time to push the price up, so that they can sell at a huge profit. Pump-and-dump scams involve artificially inflating the price of an asset through false and misleading positive information. Once the price is fully pumped the originator of the scam sells their stake, leaving the price crashing.
- Phishing Scam
Phishing scams are the most common among scammers. Scammers are aiming to access your account details, including your crypto keys. They lure you into clicking on a link to a fake website, where they can get your account details.
- Fake support team
Fake support team is a type of phishing campaign where the scammers pretend to be the support team of a company to access your crypto wallet passwords and private keys.
- Giveaway Scams
Giveaway scams are one of the most common types of crypto scams mainly because crypto transactions are irreversible. Usually, the scammer will compromise or impersonate a well-known public figure or company to gain your trust and then rush you into sending the funds by making you think that you’re about to miss out on a great opportunity.
- Cloud Mining Scams
Cloud mining refers to companies that allow you to rent mining hardware they operate in exchange for a fixed fee and share of revenue you will make. This allows people to mine remotely without buying expensive mining hardware. However many cloud mining companies are scams in that you end up losing money.
- Fake Websites
Scammers sometimes create fake cryptocurrency trading platforms or websites. These fake websites usually have similar but slightly different domain names from the sites they attempt to mimic. They look very similar to legitimate sites, making it difficult to tell the difference. When all the details you enter your wallet password and recovery phrase, end up in the scammer’s hands. Sometimes the site may allow you to withdraw a small amount of money. As your investments seem to perform well, you might invest more money in the site. However, when you want to withdraw your money, the site either shuts down or declines the request.
- Fake Wallets
A fake wallet scam tricks users into believing they are using a legitimate digital wallet to store their assets. The fake wallet asks users to enter their private keys and then scammers use those private keys to steal users’ crypto holdings. Fake wallet apps may live in app stores or be promoted through phishing emails.
- Ponzi Schemes
A Ponzi scheme offers high returns by using capital infusions from new investors to pay the promised gains.Ponzi schemes deceive investors into believing that legitimate activities are fueling investment returns.
10. Exit Scams
Where the company takes money without delivering the product. In terms of cryptocurrency scams, this often takes the shape of a company raising money through an initial coin offering (ICO) and shutting down either during the ICO or shortly after it ends.
How to Avoid Cryptocurrency Scams?
- Don’t click unusual links
- Protect private keys from everyone
- Research before investment
- Choose reliable platform
- Don’t share sensitive information or passwords.
You may feel like a lot to do to keep your cryptocurrency secure, but it is worth protecting your investment from scammers. The easier it is for you to log in and access your crypto wallet, the easier it is for scammers as well. You can reduce your risk by staying informed about the common cryptocurrency scams and following the best practices to avoid them.
Related: 10 Essential Tips for Securely Storing Your Cryptocurrencies
Frequently Asked Questions (FAQs)
What are the biggest cryptocurrency scams in history?
Some of the biggest cryptocurrency scams in history include the OneCoin scam, the BitConnect scam and the Bitclub Network scam.
Which country has the most cryptocurrency scams?
North Korea, the United States, Russia, China and the United Kingdom are the top five countries that have the most cryptocurrency scams.
How to store crypto securely?
You can store your crypto in a cold wallet. Cold wallets are also called offline wallets that are installed on an offline air-gaped device to avoid any online hack and virus.