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When it comes to money, scams always come. And the same is true of cryptocurrencies and the rise of cryptocriminals.
In February 2022, cryptocurrency exchange platform Wormhole lost $320 million after a cyberattack. In addition to this attack, cryptocurrency scammers have stolen more than $1 billion since 2021, according to a Federal Trade Commission report.
Digital currency is stored in a digital wallet, and the owner can turn the currency into cash by transferring it to a bank account.
Cryptocurrency, like Bitcoin, is different from digital currency. It uses blockchain for verification and does not go through financial institutions, so it is more difficult to recover from theft.
While cryptocurrency is a more recent trend, cryptocriminals are using old methods to steal. Here are some of the common cryptocurrency scams to watch out for.
Bitcoin Investment Schemes
In Bitcoin investment schemes, scammers contact investors who claim to be experienced “investment managers”. As part of the scheme, so-called investment managers claim to have made millions investing in cryptocurrencies and promise their victims that they will make money from investments.
To get started, scammers ask for an upfront fee. So instead of making money, criminals simply steal the upfront fees. Scammers may also request personally identifiable information, claiming that it is to transfer or deposit funds and thereby gain access to a person’s cryptocurrency.
Another type of investment scam involves using fake celebrity endorsements. Scammers take real photos and impose them on fake accounts, advertisements or articles to make it look like the celebrity is promoting a huge financial gain from the investment.
The sources for these claims appear to be legitimate, using reputable company names like ABC or CBS with a professional looking website and logos. However, the endorsement is false.
Phishing scams have been around for a while, but they are still popular. Cryptocriminals send emails with malicious links to a fake website to collect personal details such as cryptocurrency wallet key information.
Unlike passwords, users only get a private key unique to digital wallets. But if a private key is stolen, it is problematic to change that key. Each key is unique to a wallet. So, to update this key, one needs to create a new wallet.
To avoid phishing scams, never enter secure information from an email link. Always go directly to the site, no matter how legitimate the site or link appears.
Social media cryptocurrency donation scams
There are many fraudulent posts on social media promising bitcoin freebies. Some of these scams also include fake celebrity accounts that promote the offer to attract people.
However, when someone clicks on the sweepstakes, they are taken to a fraudulent website requesting verification to receive bitcoin. The verification process includes making a payment to prove the account is legitimate.
The victim could miss this payment or, even worse, click on a malicious link and have their personal information and cryptocurrencies stolen.
Cryptocriminals can lure investors with promises to be a cryptocurrency exchange. But in reality there is no trade and the investor does not know it is fake until he loses his deposit.
Stick to the most well-known cryptocurrency exchanges to avoid an unknown exchange. Do some research and check industry websites for details on the exchange’s reputation and legitimacy before entering any personal information.
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