As we move into this crypto cycle’s bull run, expect to see scammers step up a gear or two and do their utmost to steal your holdings. So just what can you do to protect your crypto and how can you spot a possible scam?
How To Spot Crypto Scams
Always remember if something sounds too good to be true then the reality is, it is! If you are ever promises guaranteed returns, free crypto coins or even free trading software then take a step back and simply shut down communication with the scammer.
There is NO financial investment that can guarantee a return because every single asset / investment can of course, go down as well as up. And as crypto is far more volatile than traditional investments, it’s laughable that any crypto project can have a guaranteed positive return in the short term.
Avoiding Cryptocurrency Scams
Any crypto you purchase, you should safely store in your own wallet. The keys to your wallet (normally a seed phrase of at least 12 words) should NEVER be made available to anybody else. If someone has access to your seed phrase then they have access to your crypto funds. If anybody asks for your keyphrase, or your keyphrase is requested from an app or website then it’s a scam to steal your funds. You should only need your keys or seed phrase for your wallet!
Test Wallet Transfers
If you are transferring a large amount of crypto to your wallet, it’s advisable to start with a small test amount first. Doing so you can check that the test amount has reached your wallet before sending the remainder.
Research
Before you invest in any coin, simply take the time to research it. Don’t simply buy it because it is pumped on social media or simply because others are buying it. Find the coins official website, research it’s utility, it’s history, it’s potential outlook. In all honesty I’d say 90% of all crypto projects are trash and will crash and burn over the next few years.
Don’t Be Pressurised!
Scammers will try and cut down your thinking time using high pressure tactics to steal your money. Maybe they’ll offer you an amazing bonus , free coins or some other offer so that they can get their hands on your funds asap. Take your time! Again, if it sounds to good to be true, it is!
Social Media Scammers
Social media is a cesspool of scammers promoting fraudulent schemes. And just because you see an ad on Facebook or Instagram does not mean is legit. Scammers will often use images of respected celebrities to knock you offguard. Remember, if something seems to good to be true, then the reality is its a scam!
Cold Calls
If someone cold calls you with any type of investment opportunity, especially crypto, simply hang up! And certainly never give them any of your personal details!
Crypto Downloads
Never download wallets, exchanges or any other type of crypto software from random websites. If you can’t download the app you are looking for from either the Google Play Store or the Apple App Store then it can’t be trusted.
Common Crypto Scams
Crypto Investment Schemes
Scammers contact victims by phone, email or through social media platforms acting as professional investment managers. They’ll spin the same old story of how they’ve made millions and how you can too.
They’ll request an upfront fee which they say they’ll invest for you. Each day you’ll see your initial investment surge in value on the scammers fake website, literally turning hundreds into thousands. At the end of the investment period, which is usually a week, but sometimes a longer, the scammer will ask you to send his commission before you can withdraw your funds. The victim sends the commission payment because he believes he’s going to get a nice windfall, but of course the victim gets nothing and the scammer disappears with the money.
Rug Pull Scam
Scammers recruit victims through social media and funnel them into Telegraph and WhatsApps groups. They pump a new coin, getting the victim to invest in the coin and encouraging them to get their family and friends invested too because the coin is going to make everybody very rich. The coin starts to gain value but nobody sells because the scammers make them believe the coin will go much higher. The victims are simply buying the useless coins from the scammers. The scammers will keep pumping the coin, perhaps saying a big announcement is due soon or a new tech update is soon to be released which will push the price even higher. As soon as investors start to realise that there maybe a problem the scammers dump coins and disappear and the coin value quickly drops to zero.
Romance Scams
Even dating sites nowadays are used by scammers. A common scam currently doing the rounds, is that someone you meet, either through social media or perhaps on an online dating site, will spend time gaining your trust. This is normally an exclusively online relationship, as the scammer will not want to giveaway their true identity. Once they believe they have your trust they’ll start to tell you how they are making big money from crypto trading. Of course they’ll suggest you should get involved too. Many fall for this as they trust the scammer plus of course they are enticed by the prospect of making big money.
The scammers then gets the victim to sign up to a trusted exchange and buy crypto, which reinforces the victims trust as the exchange is indeed legitimate. Next the scammer gets the victim to transfer their crypto to a trading platform which is of course not legitimate. Amazingly the victim, aided by the scammer, starts to make big money trading as the trading software being used is actually rigged in the victims favour. At this stage, the scammer may actually encourage the victim to withdraw a little of their initial investment to gain more trust. As the victim continues to trade profitably, the scammer suggests that the victim should invest more, perhaps to unlock more features of the trading software so they can make even more money. The victim deposits more, and then even more because they believe they are making a fortune. The reality is that all money the victim has sent to the trading platform is lost. But the scammer has not finished fleecing their victim yet!
When the victim tries to withdraw any of their fake profits, they are told that they need to pay tax or maybe commission. And of course, this can’t be simply deducted from the victims trading balance, this is simply another ploy, from the scammer to get even more money from the victim. The victim pays the fake tax but then there is another problem which needs another fee. Sadly this goes on and on until one day, the scammer vanishes and the trading platforms goes offline with the victim left with nothing.
Phishing Scams
Phishing scams are not new but have been adapted to target crypto wallets. Scammers target crypto holders with emails that appear to be from crypto exchanges or wallets. The emails contain links which when clicked, send the user to fake websites which look genuine, but of course are not. The fake websites are created to steal the victims login and keyphrases so the scammers can access the victims accounts and wallets. NEVER CLICK LINKS TO EXCHANGES OR WALLETS FROM EMAILS!
Public Wi-Fi Hacks
Never access your crypto wallet or log into a crypto exchange whilst using a public network. A scammer can easily capture data send through public networks and gain access to you keys and login details.
Giveaway Scams
Giveaway Scams are all the rage at the moment which promise free coins or even NFTs. Many even appear to be promoted by celebrities which is simply a ploy to give these giveaway scams credibility. If you click the link the scam is either to get you to make a payment for verification purposes, which of course you’ll never see again, or worse still, get you to enter your wallet details so the scammer has access to your crypto funds.
Fake Cryptocurrency Exchanges
Scammers will try and lure you to a new crypto exchange perhaps with a free coin offer or ultra low trading fees. You sign up, make an initial deposit and find out that the exchange is fake or does not even exist. Stick to tried and trusted crypto exchanges such as Bitstamp, Binance or Coinbase.
