How to detect a Cryptocurrency scam

How to detect a Cryptocurrency scam? 

Cryptocurrency has become a popular investment option nowadays. However, due to unclear rules and a deficiency of regulations, the platforms of cryptocurrency trading are full of cryptocurrency scam perpetrators now. Even the encryption algorithm, which is responsible for maintaining its safety and security, is failing to do it. Therefore, it is necessary for cryptocurrency investors to be well knowledgeable before investing in crypto coins.

Some popular crypto scam strategies owned by the perpetrators are,

  • Fake websites
  • Fraudulent links and Phishing scams
  • Pump and Dump scam
  • Government agency impersonation
  • Fraud related to Initial Coin Offering (ICO)

Fake websites:

Crypto scammers create websites to fool existing crypto investors. Scammers mimic genuine cryptocurrency trading platforms in order to trick investors who are already users. They even imitate the name of the organization they are pretending to be. In this way, scammers garner users’ personal information and identification, whatever is needed to get access to their crypto wallet. In addition, they sometimes offer fictitious coins to the users and run away with money investors spend investing with them.

Fraudulent links and Phishing scams:

A phishing scam is a prevalent method of forgery among crypto scammers. Phishing scams are perpetrated with the help of a very common means of communication, i.e., email. In this scam, scammers send their target emails providing a malicious link. These emails are often worded with legitimate terms related to cryptocurrency investments in order to gain investors’ trust. However, the malicious link provided in the email redirects the victim to a fictitious website, where investors eventually end up losing money. Sometimes scammers resort to spyware, which is provided in the email disguised as other files. Targets unknowingly install this spyware in their system and get victimized by cryptocurrency scams.

Pump and Dump Scam:

Pump and Dump scam has existed since the initial days of stocks and cryptocurrencies. In the scheme of pump and dump, scammers first buy crypto coins on a large scale when they are available at a lower price. They then spread false news making the crypto investors rush to buy them. Once they successfully hike the cost of the crypto, they then sell to make a tremendous profit. The price crash caused by them pressurizes the investors to sell the cryptocurrencies at a loss.

Government agency impersonation:

Scammers often contact their targets pretending to be calling from a government agency as they believe that people easily trust government organizations and do not hesitate to give all their personal information. They often tell their target that their digital wallet is left unsecured, and they need their personal data and identification to safeguard the crypto coins available in their wallet. After garnering their personal information, scammers get access to victims’ digital wallets and then transfer all the coins to them.

Fraud related to Initial Coin Offering (ICO):

Start-up companies of cryptocurrency garner money in order to mine a new crypto coin. They lure investors by offering considerable returns who contribute to their cause. This method of raising money is known as an Initial Coin Offering, shortly ICO. An Initial Coin Offering scam occurs when a fictitious company falsely claims to mine crypto coins and garner money, promising incredible returns but fails to fulfill their promise and runs away with the money.

Research before you invest in cryptocurrencies to refrain from breaches in your crypto wallet. A zero-trust approach can save you from the potential danger of cryptocurrency scams.

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