In the world of online profits and earnings, cybercriminals are constantly finding ways to defraud unsuspecting users of their hard-earned money. Unfortunately, this also holds true for the crypto industry, where many individuals have gained immense wealth through buying and selling cryptocurrencies.
The prevalence of cyber attackers in the crypto industry is on the rise as they seek to scam unsuspecting users out of their money without leaving a trail. To achieve their nefarious goals, they have developed several techniques that facilitate their deceitful schemes. This article aims to educate you on the various crypto scams and provide effective measures to prevent financial loss.
7 Most Common Crypto Scams
1. Rug Pull Scam
The rug pull scam continues to be a recurring problem in the crypto industry, appearing on the list of top crypto scams every year. Typically, the scam begins with token developers creating an illusion of legitimacy to attract investors. Once they successfully gain the attention of investors and their money, the developers abruptly shut down the project and abscond with the funds.
One of the most popular rug pull scams was the crypto token named after the famous television series Squid Game. The token was launched during the peak of the television series, and it got the public's attention. Within 24 hours of launching the token, the cryptocurrency's price went from a few cents to $90. Investors thought they were in profit until they discovered the investment funds had been cleared and the developers were nowhere to be found.
We have shared a few helpful tips in this article on how you can tell if a crypto project is a scam before investing.
2. Phishing Scams
Phishing is a long-standing tactic used by cybercriminals to carry out financial and data-based scams. Despite its age, this method remains prevalent as it is highly effective in stealing cryptocurrencies. Typically, phishing attacks begin with an email sent to the victim containing malicious links. Upon clicking these links, the victim may be prompted to enter their wallet information through a deceitful offer..
Unlike passwords, giving a scammer your wallet information, such as public and private keys, will give them full access to your funds. Once they have access, they can transfer your cryptocurrencies and other digital assets to another wallet. Avoid any unknown emails that would lead you to a malicious website, as they are mostly filled with scams. Even on social media, don't click any link you have not verified its source.
3. Social Media Giveaway Scams
On social media platforms like Twitter, you see many messages and posts telling users how to win a large number of cryptocurrencies by clicking on a link. Many of these links are primarily giveaways promising to allow users access to cryptocurrencies worth huge figures like $1,000 or $5,000. When users click on these links, they are usually taken to another website where they are required to input their private details to receive their prize. Inputting these wallet details usually leads to fraud. Before entering into any airdrops, ensure you trust the links you click and don't enter any of your wallet details apart from your address.
4. Romance Scams
As dating apps continue to proliferate, it is unfortunate that romance scams have become increasingly prevalent and have made it to the list of crypto scams for 2023. These scams typically occur on dating apps and social media platforms.
The perpetrators typically feign romantic interest in their victims, gaining their trust over time. Eventually, they request that their partners invest in cryptocurrencies before disappearing without a trace once the money has been sent. It is a despicable practice that preys on people's vulnerability and trust.
5. Man-in-the-middle attack
A man-in-the-middle attack is something that not many people are aware of, and scammers have continually used these methods to defraud people of their cryptocurrencies. When people connect to a public network, they often use the internet connection to do many activities, such as sharing private information about their crypto wallet details.
Cybercriminals have become aware of this, and they usually use public internet connections to steal the data of crypto users. When these scammers connect to a public internet connection, they find a way of getting any form of data that is shared over the connection. So, users can easily get scammed without knowing how the whole thing occurred. When using a public internet connection, ensure that you use a VPN before sharing any data.
6. Fake Crypto Exchanges
Many crypto exchanges pose as legit trading platforms and end up defrauding customers of their money. There are many exchanges in the crypto industry, and those who are just getting started might fall into the hands of cybercriminals who run crypto exchanges.
These crypto exchanges claim to offer a wide variety of services found in other exchanges, and they usually entice their victims by providing extravagant bonuses and investment options. When these victims make a large deposit, they are immediately blocked from accessing the exchange forever. Some of the bonuses which these exchanges claim to offer include large amounts of Bitcoin and other cryptocurrencies. This scamming practice has been going on for a very long time, and many are still falling for it.
7. Bitcoin Investment Schemes
Many investment firms have ruined the lives of people who wanted to earn massive amounts of cryptocurrencies from the so-called investment firms. The most common crypto offered in investment schemes is usually Bitcoin because of how valuable it is perceived. These platforms promise their victims that they will double or thrice the amount of Bitcoin or funds they invest in the platform. They are told they will be paid in Bitcoin. When these victims make deposits, they are defrauded of their funds. Most of these Bitcoin investment schemes usually appear legit in the early days. Then when many people start to notice it and invest more funds, the people behind the investment schemes make away with the money.
How To Spot Crypto Scams
Many red flags can help you detect when a crypto project is real and legit and when it is established by cybercriminals.
Here are some of the red flags.
- Unknown exchanges that don't have any verifiable physical headquarters and management.
- For crypto projects, unknown project developers or management with questionable characters.
- The lack of transparency in a crypto project is a massive red flag.
- Any crypto project promising free money without performing any legit activity is a scam.
- Malicious websites duplicating original brands.
- Any website that does not have an SSL certificate.
- Promises of extravagant amounts of money as bonuses or investment returns.
- Using celebrities with questionable characters as their brand ambassadors.