Know The Most Prevalent Crypto Scams & How They’re Formulated

Cryptocurrency is lauded by several people for its innovation. It indeed makes many things better and emerges as a potential alternative to traditional finance. However, the crypto space has been marred with scams and fraudulent activities right off the bat. Every year, many incidents of crypto scams and hacks happen in this domain.

That’s why the regulators are so hard on crypto implementation. Moreover, cryptocurrency has become a lucrative investment after the success of Bitcoin. People are keen to invest in all types of digital assets. While some projects have a scope of profitability for real, many others are fabricated to dupe naive investors.

Thus, for investors, it’s essential to gather knowledge about these scams. Only then, they can save themselves from becoming victims. 

Crypto Scams Every Investor Must Know About

For the past years, these frauds have unfolded in the crypto niche. They have siphoned off assets billions of dollars collectively. 

Blackmail Scams

In these scams, the miscreants claim to possess the personal information of the victims. They ask for ransom in exchange for that information and threaten to make that data publicly available. For the most part, it is a personal or even morphed photo or video of the victim. 

These scams have been going on for decades and crypto has become a more convenient medium for them. Since the payments remain anonymous, scammers have lesser chances of getting caught. 

“Get Rich Quickly” Scams

Typically, these scams lure victims with a business opportunity. These opportunities are displayed as a quick way to gain lots of money. They can be in the form of an ICO or some other passive income-generating scheme. Usually, scammers offer too-good-to-believe profits and profit-centric investors fall for them.

Fake Job Listing Scams

Keen job seekers and people seeking extra income often leave no stone unturned to explore options. Crypto scammers take advantage of it and create a fake job portal. To the dismay of victims, the ease of making websites has made scammers’ jobs easy too. 

They come up with a genuine-looking website with some subtle anomalies. However, they go unnoticed as people are keen to find a job. The job offers could involve crypto mining, crypto research, or something contemporary as well. Ultimately, they get victims to pay crypto or fiat money.

Free Prize Money Scams

These giveaway schemes have fooled many people in the past. Even today, people fall for claims and end up clicking on a spam link. Mostly, they end up losing their precious digital assets. Many of them can pose as famous celebrities or influencers to make the deal more credible. 

A popular example of it is the Elon Musk “Freedom Giveaway” scam. It promised free cryptos and attracted a large number of crypto users. 

Impersonation Scams

The one mentioned above is a type of impersonation scam. But they take many other forms to dupe crypto users. The scammers could pose as a law enforcement entity and ask for details. In this way, they get more credibility and even threaten users to reveal their information. 

They can also impersonate an executive of a large organization to their proposition attractive.

Investment Scams

These are not very different from “get-rich-quickly” scams but they explore this domain even further. The scammers introduce something that one would call an incredible investment scheme. They may even send some crypto or money to the victim in the beginning.

After showing some profits in the beginning, they trap the users to invest in more profitable schemes.

Phishing Scams

This one is also very prevalent and happens outside the crypto domain too. The scammers usually present themselves as a company. They share an email link and ask for information like wallet keys. Once obtained, they use these details to siphon away digital assets. 

Pump & Dump Schemes

This scam involves a detailed and methodical modus operandi. First, scammers create a new project and create a buzz around it. They ask for Bitcoin, Ethereum, or fiat to sell dirt-cheap tokens. When they’ve sold enough, they just vanish into thin air. 

Romance Scams

Since the advent of crypto, they’ve become prevalent in the decentralized domain as well. It involves a typical honeytrap kind of strategy. The scammer poses as a person of interest to the victim. Once they establish good terms with the victims, they convince them to pay money with some credible excuse.

The Federal Trade Commission asks people to stay vigilant while reading about new investment opportunities. It asks people to be aware of all the red flags of cryptocurrency scams. They include incredible returns, freebies, and too-good-to-be-true opportunities.  Also, it suggests people use cold wallets and verify the information closely while investing.

Furthermore, they’ve provided the following websites for reporting scams.

• Commodity Futures Trading Commission (CFTC) at CFTC.gov/complaint.
• Federal Bureau of Investigation (FBI) at https://www.fbi.gov/contact-us.
• Federal Trade Commission (FTC) at ReportFraud.ftc.gov.
• Internet Crime Complaint Center (IC3) at ic3.gov/Home/FileComplaint.
• U.S. Securities and Exchange Commission (SEC) at sec.gov/tcr.

It is important to stay vigilant while exploring investment opportunities in the crypto industry.

Steefan George is a crypto and blockchain enthusiast, with a remarkable grasp on market and technology. Having a graduate degree in computer science and an MBA in BFSI, he is an excellent technology writer at The Coin Republic. He is passionate about getting a billion of the human population onto Web3. His principle is to write like “explaining to a 6-year old”, so that a layman can learn the potential of, and get benefitted from this revolutionary technology.