Hello guys, today I'd be sharing a vital information I came across.
For those of you that are active in the crypto space, it is clear that it is a very lucrative market for scammers. There are many reasons for this, and it’s been very profitable for said scammers, mostly because the average crypto investor is driven by greed and looking for a get rich quick scheme, which almost always ends in lost money and tears. It an ideal market for scammers, as currently there is no regulation and the way coins can be moved from one wallet to another makes it very difficult for the average investor to trace the movements of their coins if they have been scammed.
To stop these scams, as an average investor, you need to know what the scams are that you should be looking out for. Remember, capital preservation is always the number one thing on your mind rather than thinking about how many boats and lambos you’ll be buying in the future! So let us go through these scams and see how they work.
Phishing
Phishing is one of the biggest and most common cryptocurrency scams worldwide. It is an attempt to obtain sensitive information from a user such as usernames, passwords, card details, etc. In the cryptocurrency world, phishing scams attack cryptocurrency exchange passwords, digital wallets, private keys, etc. This process is usually done through a fake website which looks like an authorized one. Many people join these websites, enter their information and the owners of that website can easily steal that information and use for their personal needs. Phishing is so popular scam because it is easy to operate, requires minimal technical knowledge, and doesn’t need a lot of investment. Phishing is usually done via email [1].
Malware downloads
The Internet age brought a lot of viruses, malware and other nasties into the world.
Unfortunately, the value, anonymity and entire digital nature of cryptocurrency means scammers can now make money a lot easier with dangerous downloads. As always, you shouldn’t click on unknown email attachments or potentially dangerous links.
You should also be very aware of bitcoin being used as bait. For example, a post on social media where someone says you can mine bitcoin just by downloading a program, or a link to a supposed bitcoin exchange that offers freebies to get you started, should always be treated with suspicion.
There are plenty of safe, legitimate and secure cryptocurrency exchanges, but you probably won’t get to them by following strange links. Instead, do your own research. Do your homework with Google or sites you know you can trust, and seek out your own services rather than trusting the ones that come to you [2].
Unregulated brokers and exchanges
There are dozens, if not hundreds, of unregulated online exchanges and brokerage firms offering cryptocurrencies and cryptocurrency trading products. Investors should be wary of too-good-to-be-true promotions and promises of quick riches. Once you deposit money, many of these firms will charge you outrageous commissions or make it very difficult to withdraw funds. Some of the worst offenders will simply steal your money [3].
Fake wallets
With the launch of Bitcoin, many fake android wallets have also been launched on play store.
That’s why it is a big NO from us to pick any wallet randomly from the play store because there are chances that it will be fraudulent and you may end up losing your money. Though these wallets may promise you the seed and control of your funds, never fall for them without proper due-diligence. It is one of the easiest ways to scam people and happens many times during the launch of Bitcoin forks. These wallets take your seed or private keys and rip you off your BTC too [4].
Pyramid or Ponzi schemes
This form of scam is easiest to spot but people still fall for it. If you find a crypto project that actively encourages the recruitment of new investors to maximize your profits, it is a Ponzi scheme. This system works on the model of scamming the one who enters the system later.
Also, schemes that promise absurd returns are definitely Ponzi schemes [4].
Impersonators
Using fake social media accounts to impersonate key figures in the crypto space has also been a common practice for scammers. Here a scammer will create a fake account and target users into investing into known illegitimate projects, or to trick users into giving their private keys for wallets in return for a larger amount if ROI. If anyone asks you for your wallet private keys across any form of social media it should be avoided and that account be reported to the support team of that social media platform.
##Pump and dump groups
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Getting invited into pump and dump groups across platforms such as Telegram, Discord, Slack, etc could be a way to get someone to invest into coins that look trendy and look like they are appearing to go up in value. This should be avoided unless you have done your own due diligence. What is happening is there are groups of people who are creating ‘fake hype’ for a coin, to drive it up in value before they dump it and take a nice profit, leaving the average investor in said coin down on their investment. This is highly illegal in every other market, known as collusion. When the crypto market gets regulated, and it will do, you do not want to be associated with anything like these groups, as you could have the authorities knocking on your door! Something to avoid and be careful of indeed.
Other scams
Earlier this week, South Korean police raided the office Shinil Group, whose alleged crypto scam promised investors the spoils of Russian warship Dmitrii Donskoi, that sank 113 years ago. To encourage investors to purchase the company’s own cryptocurrency, Shinil allegedly promised to reimburse them with the gold from the ship. The coin reportedly attracted 60 billion won ($53.7 million) in investments from around 100,000 investors since its launch this year. However, there is no clear evidence that the ship contained anything of value [5].
Recently, Tokyo-based security software manufacturer Trend Micro found BTC automated teller machine (ATM) malware available for purchase online. Trend Micro cites an advertisement posted by an “apparently established and respected” user on a darknet forum. For the price of $25,000, criminals could purchase Bitcoin ATM malware accompanied by a ready-to-use card with EMV and near-field communication (NFC) capabilities [5].
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To conclude this article can be seen there are many ways and some cases, very sophisticated ways of scamming general investors out of cryptos. If there is anything to take way from this article it is the old age saying of, ‘if it’s too good to be true, it probably is’. Always take a sensible approach when investing in cryptocurrencies and always do you own research. No one is going to look after your money the way you will!
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