The cryptocurrency market is known to several people as a scam market because it is prone to a lot of crypto scams. This misconception is so widely spread that when you mention the word crypto to some people, it’s quickly associated with scams. The truth is there are indeed a lot of fake projects and cryptocurrency scams at the moment. This is not new to the crypto space and the entire financial markets. But if you are well educated about the crypto markets, you will rarely fall victim to some of the fraudsters in the markets. It is often people who are less educated about how the crypto markets work that fall victim to such scams.
In this post, we’ll be showing you some of the popular cryptocurrency scams and how you can avoid them.
1. Investment Schemes
You need to understand and constantly keep in mind that there is no easy money anywhere. For you to make money in the cryptocurrency markets, you must understand what activity you are engaging in and put in the required work to yield profits. You also need to know where the money is coming from for the project you are involved in. The typical way you can make money in crypto is to invest in a coin, token, or NFT and wait for it to appreciate in value over time. Then you can sell it at a higher price for profits.
However, you could see some random people approach you to promote a new thing going on where they claim that you can invest $10, 000 to receive some guaranteed returns of $200 daily throughout your lifetime. Another could be that they could claim to help you double a specific amount of your money if you keep it with them for 2 months. As long as the idea looks ridiculous and too good to be true, best believe that it could indeed be a scam. This type of scam is known as investment schemes or pyramid schemes. You are bound to lose your money with them.
Many times, it starts well with people having outstanding testimonies to show for it. But when they’ve successfully lured more people in, they run away with lots of money, leaving many people devastated. Try to do your due diligence with any opportunities that promise unbelievable returns. They typically end up being scams.
2. Phishing scams
These types of scams could be quite tricky because you might not be aware of what form it might show itself. Hence, it’s easy to fall victim to this scam. Here’s a typical example of how this scam works: someone sent you an email or a message to click on a certain link. The link could contain malware or viruses that can access some vital data on your laptop or phone, or even compromise your wallet to steal your funds. Sometimes, victims of this kind of scam could be lured by greed into clicking such corrupted links
However, some phishing emails or messages could come from the fake accounts of popular crypto websites or platforms. Always double-check to be sure that you’re interacting with the right account of a crypto project. For instance, the correct spelling of Binance’s website is binance.com, not binanc.com, or binancee.com. Do not click any link that is putting you under pressure to do some activities in your account like changing passwords, or withdrawing money all in the bid to ” fix” your account for you. Any random link of this nature is typically a phishing link.
3. Impersonators
This is another popular scam in the crypto space. In this type of scam, people pose as someone else or another platform so that they can take money from you. They often reach out to victims via email, pretending to be the CEO of a large company like Coinbase, Luno, or Binance, and presenting a juicy investment opportunity. Then they’ll provide a wallet address for you to send your funds to. Anytime you get such an email, you should delete or ignore it because it’s a scam. No credible CEO of a reputable company will send an email to you to invest with them or to trade for you.
Several pages are trying to impersonate Greybtc, the founder of Crypto University, on Instagram. The image below is the real Instagram page of Grey.
Never fall for anyone who impersonates Greybtc and asks you to send money to a crypto wallet address. The real account of Greybtc will never send a message to you first and ask you for money.
Another example of this is the CZ of Binance. If you try to search for “CZ Binance” on Instagram, you will see so many accounts trying to impersonate him on Twitter as shown below:
However, you can easily differentiate the real account from the fake ones due to the verification tag. So, you have to be extremely cautious about who you interact with online and never share your seed phrase or private key with anyone.
An additional category of impersonators to beware of are those in the comment section of posts from top crypto accounts who pose as experts and recommend someone else or share a Bitcoin giveaway to users. Here’s an example:
Don’t interact with such accounts to avoid losing your money.
4. Live Giveaways and airdrops
This type of scam often happens on Youtube or a social media platform like Instagram. In this scam, you would see a legitimate or fake account of an influential individual claiming to give free money away. A fake social media account of Joe Biden or Elon Musk could put out a message that asks people to send bitcoin to a specific wallet address to get back double the amount they send. As shown in the screenshot below:
If you are not well informed about how scams work, you might send your bitcoin to that address and never get it back.
Another example of this is a fake live stream Tesla event which showed a Tweet from Elon Musk asking users to scan a code.
That is obviously a fake tweet intended to steal users’ funds. If you’re not so cautious you might be lured into it because it’s a Tesla account on Youtube which shows a live event where Elon Musk is talking. Try to double-check that you are interacting with the official accounts of a crypto project or influencer.
5. Man in the middle attack
This scam is quite sophisticated in outlook. It’s a scam where someone gets between you and your wallet or your computer to redirect funds or activity on your device. How it typically works is that the scammer sends you a link to claim some free crypto which you never get to receive, and later, when you try to send cryptocurrency from your digital wallet to someone else, it gets redirected and sent to the scammer’s wallet address. This means that the moment you paste your recipient’s address, another address from the hacker in your device, overrides it and repaste their address. And the crypto assets will be sent to the address they pasted.
To avoid falling victim to giveaway scams, make sure you are not clicking any random links. And whenever you paste your recipient’s address, always double-check the first 4 and the last 4 characters before completing the transaction. The best way to prevent this attack is to ensure that your phone or computer is virus free. Avoid accessing some dubious websites with the same device you use for cryptocurrency transactions.
6. Sim swap crypto scam
Sometimes you might use your phone number to register for most crypto projects or to reset your passwords. Hence, if someone mistakenly gets a hold of your phone number, that means they’re able to change your Google account, and trading accounts, How this scam works is that a scammer might convince your service provider to do a sim swap with your number by switching your number with the sim card they just bought. So your sim card becomes useless— you can’t call or receive any SMS again. All the SMSes for password reset automatically go to their phone number because they have now sim swapped with your number.
The major way to avoid this is to make sure that you are not sharing your personal information like your ID number or passport online with strangers, random websites, or impersonators of popular accounts. They use that information to get a sim swap done. You also need to monitor your phone to observe any irregular activity with your network and ensure to reach out to your service provider to find out what’s going on.
7. Rug pulls
These are popular types of crypto scams. What typically happens is that a cryptocurrency or NFT project decides to raise money for an “amazing” upcoming project and lures crypto enthusiasts to put their money into it before it launches publicly. And they’ll distribute their tokens to early investors after they launch. This often happens as an ICO ( Initial coin offering), IDO ( Initial DEx offering), or an NFT Premint. After the project successfully convinces so many people to invest early in their project, they suddenly disappear with large funds from users and never get to launch such projects. Their websites and social media pages are then shut down permanently. If any instance of this ever occurred to you, it means you’ve been rug pulled.
To avoid this scam, you have to understand the basics of how crypto investments work by understanding what you’re investing in, and doing your due diligence on the team, and the people behind the project you want to invest in. Just because your crypto friend or a popular crypto influencer online recommended it doesn’t make the project legitimate. A lot of such projects can pay influencers to promote the project for them, only to get many rugged at the end.
Conclusion
There is a lot more to these crypto scams and how they work. The general guideline is to be cautious of the people you interact with online. Do not trust anyone, especially strangers who randomly send you emails or messages. Always ignore such messages at all times. Do not click any unknown links. I hope this helps you to avoid getting scammed constantly. If you practice these tips, you’ll rarely get scammed in the crypto space.
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