As the allure of cryptocurrency continues to rise, attracting new and innovative investors, it’s also caught the attention of cybercriminals looking to pull a variety of cryptocurrency scams on unsuspecting victims. In fact, a startling report from the US Federal Trade Commission revealed that over a recent 18-month period, there were a reported 46,000 individual crypto owners who reported losing over a billion dollars to scammers and fraudsters.
From classic investment scams to modern twists on old impersonation frauds, cryptocurrency scams are as diverse as they are dangerous. In this blog, we take a deep dive into the world of cryptocurrency scams, looking at some of the most popular tactics employed by bad actors, and providing tips on how to recognize and respond to such threats.
Top 10 Cryptocurrency Scams to Be Aware of in 2024
- Ransomware: Ransomware involves attackers encrypting victims’ data and then demanding a ransom in cryptocurrency.
- Blackmail: An old tried-and-true method. Essentially scammers will threaten to release embarrassing personal information unless they receive payment in cryptocurrency.
- Bitcoin Spam Emails: These spam emails, which utilize official-looking accounts, are designed to steal login credentials and pilfer Bitcoin accounts.
- Fraudulent Investment Opportunities: Fraudsters like to pose as investment managers and promise high returns in exchange for crypto transfers.
- Fake ICOs: Touting official-sounding projects, fake ICOs dupe investors into buying tokens for coin launches or projects that don’t actually exist.
- Impersonation: By impersonating well-known figures and institutions – government agencies are a popular cover – scammers solicit crypto payments under false pretenses.
- Fake Bitcoin Text Message Giveaways: Utilizing text message and social media, scammers will promise to multiply any Bitcoin sent to them – for no charge at all!
- Romance Scams: Similar to catfishing, scammers will use dating platforms to build romantic relationships in order to manipulate victims into sending them crypto.
- Flash Loan Schemes: Scammers can manipulate DeFi platforms by using borrowed funds to profit from market manipulations, then make a quick exit, leaving the platform to absorb any losses.
- Pump-and-Dump: Fraudsters artificially inflate the prices of cryptocurrencies in order to attract investors before dramatically selling it off, plummeting the value of the crypto.
How to Avoid Crypto Scams in the Businesses World
As you can see, cryptocurrency fraud and scams can take on many different forms, often leveraging psychological tricks to appear convincing. For those accepting crypto in the business world, it’s absolutely essential that you know what to look for, and that you conduct extensive research before diving into any crypto-related investment opportunities.
Here are some red flags to watch for:
- Guaranteed Returns
- Lack of Transparency
- High-Pressure Tactics
- Unsolicited Offers
- Fake Websites and Information
- Invasive Requests for Personal Info
And here are a few preventive measures you can take to ensure you and your business don’t fall victim to crypto scammers and fraudsters:
Educate Yourself: As intimidating as it may seem, it’s imperative to educate yourself about blockchain technology and Bitcoin fraud detection, ensuring you’re staying up-to-date on new scamming techniques (crypto forums can be a valuable resource).
Use Reputable Exchanges: Unknown platforms often offer enticing deals, but play it safe by sticking with well-known and reputable crypto exchanges.
Verify and Research: Conduct research, consult informed community members, and verify team credentials before jumping into a crypto project.
Secure Practices: This can’t be overstated – protect yourself by implementing Multi-Factor Authentication (MFA), using a secure VPN, keeping your software updated, and double-checking URLs to ensure that “https” is used in the web addresses.
Keep Credentials Secure: Keep your private keys secure by storing them offline in hardware wallets.
Regulatory Compliance: Any crypto investment you involve yourself with should comply with financial regulations in your jurisdiction.
Caution with ICOs and Investments: Initial Coin Offerings (ICOs) are at prime risk of being pump-and-dump schemes, so exercise plenty of caution.
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