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Cryptocurrency markets experienced a resurgence after the presidential election, with coins such as bitcoin, ethereum and dogecoin leading the charge. The price of a bitcoin, for example, recently exceeds $100,000 for the first time.
Experts attribute this trend to several factors, including President-elect Donald Trump’s favorable comments about cryptocurrency on the campaign trail, renewed interest from retail investors and increased institutional adoption.
Crypto is notoriously volatile. The value of digital assets can fluctuate wildly in a matter of days or hours, making them an exciting and high-risk investment. But there is another dangerous part of the crypto boom: the again crypto scams.
Crypto presents a golden opportunity for scammers. The crypto market is often unregulated and once a transaction is made, it is almost impossible to reverse it. That means that if a scammer takes your crypto, there’s little you can do to get your money back.
If you are actively investing in crypto or looking into digital currencies, make sure you know how you can find these get-rich-quick schemes and other schemes.
Top cryptocurrency scams to watch out for
The potentially high payouts of crypto have attracted many scammers. By 2023, crypto scams cost victims $5.6 billion, according to the FBI. These are some examples of common crypto scams.
Phishing attempts
A phishing scam tries to get you to reveal sensitive personal or financial information by sending you a fraudulent email, text or phone call.
Crypto phishing scams take many forms. For example, it is common for bad actors to pretend to be legitimate exchanges to try to trick you into your private key — a unique passcode that allows you to access your crypto — by prompting you to click on an embedded link in a text or email.
Some examples of crypto-related phishing attempts, according to the FTCincludes:
- Celebrities contacting you with a cryptocurrency opportunity. This happens on social media, but an actual celebrity is unlikely to contact you with a business or investment opportunity.
- An investment manager offers to manage your portfolio. They promise to grow your money, but only if you transfer crypto to them first.
- A new or established company enters the crypto space. You may be contacted by a scammer claiming that a company has dived into crypto and offering a new coin or token. If it is true, it will be widely reported in the media.
Social engineering
Scammers can also build deep connections with you and then try to manipulate your emotions to force you to make a quick decision, such as committing to a new type of crypto.
“In a bull market, scammers rely on human greed, promise high returns and exploit the fear of losing. In a bear market, they play on fears that cryptoassets are at risk,” said Nick Percoco, chief security officer at cryptocurrency exchange Kraken.
Percoco added that investors should beware of high-pressure tactics. “Scammers know that if you ultimately do nothing, they will be gone. Be very careful with your time and research opportunities.”
Rug pulls and counterfeit tokens
Developers are constantly creating new tokens designed to look like legitimate crypto coins to entice investors to buy cryptocurrency. Once a purchase is made, the fraudster takes your money and disappears, leaving you with nothing but a fake token.
Many times this fraud occurs when bad actors encourage investors to act quickly to get into a new crypto project before the price rises. If you are not sure if a token is legitimate, be sure to research the asset, its website, project founders and digital coin transaction activity. If no website exists or the creators of the project are unknown, this may indicate a high risk.
Bitcoin ATM scams
In this scam, a cybercriminal tries to trap you by posing as law enforcement or a financial institution. The scammer may tell you that you have to pay a fine or that a fee is no longer due. To avoid legal action, the scammer instructs you to use a bitcoin ATM to send them the funds.
Legitimate entities do never request payment through bitcoin ATMs. You should ignore such requests completely.
What if I fall for a cryptocurrency scam?
If you fall for a cryptocurrency scam, it is unlikely that you will get your money back. Part of what makes these scams so attractive to cybercriminals is that cryptocurrency transactions are irreversible. It is also difficult to track the money after it is sent because the scammers can be moved to any part of the world.
“Investors should exercise caution and conduct thorough research before engaging in any cryptocurrency platform or investment opportunity,” Jacqueline Cooper, CEO of the Blockchain Legal Institute, said.
However, you should report the scam to help catch the hacker and help others avoid the same fate. To report a cryptocurrency scam contact:
- the FBI at www.ic3.gov.
- the FTC on ReportFraud.ftc.gov
- your local attorney general’s office.
- If applicable, the legitimate crypto exchange company you use to send funds.
Although most scams aim to steal cryptocurrency, they can also compromise your personal information. Social engineering tactics often capture sensitive details, which can lead to identity theft and broader financial fraud.
Think freeze your credit is free of Experian, TransUnion and Equifax to prevent fraudsters from opening new lines of credit in your name.
Education is your best defense against crypto scams
If you choose to invest in crypto, you just have to use it verified cryptocurrency exchange. Experts suggest investing only what you are comfortable losing.
Do not click on any links sent to you via email, text message or on social media and do not give out your personally identifiable information on a whim. If something feels off and forces you to make a quick decision, consider that a red flag. Always take your time when making any financial decisions.
By staying informed, verifying platforms and protecting your personal information, you can confidently prevent crypto scams and navigate the crypto world while minimizing risks.
