In the cryptocurrency world, there are many cases of scams that make easy money from newbies and losers. We have prepared a list of the most common and well-known traps in the cryptocurrency field. We hope this information will help you avoid the trap!
Fake exchanges, wallets, and projects
This is one of the simplest types of fraud. Criminals offer a service or product that is designed to trick people into money.
In recent years, there have been quite a few scam exchanges, fake wallets, and coins that cost nothing. Sometimes they look like a well-known, recognizable company. Others are just trying to look professional to gain trust. In any case, once they receive your money, you will not get them back.
The best way to keep yourself safe from these traps is to take your time and check everything thoroughly. Follow only links that you trust, and listen to community comments, and what other people have to say about these services. If you are just confused by something, you better trust your instinct.
Another popular form of cheating is giveaways on Twitter and other social networks. Fraudsters often copy the account of a well-known person – the head of the exchange, developer, or company, and promise to transfer money to those who register in the program.
Usually, for this, you need to send a certain amount of coins to the specified address or provide personal information. Either way, it’s always a scam. Nobody ever gives out coins for free. Cryptocurrency traps have become popular because of the ability to remain anonymous. Whatever you are promised, do not believe it.
Financial pyramids
A pyramid is any type of fraud that requires a constant influx of new investors. Typically, they ask for an initial investment and promise fabulous returns. However, only the first investors get profit because they bring new participants to the scheme. But sooner or later, the pyramid begins to crumble.
As the money flows through the funnel, the principal goes to the creator of the pyramid, who disappears as soon as it becomes clear that all the profits have already been collected. Most people are left without profit and money.
One of the most famous examples of this kind of scam is Bitconnect. The project that turned out to be a financial pyramid collected billions of dollars from investors and left them with useless coins. It no longer exists, but the cryptocurrency space is still full of such schemes. The best defense is a careful study of the project. Take time to find out all about where you are going to invest your money. Also, you should be warned about unrealistically high and fast profits.
Traditional traps
Usually, modern scams are not very different from those that have been used to deceive investors for years. These are phone calls, text messages, or letters promising rewards for participating in competitions, threatening lawsuits, or even simply extorting money. In any case, all allegations are a trap and attempt to lure unsuspecting citizens to make them pay.
Fraudsters can write on behalf of the tax or other regulatory authority. They can threaten to post private videos of the victim’s webcam on the network unless she pays the blackmailer some bitcoins.
Virus software
Viruses are programs that were designed specifically to steal money or information from your device. The principle of operation is different for everyone. Some people simply install a utility that records whatever you enter from the keyboard and passes that information on to the attacker. It is how he/she learns your usernames and passwords.
Some virus programs scan the clipboard. When the address of the cryptocurrency wallet appears there, the program changes it to the address of the hacker. If you copy and paste the address, check it visually two, preferably three times before sending money.
To defend against this kind of attack, do not click on anything that you are not 100% sure about. It’s also a good idea to keep your cryptocurrency separate from the system you use regularly, such as surfing the web or browsing social media.
Pump and dump
Another common form of scam comes from small, organized groups that create a buzz around obscure coins. They first buy them, and then launch a coordinated social media campaign to create buzz around the project and attract investors. It drives up the price and kicks off the FOMO cycle (fear of missing out on a good opportunity) as more and more people want to take advantage of an investment opportunity.
Once the fever reaches its peak, the organizers of the scheme discard their coins. This provokes its collapse and a massive exodus of investors who begin to realize that they are losing money. Only scammers win. The obvious way to avoid this is to not succumb to mass psychosis and, again, carefully study the market.
Conclusion
This article covers the most common forms of cryptocurrency fraud. However, criminals are smart and are always looking for new ways to fool unsuspecting cryptocurrency users. The best advice in this situation is not to rush, read reviews and never invest money in emotions. By following these tips, you will avoid most of the dangers.
