Table of Contents
- What Are Crypto Scams?
- Types of Crypto Scams
- Investment Scams
- Phishing Scam
- Upgrade Scams
- SIM-Swap Scams
- Fake Crypto Exchanges and Crypto Wallets
- Market Manipulation
- Pump-And-Dump Schemes
- Rug Pulls
- Blackmail and Extortion
- Traditional Hacking and Theft
- Initial Coin Offering (ICO) Scams
- Romance Scams
- Social Media Cryptocurrency Giveaway Scams
- Ponzi Schemes
- Employment Offers And Fraudulent Employees
- To Wrap It All Up
With the introduction of cryptocurrency to the general public, came the risks of crypto scams. Like all industries, scammers are regularly trying to extract money in the form of cryptocurrency for their personal benefit.
Today, we’ll be discussing 15 different techniques of the biggest crypto scams that you should know about so that you can increase your chances of surviving a malicious attempt.
What Are Crypto Scams?
Just like any other financial scam, crypto scams are targeted toward the cryptocurrency you have in your possession. Hackers and other malicious third parties try to steal your crypto assets via different methods.
The scams work out like regular financial scams as well. Hackers will always common tactics like a fake claim or other schemes. Other times they will straight up steal digital assets from an individual.
When stealing assets, hackers try to break into your digital wallet and try to transfer all the assets from your account to your personal account. The main goal here is to manipulate you into giving up your crypto or NFT (Non-Fungible Tokens) assets.
Types of Crypto Scams
Even with different cybersecurity measures available, scammers are getting creative with their approaches every single day. Let’s take a loop at the biggest crypto scams that hackers and other malicious entities pull off to exploit someone:
- Investment scams
- Phishing Scams
- Upgrade Scams
- SIM-Swap Scams
- Fake Crypto Exchange Scam
- Market Manipulation
- Pump-and-Dump Schemes
- Rug Pulls
- Blackmail and Extortion
- Traditional Hacking & Stealing
- Initial Coin Offering
- Romance Scams
- Social Media Crypto Scams
- Ponzi Schemes
- Employment Offers With Crypto Donations
An investor scam is when a scammer manipulates and encourages people to hand their cryptocurrency over with the promise of a large profit with simple investments.
A scammer will either pretend to be some sort of celebrity or a finance expert to convince others that they know what they’re doing and that you should invest to gain a huge amount of profits.
These offers always start with a very low offering, since it’s designed to lure people with the promise of getting more for less. But once you give in to it, there’s no doubt that all your investment that was through crypto is gone forever.
Phishing is one of the oldest methods of scamming an individual. A scammer is constantly trying to access your financial accounts, including your crypto wallets. To access crypto wallets, they need the crypto key that you have, and that’s where the phishing method comes in.
Phishing scammers will often create a replica, fake website for the real website that you use for your transactions. When you input your personal information on that fake website, the website relays that information to the scammer, and they can easily access your account with your credentials.
It doesn’t just stop at fake websites. They also can impersonate other organizations, including:
- Online delivery services
- Your bank
- Different utility companies
- Financial advisors
- Government agencies
It can be as simple as a mail that says someone withdrew a large amount of money from your account, and you can cancel the transaction by clicking the link attached to the mail. When you enter the link, you’re entering all your information in an interface that acts as a portal for the hacker to collect information.
These attacks can come from anywhere, and anyone can fall victim to a phishing incident.
All software is constantly getting updated, which includes cryptocurrency platforms. People are used to different software updates and upgrades these days, so no one suspects that malicious software replaces the real software with an update.
Scammers also use different tricks to collect private crypto keys as a part of the upgrade. For example, Many scammers offer a free upgrade to a professional version of certain software in exchange for crypto wallet keys. It’s a simple social engineering attack and it’s effective almost every time.
There are times when hackers will piggyback on legitimate upgrades as well, launching their schemes right around the time of an upgrade for a certain crypto platform. They do it to target the user base of a certain crypto to catch them at an unaware moment since they’re already expecting an update.
A SIM swap is a more recent method. In this case, a scammer can create an exact copy of your cellphone and can use that SIM card to access your phone data. But how?
The clone SIM card works as a transmitter, from which the hacker receives signals about the information you’re sharing through the phone and every input you’re making.
In some cases, the SIM card is more advanced, working as a module through which the hacker can take complete control of the phone it’s inserted into.
The information collected from the phone can easily be used to access your crypto wallet or retrieve your crypto keys to gain access.
The damage that can be done with this scam method is severe. Since the hacker has direct access to your devices and credentials, it will not be counted as “an invasion” on your account, and you will not catch wind of the damages until it’s too late.
Fake Crypto Exchanges and Crypto Wallets
Many random accounts on social media platforms will offer you cheap coins or wallets and offer an unimaginable amount of ROI. If you see offers like this, it’s a scam.
These crypto products will offer you an outrageous amount of ROI but will ask for a high initial fee in return. Also, they will keep asking you, again and again, to invest in their scheme.
If you give into temptation and invest, there’s a high chance they will vanish when you try to withdraw your funds.
You’ll also come across fake crypto wallets that you will find are very affordable to purchase. But there’s a trick here.
Most of the time, these wallets just contain trojan malware. Once you log into these wallets, this malware enters your computer to steal your credentials, personal information, and everything in between.
Market manipulation is when hackers try to influence the crypto market artificially to interfere with asset prices. They do it to tip the scales in their favor for extra profits and quick ROI.
Here are a couple of unethical trading activities that fall under the category of market manipulation
Churning: Churning is when nefarious brokers try to exploit commission-based payment structures by excessive trading. But this is done by hacked accounts they acquire from unaware individuals, so when the penalty hits they don’t take any damage since they already withdrew their earnings and left.
Front-Running: Front-running is when someone tries to manipulate the market by exploiting knowledge of pending transactions. This information is usually collected through unethical means and then exploited for personal gains.
Spoofing: Spoofing is the process of creating an illusion of momentum with a high number of orders, and these orders are canceled before they are completed. This hurts an organization in two ways: the company servers are overwhelmed when processing a large number of orders, and when they’re canceled the company faces a neat loss.
Crypto markets are relatively new and are still in an infantile state, so they’re more vulnerable to market manipulation tactics. To stay safe, Only trade within reputable crypto exchanges that offer you protection and safety measurements against the aforementioned methods.
Pump-and-dump is when an individual or a group of people intentionally inflate the price of an asset so they can sell the same asset at a higher price for more profit.
Crypto schemers regularly spread false information regarding these schemes to inflate the value of certain crypto or assets as much as they can. They already have a decent amount of the same asset in their holdings.
They continuously keep feeding people fake information to hype people up for investing their assets as well.
Once they manage to drive the price high enough, they sell it off and vanish. Doing so plummets the value of the asset right away, sinking the investors financially.
Think of a Kickstarter campaign, but instead of delivering the product, the person who started the campaign runs away with the money instead. That’s how a rug pull works.
Often, a bad actor will release a brand new cryptocurrency in the market and create hype around it on social media. They aim to funnel as much investment as they can into their currency.
Once they think they have made enough money, they proceed to scratch the entire project and run away with the investor funds.
The most common victims of scams like these are early adopters, who are constantly manipulated with exciting offers and upcoming roadmaps for the currency. Almost all of the time, these visions and ideas are made up just to scam people out of their money.
Blackmail and Extortion
Sometimes scammers would just drop the act and straight-up start threatening you, like claiming to have your internet browsing history of visiting adult/illicit websites, your home address, compromising photos or videos, etc, and for their silence demanding payment in crypto.
These cases represent criminal blackmail and extortion scams and should be promptly reported to the FBI and similar law enforcement agencies.
Traditional Hacking and Theft
Though the trends and techs of crypto markets are far different from regular markets, traditional hacking, and theft is still an option here to scam someone.
To trade any kind of crypto, you will need a crypto wallet that is maintained virtually. If a hacker takes access to your personal devices, they can easily steal your crypto wallet with all your assets in it.
Hackers aren’t just after your crypto assets either. They take your crypto wallet, which has your unique identity, and then perform other malicious tasks with it. This can be considered identity theft.
When performing these thefts and hacks, a scammer will always use the age-old methods of phishing or spam mail and other cheap tactics. They even pose as credible organizations to bait your assets out of your personal security boundaries.
Initial Coin Offering (ICO) Scams
This is one of the most basic scams that crypto scammers adopted from the stock market. Through an ICO, crypto companies raise funds for further developing their released crypto. In exchange for your investment, they offer you a certain amount of minted coins.
Most crypto scammers try to create hype for a new brand of crypto and run a lot of publicity marketing campaigns regarding said crypto to generate artificial hype for the currency. Only this time, they offer a ton more minted coins with exceptional ROI promises.
When an offer sounds too good to be true, there’s a high chance that the offer in question is made by someone who’s trying to scam you. That’s what happens in most ICO scams.
Scammers offer you a lot of coins in exchange for your investment, they take all your money, and when the time to deliver is near, they run away with all the investments they gathered.
Dating websites have become the new playground for crypto scammers. Here, they impersonate another person, most preferably a woman, and then place baits to lure people into investing in different kinds of crypto scams.
Most of the time, a scammer will pose as a woman to create a bond and gain trust with another male individual. Over time, they will continue to exploit the victim to either make them invest in a crypto scam, or extract money and other assets from them in the form of crypto.
Since crypto is untraceable, these assets are nearly irrecoverable, and as a result, the damage is done before anyone realizes the real intention of the scammer hiding behind the mask of a love interest.
Social Media Cryptocurrency Giveaway Scams
Many fraudulent posts are made by scammers every day that they are giving away a huge amount of cryptocurrency, and all you have to do is click a certain link to claim your rewards.
This is one of the most blatant scams out there. The links that you see posted by the person can often redirect you to an unprotected website where hackers collect every piece of information you put in. Sometimes these links contain direct download links for malware, that can render your entire system vulnerable.
If you see an advertisement on social media about a big crypto giveaway, always check the credibility of the individual/ organization who posted it before you decide any further.
Ponzi schemes are where a scammer pays older investors with the proceedings from the new ones. There is no profit to make from a scheme like that, but scammers will still try their best to get you into it.
They will often offer you schemes that will promise you something that sounds either too good to be true, or nearly impossible. Their goal is to lure unaware people into the scheme, making them invest.
At the same time, they will pay older customers with the investment from the new victims. At the end of the day, the investors are making zero profits, while the scammers are siphoning money from everyone else.
Employment Offers And Fraudulent Employees
Scammers often impersonate employees of well-reputed organizations, or job recruiters to steal crypto. Want to know how it works?
Let’s say a scammer is impersonating a job recruiter from a high-end company. They will offer you a great job with an offer you can’t refuse. If you agree, they will inform you that you will need to participate in a job training program to be eligible.
But to be enrolled in the training program, you will need to pay the recruiter in cryptocurrencies. If you find an offer like this, it’s undoubtedly a scam.
A real job recruiter has no interest in your finances and is only looking for the skills that they require. If any job recruiter or employee is asking money from you for anything, ignore them completely to keep yourself safe from scams.
To Wrap It All Up
In the world of cryptocurrencies, it is essential to stay vigilant and be aware of the various risks associated with investing in digital assets. If you ever come across such incidents, you must report crypto scams immediately to the appropriate authorities, such as the Internet Crime Complaint Center (IC3).
Additionally, you should also educate yourself about the common crypto scams, such as phishing attempts, fraudulent investment schemes, blackmail and extortion scams, etc. You should also be mindful about safeguarding your private keys, which grants access to your crypto investments.
You should also be cautious while linking a bank account to crypto-related activities, so you can mitigate potential risks with common cryptocurrency scams before they become a serious issue.
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