What Are Cryptocurrency Scams?
The 19th century experienced a monumental event called the gold rush. Hundreds of thousands of people set off to search for gold in different corners of the globe. They all hoped they would discover great riches with just a little bit of luck. Nowadays, something similar is happening with cryptocurrency in the brave new cyber frontier.
It seems we are in a planetary craze for this new digital form of money. Some experts are praising it as the technology of the future, while others scoff at it as nothing more than a pyramid scheme. Whichever side you are on, it’s undoubted that investors, professionals, and amateurs alike, are trying their hand in crypto trading.
Snakes and Ladders of the Cryptocurrency Game
There’s so much to be excited about cryptocurrency. Primarily, it is supported by blockchain technology. This revolutionary tech is extremely safe, and we have just scratched the surface of all the potential applications it can have.
What’s more, the blockchain systems enable direct peer-to-peer transactions, which completely cuts out the middleman. This can create a paradigm shift in world economics, as banks, lawyers, and other third parties have been a key element of funds transfer. This creates a highly decentralized system of exchange with huge freedom to do business without imposing governing bodies.
The Highs
These qualities transfer to cryptocurrencies, but that’s not why there’s an ever-growing outbreak of investors. The value of any crypto money is not tied to a specific asset but it depends on various conditions like supply and demand. This can make it highly volatile with its value soaring and plummeting within minutes. That means that a small investment could lead to huge earnings if a person makes the right prediction.
To top it off, Bitcoin and Etherium have sparked a whole slew of new types of cryptocurrencies. As of March 2022, it is estimated that there are 18,465, and the trend is rising. The thing is that all of them carry a promise that they could become valuable and present a potential investment opportunity.
The Lows
It is certainly true that a lot of crypto traders have amassed great wealth. Sadly, the same promise of riches can turn into a siren’s song. The high reward of crypto exchange carries a high risk with it, and many people have lost their money to cryptocurrency.
It is important to note that dealing with cryptocurrency is a perfectly legal and legitimate form of earning money. However, it does involve tremendous risk, and the lack of centralization implies that there are no institutions to provide a safety net. What’s more, the allure of get-rich-quick has spawned a myriad of scams to extract people’s money with crypto trading.
Dangerous Websites
Fraudulent sites are scammers’ bread and butter. They are commonly a trap to suck people into a larger scam. They can range from fake dating platforms to fake online casinos. With the rise of cryptocurrency trading, unsurprisingly scheming internet pages have been sprouting all over. They tend to be more common than you think, so be careful.
Locked Funds Traps
Many of these fraudulent platforms present themselves as cryptocurrency trading institutions or investment syndicates. Almost universally, these frauds advertise seductive return rates while boasting a risk-free system. It’s all a ploy to entice people to give them money.
When a target hands over their funds, the site may present an illusion that the investment is generating profit. This might even encourage a victim to supply more money. However, if the unfortunate investor tries to draw their money, they soon discover that it is locked. To their shock, they can’t come in contact with anyone responsible, slowly realizing their money has been stolen.
Data Grabbing Eye Candy
Some criminal sites aren’t set for a long con and don’t go as far as extorting money. As a matter of fact, they are aiming for your data. Certain platforms are non-existent apart from their entry point. It is usually a subscription page which is designed to extract information which can be used to steal cryptocurrency.
These sites will ask a series of questions to confuse the target that they are undergoing a typical admittance process. If a person isn’t careful enough they might divulge their private key or recovery phrase for their e-wallets. When they get this info, the scammers immediately steal the victim’s crypto funds.
Phishing
This is a tactic of sending unsolicited emails or texts that usually contain a link and a call to action. As a rule, the link leads to a malicious site, and the message confuses the victim into believing it’s from a legitimate institution. If you’re thinking to yourself: “I would never fall for something like that”, just bear in mind that scammers use dirty tricks to fool people. What’s more, with the sheer number of fake emails and messages, a target will click a problematic one eventually.
When it comes to phishing in the cryptocurrency department, the MO is the same. However, the only difference is that malicious sites and texts aim for a victim’s personal key to the e-wallet.
Pump and Dump Schemes
This is a shifty practice in which several owners inflate the value of a specific cryptocurrency, and after it is high enough they abruptly sell all of it. Hence the colloquial term pump and dump. As a result of sudden and substantial sales the price plummets, leaving many people with worthless crypto assets.
A select few swindling crypto holders are behind the entire operation. They promote an aggressive marketing campaign to make as many people purchase the specific cryptocurrency. Also, these scammers also buy it in loads to enhance the pump. The eventual dump happens in a matter of minutes. Since the schemers are the only ones behind the plan they earn big money, while their victims end up broke.
Rug Pull
The execution of this scheme is very similar to pump and dump in a sense that a small number of masterminds is inflating the value of a specific cryptocurrency. However, in an opportune moment they remove the liquidity of the crypto from other owners. This is detrimental to any holders of that crypto asset, because they can’t sell it. At least with pump and dump, as highly unlikely as it is, the crypto owner might sell it eventually, cutting losses.
Dangerous Apps – Spot the Difference Game
We live in an exciting time when there’s an app for everything. There are dating apps, streaming apps, shopping apps, you name it. So it’s no wonder there are apps for cryptocurrency dealings. You can find authorized and safe apps like Webull, Coinbase, and Binance. However, there are considerably more fraudulent ones which aim to steal money.
Commonly, these apps will try to emulate the logo of an authentic counterpart. Likewise, they will take on similarly sounding names to official institutions. If a target gets confused, they end up downloading malware that extracts data or siphons money. Though these kinds of apps tend to get taken down quickly, they do manage to scam people. What’s more, they are like weeds – no matter how many times you cut them down, they keep popping back.
Phony Celebrity Endorsements
Marketing people have tested this time and again: Slap a famous face on a product and watch the sales rise. Legitimate crypto companies have already done this. Celebrities like Matt Damon and Kim Kardashian have already backed specific institutions and cryptocurrencies.
The con people use a similar technique. In order to make their scam more enticing, they claim it has been endorsed by a celebrity. However, this isn’t the case, and the real person is completely unaware their name has been used to con people. The success of this ploy is evident in the case in which Elon Musk impersonators stole about $2 million.
Giveaway Scams – Help Me Help You Lose Money
Even though children are wise enough to follow the stranger danger rule, grownups on social media tend to dismiss it. Giveaway cons usually start with an unsolicited DM or message from a chat group. The scammers behind it usually impersonate a celebrity or a member of a legitimate business.
The scammer offers their target a unique opportunity to earn big bucks. If they give their crypto money to a celebrity or financial mogul, they are bound to get enormous returns. In case the victim gives away their crypto funds, they never see them again and the fraudster disappears.
Cloud Mining Complications
There is a vast network of computers across the globe which decodes the encryption behind the blockchain transaction. Mining is the term for the process of these computations, and it requires enormous hardware power. With the aim to ensure development, the cryptocurrency systems offer compensation to anyone who participates in mining.
There have been cases of electrical malfunctions while mining for cryptocurrency like Bitcoin. Though rewards can be great, most people feel like it’s more trouble than it’s worth. That is why certain agencies specialize in the services of lending their mining hardware from distant locations. An individual may practice mining from afar and without monitoring the computers. This is cloud mining.
It’s all the benefits of mining without the hassle of having to manage the computers. As wonderful as it sounds, this sales pitch is perfect for fraudulent activities. Primarily, to participate in cloud mining organizations, you have to pay a fee or you need to give away crypto funds. Unfortunately, nobody can guarantee you’ll get any returns. What’s more, these kinds of presentations are perfect for Ponzi schemes.
Fraudulent Initial Coin Offerings – No-No ICOs
Like any other startup, initial coin offerings (ICOs) can provide venture capitalists an extraordinary opportunity to invest in potentially game-changing projects. A company may create a new type of cryptocurrency and to set it off they need investors. Primarily the new crypto money has no value, but over time it can gain it.
People who have decided to take a risk by putting their money in initially worthless currency can later gain great profit once its price rises. Such financial endeavors can have considerable benefits, and scammers use this to their advantage.
Fraudulent parties can create aggressive marketing campaigns, employ telemarketers and organize sales pitches. All of this is in order to promote a false up-and-coming new cryptocurrency. Their offer is highly enticing and they try to sell the new crypto money as much as possible. Eventually, the scammers disappear, and victims are left with unprofitable crypto assets.
What to Do in Case of Cryptocurrency Scam?
The world of crypto trading is exciting, profitable, and it gives everyone the freedom to shoot for the stars. Alas, the road to riches is full of traps and schemers. In case you believe you’ve ended up in a cryptocurrency scheme, not all is lost. You still have options. Most important of all contact professionals. Funds recovery agents can provide you with advice and services that can ultimately retrieve your stolen money back.
Visit our site and get your free consultation now.