It is important to be aware of the risks when looking at investing in cryptocurrency. There are lots of scams involving crypto, and fraudsters are very eager to take advantage of you to steal your money.
First, what is cryptocurrency? Cryptocurrency is a type of digital currency that you usually only use and purchase on your phone, computer, or cryptocurrency ATM. Well-known cryptocurrencies include Bitcoin and Ether, but there are many new ones being created.
Next, here are some common cryptocurrency scams and how to avoid them:
- Fake websites. Scammers may create fake cryptocurrency trading platforms or fake versions of official crypto wallets to trick their victims. Be aware of slightly altered domain names or similar designs of the real websites when determining if the website is fake or not. Scammers usually try to mimic real websites but alter small details to make it seem legit.
- Phishing scams. Crypto phishing scams target information relating to online wallets. Scammers target crypto wallet private keys, which are required to access funds within the online wallet. Typically, scammers send an email to lure recipients to a fake website and asking them to enter private information. Once they acquire this information, they can steal cryptocurrency in those online wallets.
- Pump and dump schemes. Fraudsters hype a particular coin or token through email or social media. Traders rush to buy the coins, which drives up the price, causing inflated prices. Scammers want prices to be inflated so that they can sell their holdings – which causes a crash. This scam can happen within minutes.
How to protect yourself from cryptocurrency scams:
- Protect your wallet. Use a wallet with private keys. If anyone ever asks you to share your keys to participate in an investment opportunity, IT IS A SCAM.
- Keep an eye on your wallet app. The first time you transfer money, transfer only a small amount to confirm the legitimacy of the crypto wallet app. If you notice any suspicious behavior, uninstall the app.
- Only invest in things you understand. If it is not clear how a certain cryptocurrency works, then it is best to take a pause and do some more research before investing.
Overall tips for avoiding cryptocurrency scams:
- Only scammers demand payment in cryptocurrency
- Only scammers will guarantee profits or big returns
- NEVER mix online dating and investment advice
- Only download apps from official platforms
- Do your research!
Scammers are always trying new ways to steal your money and get you to fall victim. Be aware of this and make sure to protect yourself and your money! To learn more about all things cryptocurrency check out these articles:
- consumer.ftc.gov/articles/what-know-about-cryptocurrency-and-scams
- kaspersky.com/resource-center/definitions/cryptocurrency-scams
We’re here to help! Visit our webpage to stay up to date with the latest fraud and scams.