More and more people are becoming interested in pursuing the benefits promised by the crypto world as it develops. Many think crypto is an easy way to make big profits in a short time. However, this is an incorrect concept. Like any other investment, crypto has its own risks and requires skill to make a profit. From there, many scams under the guise of crypto investment have emerged.
Crypto scams take many forms. There are several ways for crypto scammers to trick a victim into giving access to stolen crypto assets. To protect your crypto assets, it is important that you understand a few things. In this article, you can learn everything there is to know about how to avoid crypto scams.
Types of Crypto Scams
In general, crypto scams can be classified into two categories. First, there are types of fraud gains access to digital wallets or authentication codes. Crypto scammers trick victims with fake investment/business opportunities to receive crypto. Of the two categories above, there are various forms of guise of fraud that you must recognize. Here are some of them:
Social Engineering Scams
For this type of fraud, the perpetrator usually uses psychological manipulation and traps the victim to provide access information for their crypto account by pretending to be a government official, customer support, a trusted person, and so on. The perpetrator will take sufficient time and effort to gain the victim’s trust so that they can obtain this information.
This type of fraud is rife on online dating sites under the guise of a romantic relationship. The perpetrator will trap the victim by making them believe that they are in a long-term relationship. Perpetrators gain trust, ask for crypto access or funds, then disappear.
Imposter Giveaway Scam
Crypto scammers can also act as celebrities, well-known businesspeople, or crypto influencers. These scammers usually promise to pay dividends in the form of doubling the amount of crypto sent. A trustworthy social media account appears, urging users to make immediate transfers for profit. The scammer tempts many victims to earn huge profits in a short time and makes them send crypto funds.
This fraud is one of the most common in the online world. Phishing refers to activities in which a fraudster targets someone’s digital wallet access information. By gaining access to a digital wallet, they can access crypto funds and steal them. Fraudsters usually carry out this fraud by sending a link via email to crypto users, asking them to enter a certain website that the fraudster has created. The website will ask the victim to log in by entering their private keys. From there, fraudsters will steal the information and take the crypto funds in the wallet.
One popular scam used by unscrupulous individuals is the blackmail scam. In this scam, victims receive an email containing a threat to reveal private keys or a number of crypto funds. The threat takes the form of a claim that the perpetrator has disgraceful evidence, such as a pornographic video, and they threaten to distribute it unless the victim complies with their demands.
Investment or Business Opportunity Scam
Fraudsters frequently disguise scams in the crypto world as short-term business or investment opportunities that promise significant profits in a brief period of time. Fraudsters typically use a website where they ask victims to make a substantial “investment.” However, scammers often make the funds inaccessible or cause them to be lost after the victim makes the investment.
New Crypto or NFT Scam
Cryptocurrency-based investments, such as initial coin offerings (ICO) or purchasing non-fungible tokens (NFT), have now become a cover for fraudsters in cyberspace. Although these investments can be legitimate and offer benefits, it’s important to conduct a background check to avoid falling victim to fraud. Be sure to buy ICO coins from the official website and read the project’s white paper, which has been proven to be genuine.
This type of fraud is executed by withdrawing all investment funds from a cryptocurrency project after investors have transferred their funds to the project with the promise of substantial profits. The project is then abandoned, and investors lose their funds.
How to Spot Crypto Scams
Crypto scams can be easy to identify if you know what to look for before investing. Legitimate crypto assets provide detailed information about the blockchain network they use and who is involved in the project. To help you identify the information that needs to be researched before making a safe investment, here are some things to keep in mind:
Read the White Papers
Genuine crypto assets go through various technological development processes. Before this process begins, an official document detailing the asset’s background is published for public reading, called a white paper. In the white paper, you can find information about the protocol used, the blockchain network description, the formula used, and how the entire network will function. If a crypto asset does not have a white paper, it is a sign that it is fraudulent. However, there are fraudulent assets that have white papers, but they typically lack clear explanations and do not provide details about the technological developments behind the assets.
Identify Team Members
The white paper contains important information about the team behind the cryptocurrency. Typically, the paper will explain who the developers are that manage the network. You can research these developers through the cryptocurrency community. If their identity is unclear, then the cryptocurrency may be fraudulent.
Pay Attention to Free Items
If a cryptocurrency promises a lot of free items, that could be a red flag indicating that it is a scam.
Learn the Marketing Tricks
People generally do not create cryptocurrencies as a means of making money. They create purposeful projects by designing coins/tokens for transactions within their blockchain. Legitimate cryptocurrencies usually do not promote themselves on social media by claiming they will become the best cryptocurrency in no time. There may be some online updates about their blockchain, but usually, they relate to the technology behind it rather than how much money has been made. Most legitimate cryptocurrencies do not sell their coins.
How to Avoid Crypto Scams
There are several actions you can take to avoid crypto scams. If you see any signs of fraud, you must not click on any links, call the telephone number, contact them in any way, or send them any money. Here are some other things you need to do:
- Ignore requests to provide access to your cryptocurrency. Private keys control your cryptocurrency and wallet access, and no one needs them in legitimate cryptocurrency transactions.
- Ignore promises that you will make a lot of money.
- Ignore investment managers who call you and claim they can grow your money quickly.
- Ignore calls or emails from celebrities; a celebrity is unlikely to contact people to buy cryptocurrency.
- Meet your potential partner in person before giving them any money if you’re using an online dating website or app.
- Ignore text messages and emails from well-known or new companies, stating that your account is frozen or they are concerned about it.
- Ignore any email, text, or social media message that states you must send cryptocurrency or money to a government, law enforcement agency, or utility company because your account or assets are frozen.
- Report and ignore threats to post explicit material unless you send cryptocurrency.