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8 Types of Crypto Scams to Avoid in 2024
2024/08/12By:
Have you fallen victim to a cryptocurrency scam? If so, you’re not alone – crypto users lost close to $2 billion to scams, rug pulls, and hacks in 2023, and over $1.4 billion in the first half of 2024.
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- What is a Crypto Scam?
- What Are the Eight Most Common Cryptocurrency Scams?
- Phishing Scams
- Romance Scams
- Impersonation and Giveaway Scams
- Crypto Investment Scams
- Blackmail and Extortion Schemes
- Cloud Mining Schemes
- Fake Cryptocurrency Exchanges and Wallets
- SIM-Swap Scams
- How to Avoid Crypto Scams Early?
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What is a Crypto Scam?
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What Are the Eight Most Common Cryptocurrency Scams?
As we mentioned above, crypto users lost close to $2 billion to scams, rug pulls, and hacks in 2023 and over $1.4 billion in the first half of 2024. Let’s dive deeper into each of the scams, see how they work, and how you can prevent falling victim to them.
Phishing Scams
A phishing scam is a deceptive tactic employed by fraudsters, where they create fake websites, social media profiles, or send phony emails to trick you into divulging your personal information, including your identity, passwords, and cryptocurrency wallet keys. These scams cunningly imitate legitimate cryptocurrency platforms, such as exchanges, to instill trust in unsuspecting victims. The emails or messages you receive may seem credible, often containing enticing offers or urgent requests for your sensitive information, such as your private key or login credentials.
Once you have unwittingly disclosed this information to the scammers, they can then exploit it to steal your digital assets. This might involve accessing and emptying your cryptocurrency accounts on genuine platforms using the details you provided. Therefore, it’s crucial to be wary of any unsolicited communication asking for your personal or financial information, especially if it promises too-good-to-be-true deals or creates a sense of urgency.
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Romance Scams
Once the scammer has cultivated your trust, they’ll introduce the idea of investing in a cryptocurrency scheme or request a direct cryptocurrency transfer. However, instead of using the funds for the promised investment, the money is promptly diverted into their own pockets. The financial losses incurred through these scams can be staggering, reaching astronomical amounts. According to AARP, in November 2023, the U.S. Justice Department and Secret Service retrieved $9 million worth of Tether from scammers who had targeted more than 70 victims. A large portion had been targeted through romance schemes.
Impersonation and Giveaway Scams
Social Media Scams: Scammers establish phony profiles, pages, or groups on platforms like Facebook and Instagram. They’ll then use those pages to promote fraudulent investment schemes or phishing links – in 2024, fake social media scams, sometimes called deepfakes, surpassed $25b. Scammers managed to achieve this by posting fake testimonials, success stories, and screenshots of large profits to lure victims. The links on these posts will direct users to a site that captures login credentials or private keys.
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Crypto Investment Scams
Scammers sometimes design enticing crypto investment schemes that promise high returns with little to no risk. They often involve elaborate ways to convince you that their investment is safe and profitable. The most common types include Ponzi schemes, pump-and-dump schemes, and fraudulent ICOs and NFTs.
Here’s how they work:.
Blackmail and Extortion Schemes
The modus operandi of these schemes mirrors that of traditional monetary scams, albeit with cryptocurrency as the medium of exchange. Crypto scammers employ blackmail or extortion tactics, leveraging their possession of sensitive information like personal photos, videos, or financial records to coerce victims into making cryptocurrency payments. The victims acquiesce due to the fear of the consequences should this sensitive data be disclosed, often under the threat of a looming deadline. Thus, the scammers succeed in extracting payments in cryptocurrency from their intimidated victims.
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Cloud Mining Schemes
Victims of these scams fall prey to deceitful tactics employed by fake companies posing as crypto mining contractors. These contracts entice with promises of profits derived from cryptocurrency mining without requiring ownership of costly equipment. However, the truth is that these companies are mere fronts set up by scammers who neither possess mining equipment nor the financial means to fulfill their promised returns to investors. In some instances, these mining scams initially function as Ponzi schemes, where initial investors are paid using funds sourced from newer investors, further perpetuating the fraudulent cycle.
Fake Cryptocurrency Exchanges and Wallets
To pilfer funds, scammers devise fake cryptocurrency exchanges and wallets that mimic legitimate platforms, rendering them nearly indistinguishable to the unsuspecting eye. These counterfeit sites entice victims with alluring offers, including reduced fees, enhanced security, and exclusive functionalities. However, once victims create accounts and deposit their funds, the scammers swiftly abscond with the stolen money, leaving the victims empty-handed.
In May of this year, two men in the UK stole almost £6 million worth of cryptocurrency from victims. They replicated the website of Blockchain.com so they could access victims’ online wallets.
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SIM-Swap Scams
These crypto fraud tactics are exceptionally sophisticated, leveraging victims’ mobile numbers as a gateway to their online accounts, including crypto wallets. Scammers exploit this information to intercept verification codes and even reset passwords, thereby gaining direct access to digital assets. They can acquire mobile numbers through various means, such as social media profiles, data breaches, or phishing emails.
How to Avoid Crypto Scams Early?
Spotting a crypto scam early is a great way of protecting yourself against falling foul of a fraudulent scheme. You can do so by:
- Analyzing the investment’s whitepaper
- Looking for red flags in communication
- Spotting unrealistic promises
The best ways to protect yourself against being scammed is to:
- Check third-party reviews
- Ignore unsolicited messages
- Verify any endorsements or partnerships
- Move slowly before investing
- Bookmark important links
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Where & How to Buy Crypto Safely?
If you want to buy cryptocurrencies safely, you can easily start by creating an account with BTCC, one of the longest-running exchange in the world. As a old exchange enjoy good reputation, BTCC is more reliable with no reported hacks or security breaches to date.
BTCC is among the best and safest platforms to buy cryptocurrencies. The reasons why we introduce BTCC for you summarize as below:
- Industry-leading security with no reported hacks or security breaches to date
- High liquidity & volume
- Extremely low fees
- High and rich bonus
- Excellent customer service
Conclusion
As the cryptocurrency landscape rapidly evolves, it is imperative to maintain a heightened awareness of the ever-more sophisticated scams and deceitful tactics employed by fraudsters. By staying informed through reading informative guides like this one and remaining vigilant during investment processes, you can safeguard yourself against falling prey to these nefarious schemes. Engaging in thorough research and staying up-to-date with the latest developments is a crucial step towards making informed investment decisions and protecting your assets.
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