Beware of a Crypto Scam!
Cryptocurrency has revolutionized the financial world, offering decentralized and innovative ways to complete transactions. Unfortunately, though, its rapid growth has also attracted an increase in scams targeting unsuspecting investors. Here’s what you need to know about crypto scams and how to avoid them.
How the scams play out
Crypto scams can take several forms. Here are the most common variations of these scams:
Crypto investment scams. In this variation, an alleged investment manager reaches out to a target and promises to grow their money on the condition that they purchase cryptocurrency and transfer it to an online account. Unfortunately, if the victim follows through, they’ll be sending their money directly to a scammer.
Crypto celebrity scams. Here, a scammer impersonates a celebrity who promises to multiply a target’s cryptocurrency. They’ll provide a link for the target to send their cryptocurrency to, or ask that it be sent using the celebrity’s QR code. Of course, any money sent would go directly to a scammer.
Crypto romance scams. In this scam, an online love interest asks their virtual date to send money via cryptocurrency for an investment opportunity. Naturally, this is a scam and the money will only go to line a fraudster’s pockets.
Crypto customer service scams. Here, scammers pretend to represent well-known companies, like Amazon or Microsoft, or your financial institution. They’ll send a message via text, email or social media, claiming there’s a problem with your account. In order to fix it, they’ll say, you must buy crypto and send it to them. If you fall for their story and follow their instructions, you’ll only be sending money to a scammer.
Red flags
Watch out for these red flags, which can alert you to a possible cryptocurrency scam.
Unsolicited contact. Be wary of unexpected messages or calls from individuals claiming to offer investment opportunities, especially if they pressure you to act quickly.
Guaranteed high returns. Promises of substantial profits with little to no risk are classic signs of fraudulent schemes.
Lack of transparency. Scammers will not be able to provide clear information about their operations, team members or physical addresses.
Pressure tactics. If you’re pressured to invest immediately or risk missing out on a “limited-time offer,” it’s likely a scam.
Requests for upfront payments. Demands for fees before accessing funds or services, especially via cryptocurrency or gift cards, can be clear indicators of scams.
Unregistered platforms. Scammers will operate through unregulated exchanges or platforms that are lacking proper licensing.
How to avoid falling victim
Don’t get caught in a crypto scam! Take these steps before purchasing or investing in crypto.
Before investing, thoroughly research the company behind the opportunity. Read reviews, verify credentials and look for details about their team members and physical location. Be sure to use only reputable platforms for investing in crypto as well as regulated exchanges and wallets.
It’s also important to keep your assets secure by utilizing hardware wallets and enabling two-factor authentication to protect your holdings.
Finally, stay informed about common crypto scam tactics to help you avoid falling victim to a scam.
If you’ve been scammed
If you’ve fallen victim to a crypto scam, there are steps you can take to mitigate the damage.
First, gather all communications, transaction records and any relevant information related to the scam. Next, contact local law enforcement and financial regulatory bodies to file a report. It’s equally important to inform your financial institution and any involved crypto exchanges or wallets about the scam. Finally, consult with a legal professional experienced in cryptocurrency-related cases to explore potential remedies.
As you recover from the scam, be cautious of individuals or companies promising to recover your lost funds for a fee — these are often additional scams.
Cryptocurrency is exciting and offers a relatively new landscape for investment opportunities. Don’t let scammers ruin your crypto experience! Follow the tips here to stay safe.