With parabolic price hikes, overnight fortunes, and growing support from celebrities and high-profile entrepreneurs, new users are rushing into the crypto space. Unfortunately, most are unprepared for the risks of scams, so we’ve put together a list of the most common crypto scams and how to avoid them.
We’ve broken down all the top crypto scam tactics, looking at how they work, recent examples, and how best to avoid falling victim.
In general, the best way to avoid scams is to simply learn about cryptocurrencies before investing. We are the first generation to have access to financial autonomy. This is a huge privilege, but it comes with a big responsibility, so make sure you do the necessary research. The success of scams is based on ignorance and inexperience.
A good place to start is to learn about cryptocurrency security and the basics of secure storage. Krypto offers a secure way to store your assets, but there’s no customer support. The best line of defense against crypto scams is awareness and education.
Don’t be afraid to ask questions on Reddit, Twitter or Discord. In general, you will find people to be helpful and supportive.
Fake crypto tokens
This is what fake cryptocurrency gifts usually contain:
- Scammers hack or impersonate major Twitter accounts and use networks of accounts to amplify posts or add credibility
- They advertise gifts that invite the most ordinary people to send cryptocurrencies and get back twice as much
- They link to professional looking websites which are often fake versions of very popular services
- Those who are tempted to send payments in cryptocurrencies get nothing and never hear back
How do fake cryptocurrency gifts work?
Fake crypto giveaways usually involve scammers logging into verified social media accounts; create fake versions of verified social media; create fake versions of real websites to promote the scam.
Counterfeit cryptocurrency gifts have been very common since the ICO boom of 2017. Usually, scammers found on social media try to get people to send cryptocurrency to an address by promising to get a larger amount of currency in return.
Scammers often use social media accounts posing as big celebrities like Elon Musk to trick people into believing the offer is real. Due to the nature of crypto wallets, it is very difficult, if not impossible, to get your money back once the money has been sent.
Recent examples of cryptocurrency donation scams
The biggest example of such a crypto scam occurred in July 2020 when the Twitter accounts of prominent celebrities and politicians like Elon Musk and Joe Biden were hijacked and used for promotion.
How to spot fake crypto gifts
There is no reason for anyone to offer to double your money like this. What would their motive be? Be suspicious, ask a stranger’s opinion, try not to be tempted by money, this is how this scam attracts people.
As a general rule, nobody will give you free cryptocurrency.
They usually pose as celebrities or famous businessmen, but fake accounts can be recognized by the absence of a blue check mark. Sometimes a fake blue check is used or a real account has been hacked, so check the username and look for other accounts under the celebrity name that look legitimate.
Check the comments and replies as often the smartest users see the scam and try to warn people about it. Scammers use other fake accounts to build legitimacy, but when in doubt, assume it’s too good to be true.
If you’re tempted to click on links, take a look at the URLs, which are often similar copies with minor differences and the absence of an SSL certificate, the padlock symbol that appears in the browser’s address bar just before you start. it should stand. from the url.
If none of this puts you off, listen to this hapless German who was scammed out of 20 Bitcoins, as reported by the BBC.
How do trading bot scams work?
Fraudulent trading bots have been in cryptocurrency for years. They usually promise investors a guarantee of very high returns when investing money in them, but in reality they have no trading function.
These use a pyramid scheme and attract deposits from new investors to pay off previous investors’ returns. This can work long enough to keep previous investors happy and allow scammers to raise enough money and plan their way out when the system inevitably collapses.
Examples of trading bot scams
One of the most famous examples of a trading bot scam is Bitconnect, which stole around $250 million from investors by promising a 40% monthly return.
It encouraged users to stake Bitcoin and receive rewards in Bitconnect tokens generated by a fake trading bot. At one point, it was a top 20 cryptocurrency, dropping from $0.17 to an all-time high of $463 in December 2017, but tumbling more than 90% in a month before crashing completely.
Despite the high-profile collapse of Bitconnect, there are other examples of projects successfully masquerading as actual cryptocurrency projects, such as OneCoin, which is estimated to have scammed investors out of several billion euros.
Trading bot scams are complicated by the fact that early adopters who get the promised returns want the system to continue and often defend it. They are often encouraged to attract new users with the so-called downline system and can be aggressive in attacking anyone who tries to expose the scam.