Before you make any type of investment, it’s critical to do your due diligence. There are always con artists looking to part you from your money. In cryptocurrency investing, thieves want to take advantage of an investor’s lack of expertise and eagerness to turn a profit. This industry is hot and has produced returns that investors in traditional venues could only imagine. Weeding out the nefarious players can be a challenge, especially when you’re excited about the prospects of large gains. Let’s take a look at some of the common cryptocurrency scams and how you can avoid falling prey to the con artists who create and deploy them.
Never Take Unsolicited Advice
A con artist counts on you running with a piece of information instead of doing any research about it. They put a sense of urgency around the tidbit, making it seem as if you don’t act right now, you’re losing out on big money. Stay curious, and don’t take their information at face value. Verify information before acting on it.
The popularity of Coinbase has resulted in a lot of malicious parties creating scams around it. Most of these scams start as an SMS or email. The con artist is trying to get you to click on a link. This is a phishing scam. When you visit the website, it plants a virus or malware on your phone or computer. This malware allows the thieves to capture your keystrokes and gain access to your accounts, passwords or digital wallet. This is one of the oldest types of online scams, and it still works.
Tech Support Scams
In 2018, the FBI warned cryptocurrency investors of scammers pretending to be support staff for blockchain exchanges. These con artists gain the trust of the victim and steal their tokens or other assets. The scammer’s goal is to get your passphrase that unlocks your digital wallet. They then transfer your assets to other wallets. Some people use hardware wallets to get around this type of scam.
Plenty of people love the chance to get something for free. That’s why giveaway scams are so successful. In one common scam, investors are told they can double their digital coins if they send funds to a celebrity. Elon Musk impersonators collected $2 million this way in 2021. Airdrop scams are common on social media. Beware of any message that asks for your personal information.
Job seekers of all ages can fall for employment scams. You might be offered Bitcoin for completing a task. Then you find out you owe your new boss funds. A criminal could also pose as a recruiter or talent scout who promises you jobs, but you have to provide sensitive information. Never share your birth date, Social Security number or other security question or personal details.
Pyramid or Ponzi schemes are also common in cryptocurrency. This involves a person promising incredible returns if you invest now. Instead of investing your money, they use it to pay people who invested before you. They only pay the early investors just enough to keep them happy. The con artist uses the rest of the money to fund a lavish lifestyle for themselves.