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Crypto scams: how to avoid them

Crypto scams: how to avoid them
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The rise in the popularity of cryptocurrency has also opened up more possibilities for bad actors to exploit all the loopholes in the crypto space and scam unsuspecting people. 

In 2020, cryptocurrency scammers stole over $7.8 billion and this number doubled in 2021 as scammers were able to steal over $14 billion worth of crypto in the past year. New types of crypto scams are cropping up every day and if you are not careful, you may end up falling prey to them. 

In this article, we discuss:

  • How cryptocurrency scams work
  • The most common types of crypto scams
  • How to avoid cryptocurrency scams 
  • How Red Points can help protect your brand against crypto scams

How cryptocurrency scams work

A cryptocurrency scam involves criminals stealing money from people who are actively investing in the new digital currency or making transactions through it.

Since most crypto assets aren’t regulated or tracked by the government, it can be incredibly difficult to recover your lost money from cryptocurrency scammers. This is also the reason why more and more criminals are courageously coming into the crypto space and scamming unsuspecting people without any fear. 

At the end of the day, it becomes the responsibility of the end-users to protect their assets. 

Cryptocurrency scams mainly fall under the following categories:

  • Obtaining access to a person’s wallet: These include scams where criminals gain access to the target’s digital wallet or their account authentication credentials. Scammers will try to either get access to private information like security codes// private keys or they may even try to access physical hardware 
  • Transfer or steal cryptocurrency directly: In these scams, criminals transfer cryptocurrency directly from their target’s wallet to their own wallet through impersonation, fake business opportunities, or any other malicious ways.

5 Common crypto scams 

#1 Fake websites 

New crypto users can get lured to fake websites that advertise ‘big’ investment opportunities or mining in cryptocurrencies. Many of these websites look so authentic that they may convince you that your investment will most certainly grow. 

While the investment may be easy, the chances of you getting back your profits are almost impossible as scammers take all the money and shut down the website just as they collect enough money.

In many cases, scammers can also impersonate businesses and create websites that look almost the same as the original ones to attack unsuspecting customers.

#2 Fake mobile apps 

Fake mobile apps have also become a rather popular way for scammers to trick cryptocurrency users. The goal of these mobile apps is to trick people into thinking they are using the original mobile app and the scammers in turn gain access to users’ digital wallet details. 

For instance, Poloniex, a popular crypto-asset exchange app fell prey to scammers when a fake app with a similar name and user interface showed up on Google Play. The company did report the fake app, but by the time it was finally taken down, over 10,000 users had already downloaded the app and possibly jeopardized their account security.

#3 Email scams

Emails can also be spoofed in an attempt to look like they were sent from a trusted and legitimate source to lure people. Most of these emails ask for ‘urgent’ payments to be made through cryptocurrency. The idea is to convey a sense of urgency so the user acts quickly on the email without giving it much thought. 

With the sudden increase in the new crypto-based investments like non-fungible tokens (NFTs) and initial coin offerings (ICOs), there are now more ways than ever for scammers to gain access to your money. For instance, scammers can send out emails pretending to be from a legitimate cryptocurrency company offering you with a limited time offer.

In other cases, founders of new cryptocurrencies themselves may distribute tokens that are still unregulated or mislead investors about their products with fake advertising. 

#4 Giveaway scams 

Cryptocurrency giveaway scams are promoted on YouTube, Twitter, Facebook, and other social media platforms. These giveaways almost always appear to be from celebrities or famous personnel within the crypto community. 

In the giveaways, scammers claim to multiply or match the cryptocurrency sent to them through well-crafted messaging and authentic social media accounts. Most of these giveaways have a sense of urgency with a time limit put upon them and they appear to be a once in a lifetime opportunity. 

In 2021, over $2 million in cryptocurrency were scammed by Elon Musk impersonators alone. 

Since there have been many legitimate giveaways on social media as well, it can be difficult to differentiate the scams from the genuine ones. This is exactly why you need to do your due diligence and research before you engage with them. 

Marketplace scams 

Marketplace scams are instances where customers are asked to send cryptocurrency for a product they are buying through an online marketplace. 

Many eCommerce websites now readily accept cryptocurrency as a form of payment to make it easier for crypto enthusiasts to purchase products. But that doesn’t mean that all the websites that claim to accept cryptocurrency are genuine. 

Scammers can set up fake seller accounts or complete fake websites to lure unsuspecting customers to make purchases using cryptocurrency. After taking orders, the scammers will either shut down the website completely or sell counterfeit products instead.

How to avoid cryptocurrency scams

Cryptocurrency scams may be increasing but you can take proactive steps to avoid ever being trapped in one. Here are some of the ways to prevent cryptocurrency scams:

Protect your digital wallet: To invest in cryptocurrencies like Bitcoin or to make transactions, you will need a digital wallet along with private keys to access the wallet. If a website or a company asks you to share your private keys under any condition, it is most definitely a scam and you should stay as far away from it as possible. Your private keys to your digital wallet should never be shared with anyone.  

Ignore cold emails: If you get contacted out of the blue about an ‘amazing’ cryptocurrency investment opportunity that just seems too good to be true, then it probably is. Never give away your personal information or login to your digital wallet through suspicious links present in emails because it is mostly likely to be a scam.

Do your research: If a company does try to pressure you to invest in a ‘limited-time’ offer make sure to not fall under the urgency and do your research. There have also been some cases where scammers offer discounts or bonuses just to get people to invest right away. Instead of going all in at once, take some time out to research properly before investing any of your money. 

Stay away from social media ads and Google ads: Scammers use ads on social media and even Google search to target crypto enthusiasts. In 2021, bad actors purchased Google ad placements for fake websites that impersonate popular crypto wallets to target people and the scammers were able to steal over $500k worth of cryptocurrency.

Protect your business: It’s also just as important to protect your business online to ensure crypto scammers do not impersonate your business in order to scam prospective customers or sell counterfeit products. This can in turn affect your brand reputation drastically and even impact your sales.

To protect your business from bad actors, you can opt for a business impersonation removal software that alerts you if your brand is being compromised. The tool can help automatically find and remove any brand impersonation attempts and prevent online identity theft of any kind.

What’s next

While adopting crypto has become important in today’s digital world, protecting your business against crypto scams is just as important safeguarding your brand reputation.

Red Points can help you protect your business online and avoid crypto scams altogether.

Check out Red Points’ Impersonation Business Removal to learn how it can protect your business against crypto scams.

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