The digital currency has grown quite in popularity compared to its initial days. One such digital currency is Cryptocurrency. The cryptocurrency was quick to become everyone’s favorite currency. But, popularity brings risks along with it. One such risk is a scam. Crypto scams are present almost since the time the cryptocurrency is present. And in recent times, there has been a surge in cryptocurrency scams. The reason for it is, the naivety of the people who get into trading without much knowledge and the scammers take advantage of this situation and build up tricks to lure the naive victims.
Let’s discuss more on crypto scams here.
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What are cryptocurrency scams?
Scams involving cryptocurrency are a sort of investment fraud wherein criminals steal money from consumers who want to invest in the new age of electronic currency. The majority of crypto assets are not regulated by the Financial Conduct Authority (FCA), implying that they are most likely a scam.
It used to be nearly impossible to recover funds lost to crypto scammers. However, there are now so many cryptocurrency scam recovery companies that it is extremely possible to get your money back. The major goal of these firms’ professional workforce, which includes lawyers, financial experts, and fund recovery agents, is to deliver justice to the fraud victims.
Types of crypto scams
Following are some prevalent cryptocurrency scams
Celebrity endorsement scam
Some scammers use celebrity photos or videos in their adverts to promote their cryptocurrency investments. They use social media to reach out to people and pretend that high-profile public personalities support their investment scheme. Adverts frequently attract viewers to online websites where they are urged to participate in non-existent investments using crypto or conventional currency. Some con artists construct phony accounts that they control with software to make it appear as if an investor is profiting, incentivizing them to contribute more. Once the investor has increased their investment, their account is closed, and the fraudsters depart with their cash.
Some scammers use celebrity photos or videos in their adverts to promote their cryptocurrency investments. They use social media to reach out to people and pretend that high-profile public personalities support their investment scheme. Advertisements often attract viewers to online portals where they are urged to engage in non-existent investments utilizing crypto or conventional currency. Some con artists construct phony accounts that they control with software to make it appear as if an investor is profiting, incentivizing them to contribute more. As soon as the investor has increased their investment, their account is closed, and the fraudsters escape with their money.
Exit scams are when con artists start a new cryptocurrency platform and distribute attractive marketing materials to acquire funds from investors, usually through an Initial Coin Offering (ICO). Once the money is gathered, the thieves pocket the amount and disappear with the money. Because of the lighter listing requirements and the difficulty in tracing stolen cash, these scams are more common in the crypto realm.
Exit scams are not limited to ICOs and can occur after a coin has been in existence for some time. These frauds are typically a variation of a Ponzi scheme, in which new members’ money is utilized to create the impression of a profitable investment. This can go on for a long time, but the end outcome is always the same – the creators departing with the money invested.
Cloud mining scam
Some cryptocurrencies are created by a process known as mining, wherein people use computers to solve complex mathematical puzzles. To mine a single unit of cryptocurrency, you’ll need pricey technology and a lot of electricity.
A new generation of cloud mining platforms has arisen, allowing consumers to mine cryptocurrencies without having to invest in expensive machines or rack up debt. Criminals, on the other hand, have attempted to profit from this by setting up phony cloud mining software platforms and apps that steal money from miners.
Identifying crypto scams
- If the investment scam claims big returns and high earnings in a short period, this is a straightforward technique to spot fraud. This is a simple approach to deceive unwitting victims. Because no one can foresee the market, no one can guarantee huge profits.
- Scammers routinely hack into well-known people’s social media accounts and offer to return double the amount of cryptocurrency you pay.
- Another method used by crypto scammers is to heavily sell and promote their crypto coins, such as first-page newspaper adverts, online banners, and so on. A genuine cryptocurrency coin will not do so, as it will place its bets on genuine growth.
- Scammers may offer bitcoin in return for a few coins, stating that they require it for identity verification or to reap the benefits of an offer. But, don’t fall for it because these are very probably con games that require a large number of people to amass a large coin collection.
- If the price of a currency with no history suddenly shoots up, it’s cause for alarm.
Avoiding cryptocurrency scams
- To participate in cryptocurrencies like bitcoin, you’ll need a wallet with private keys. It’s almost probably a fraud if a company wants you to submit your private keys to participate in an investment opportunity.
- It’s a fraud if you’re contacted all of a sudden about a bitcoin investment opportunity. If they ask for your personal information or money, don’t give it to them.
- It’s clearly a scam if a firm persuades you to invest straight away. To urge you to contribute immediately, some con artists offer perks or discounts. Before you invest any money, take time to research and when you are sure, then only proceed.
- Employers would never ask you to pay a registration fee, particularly if you’re using cryptocurrency. As a result, you should avoid such job offers.
As bitcoin’s popularity grows, so does the number of cryptocurrency frauds. The easiest way to protect yourself is to be aware of these new scams. To begin, study as much as you can about the various types of scams that are now operating. It will be easier for you to recognize them when they come in new forms as a result of this. Also, when dealing with or investing in cryptocurrencies, use extreme caution.