Recently, there was a massive scam in which the Twitter accounts of prominent figures like President Barack Obama, Joe Biden, Elon Musk, Bill Gates, Kanye West, and Michael Bloomberg were hacked. It was actually a type of cryptocurrency scams where fake tweets were placed on their verified accounts to reach a wider audience.
In the fake tweet, subscribers were asked to send money to a particular address using Bitcoin and in return they would receive double the amount. This type of cryptocurrency scam is quite common and you should be aware of all the scam methods that scammers use to deceive unsuspecting people. That's why I've compiled different ways to avoid cryptocurrency scams:
- Fake Crypto Investment Platforms
- Gift scams via tweets and other social media updates
- Fraudulent emails, phishing, tech support, identity theft scams
- Investment scams
- Loading or loading scams
- Initial Coin Offerings (ICO)
- Unregulated brokers and exchanges
- Bitcoin trading systems
- Mining scams
- Pumping and emptying schemes
Let's discuss it in detail:
How to avoid cryptocurrency scams?
1. Fake Crypto Investment Platforms
There are a large number of bogus websites or mobile apps that have been created to look like genuine crypto investment companies. But there are several ways to identify a fake website. For example, you should always look for the small padlock icon indicating security near the URL bar and avoid sites that do not have "https" in the site address. Sometimes attackers create a fake URL by replacing a letter of the address. For example, they may substitute a zero for the letter "o" in it, which can lead to a bogus site.
Another common method used by hackers is to create fake mobile apps that have names and user interface similar to the genuine ones. Before entering your login information on a platform, you should check if the app or website is safe and secure.
2. Giveaway scams via tweets and other social media updates
Much like the recent fake cryptocurrency scam that took place on Twitter, one can fall prey to dubious schemes via deceptive tweets or Facebook or any other social media update. If you see a social media post offering a cryptocurrency deal that is too good to be true, chances are it is fake.
3. Fraudulent emails, phishing, tech support, identity theft scams
Now this one is a current method that each of us must have met. You probably receive a lot of spam emails or calls impersonating your bank and trying to retrieve your login credentials or other sensitive information. Likewise, attackers can show up as your legitimate cryptocurrency company in your inbox with identical logos and branding.
They are often accompanied by malicious links or files, so you should never click on a link in these emails or messages. Scammers go so far as to advertise fake ICOs, or initial coin offerings, to steal funds. Don't fall for these fake emails and website offers. Take your time to review all the details. Also keep these points in mind:
- Never give remote access to your machine to support staff or anyone else
- Do not share your security codes or 2FA passwords (2-factor authentication)
- Never accept outgoing calls asking for your confidential personal information
- Scammers can also spoof legitimate phone numbers
4. Investment scams
Scammers often set up seemingly legitimate platforms that claim to offer high returns and often unrealistic if you send cryptocurrency. In such cases, it is advisable to take certain precautions:
- It's okay to be skeptical of websites or services promising high returns
- Send cryptocurrency to known and trusted third parties only
- In case of new contact, do extensive research on the organization to verify its authenticity
5. Loading or loading scams
Cryptocurrency scammers typically offer "load" services on a variety of platforms. They claim to need Coinbase accounts with high limits and in return promise to offer the victim some of the proceeds. In such cases, they use stolen credit cards from compromised accounts to support payment fraud.
Ultimately, the victim is left with defaults after the cardholder finds out about the fraud. Until then, the scammer steals all available cryptocurrencies and levies unauthorized charges on verified payment methods.
6. Initial Coin Offerings (ICO)
Initial coin offerings are basically fundraising mechanisms for newly launched cryptocurrencies. Investors in ICOs are given tokens in the new business. Investors pour billions of dollars into ICOs every year. There are several ICOs that are legitimate, there are several that do not have a real business plan or technology behind them.
In fact, many are started with nothing more than a white paper by people with no technology or industry background. So you need to be very careful before investing in ICOs, regardless of the promises.
7. Unregulated brokers and exchanges
There are dozens, if not hundreds, of online exchanges and unregulated brokerage firms that offer cryptocurrency and cryptocurrency trading products. Again, you should be wary of too good to be true promotions and promises of quick wealth, as this could just be another cryptocurrency scam.
Once you invest the money, this type of business will charge you outrageous commissions or make it very difficult to withdraw funds. In the worst case, they can just steal your money.
8. Mining scams
Any regular investor can mine cryptocurrency through cloud mining which works without expensive hardware. There are several cloud mining services that allow users to rent server space at a fixed rate to mine altcoins.
Now, this looks like a lucrative option to mine altcoins like Bitcoin sitting at home without investing in hardware. But as a newbie investor, how do you know if the services are genuine, or are they just running cryptocurrency scams to steal your hard earned money?
Well, one method to identify the fakes is to analyze their noble promises. They tend to promise high returns on your investment and never mention any hidden fees applicable to returns. They smartly design their systems to continue sucking money from unsuspecting investors.
In reality, no genuine business can guarantee such huge profits. So always be careful before signing up for cloud mining servers. Also make sure that your data is not compromised when you are on a shared server.
9. Pumping and emptying diagrams
To avoid suspicion and make the opportunity lucrative, cryptocurrency fraudsters are largely buying new altcoin. This raises the market price of the cryptocurrency for a while and triggers a false sense of good returns among other investors.
As soon as unsuspecting investors start investing in the new coin and the prices skyrocket, scammers sell their share of coins at a higher price. So, not only do they get back the money they initially invested, but also end up collecting more than that.
If we are talking about the stock market, pumping and dumping is illegal. But when it comes to cryptocurrencies, it falls in the gray area. To avoid being fooled by the pump and dump schemes, you should try to choose a more popular and stable coin to avoid falling for cryptocurrency scams.
