The 2021 cryptocurrency boom, highlighted by Bitcoin’s impressive price surges, driven by institutional investments and endorsements from notable figures like Elon Musk, has drawn in numerous new retail investors. Unfortunately, this influx has also attracted a surge of scammers eager to exploit unsuspecting newcomers. Here are the top 17 crypto scams that both new and seasoned investors should be aware of.
Social Media Scams
Social media platforms are rife with crypto scammers. A common tactic involves spamming tweets and Instagram posts with various crypto-related hashtags or impersonating popular exchanges. These posts often promise signup bonuses or investment advice but instead contain malware links. Always verify the identity of social media accounts before engaging or clicking any links.
Social Engineering Scams
Social engineering scams use psychological tricks to steal money or information. Scammers may try to obtain your cryptocurrency exchange passwords or pose as your wallet provider. They may also claim to have compromising images of you and threaten to release them unless you pay a ransom. Never click on links from unknown sources or respond to such threats.
DeFi Rug Pulls
Decentralized Finance (DeFi) encompasses various cryptocurrency financial applications. In a rug pull scam, an organization locks your funds in a smart contract, promising a significant payout. However, these contracts often contain vulnerabilities that hackers exploit, leaving you with empty accounts. Invest in DeFi projects that have undergone security audits and have reputable track records.
Fake Bitcoin Exchanges
Fake exchanges lure you with promises of zero fees or below-market prices for Bitcoin. Once you deposit your money, the exchange disappears. Ensure that any exchange you use is fully registered, regulated, and has positive online reviews.
Fake Cryptocurrencies
Creating a new cryptocurrency is relatively easy, and scammers take advantage of this by launching new coins with lofty promises. They often target victims through email campaigns and social media posts. Always verify the legitimacy of a cryptocurrency and its developers before investing.
Malware
Malware is a longstanding cyber threat that has evolved to target crypto users. It can access your online wallet, scan your device for crypto addresses, and replace them with the hacker’s address. Keep your antivirus software updated, avoid suspicious attachments, and only download programs from legitimate sources.
Imposter Websites
Imposter websites mimic legitimate crypto exchanges and wallet providers. They trick users into entering personal and financial information. Watch for red flags like pressure to deposit funds quickly and unsolicited emails. Always verify the URL and ensure it matches the legitimate site.
Fake Mobile Apps
Fake mobile apps impersonate real exchanges on app stores. These apps steal your data and payments. Although Apple and Google are vigilant about removing fake apps, other app stores may not be. Verify the app’s name and avoid apps that pressure you to make purchases.
Bad Tweets and Social Media Updates
Fake accounts on social media platforms often pose as influencers or development firms, promising big returns. They provide links to invest in projects, but these links lead to scam sites. Don’t click on social media links or trust deals that seem too good to be true.
Scamming Emails
Email scams include blackmail, get-rich-quick schemes, and ransomware links. Most email platforms filter out these scams, but if one slips through, report it as spam and delete it. Never trust messages from unknown sources.
Phishing
Phishing attacks often come via mass email campaigns, but spear phishing is more targeted, gathering detailed personal information. Protect yourself with two-factor authentication and complex passwords for online accounts.
Fraudulent ICOs
Initial Coin Offerings (ICOs) are used to raise funds for new crypto projects, but an estimated 80% are fraudulent. Scammers promise huge returns but deliver nothing. New investors should avoid ICOs, while experienced ones should thoroughly vet any project before investing.
Bitcoin Blackmail Scams
Scammers claim to have compromising information about you and demand Bitcoin to keep it private. These are usually baseless threats sent to thousands of people. Ignore and delete these messages.
Impersonation Giveaway Scams
Scammers create fake social media accounts of famous people to offer fake investment opportunities. They promise Bitcoin rewards or airdrops for signing up, but links lead to scam sites. Be cautious of links and offers that seem too good to be true.
Ponzi or Pyramid Schemes
Ponzi schemes involve early investors receiving returns from new investors’ funds, convincing them the scheme is legitimate. Eventually, the scammers disappear with the money. Avoid any investment that pressures you to recruit others.
Mining Scams
Scammers exploit the complexity of crypto mining by promising high returns for cloud mining services. These scams often steal data or have hidden fees. New crypto investors should avoid mining activities.
Pumps and Dumps
Pump and dump schemes involve coordinated buying of a small market cap coin to inflate its price, followed by a sell-off that crashes the price. Be wary of sudden price jumps in low-cap coins and avoid social media promotions of such schemes.
Recovering Your Money After a Cryptocurrency Scam
If you’ve been scammed, don’t lose hope. Refundaroo specializes in cryptocurrency scam recovery, with a team of legal experts ready to help you. They can investigate your case, identify scammers, alert authorities, and use legal channels to recover your funds, including chargebacks for payments made via credit or debit card.
