6 Common Cryptocurrency Scams You Should Know
The cryptocurrency industry has a worth of more than a billion-dollar. According to the analysis of MarketsandMarkets, the 2021 cryptocurrency market size is around 1.6 Billion Dollars which will exceed 2 billion by 2026. Such a growing market is attracting a lot of investors, entrepreneurs, and business owners too to invest in various cryptocurrencies like Bitcoin, Ethereum. But since the nature of such currencies is volatile (it means the demand of a cryptocurrency can unpredictably increase or decrease) and no financial institutions like banks can regulate its way of doing business, scammers can use this loophole and take all the hard-earned money of innocent people still not ready to know every detail of a cryptocurrency in which they prefer to invest.
And this sort of thinking is giving rise to many common cryptocurrency scams that can enter your lives either in the form of fake investment schemes, job offers, apps, etc. Curious to know them now? Let’s discuss those six common cryptocurrency scams in which a scammer will encourage you to take part in payment activities related to some cryptocurrency and in the end, disappears as soon as he/she receives that payment successfully in his/her account.
1. DeFi Cryptocurrency Rug Pulls
Such scams happen with investors who are attracted through a DeFi project. This project created by crooked developers promises a bright future to investors. Once the investors have enough capital acquired, the owner of this project (you can call this project a rug pull) along with those developers:
- cash out the capital, terminate the project and run away.
- This is making the DeFi sector (i.e. decentralized finance sector) more prone to risks like financial loss, personal information loss, and so on.
There are various examples of rug pulls that are happened recently are and most of them have stolen even 2 million dollars or more of the investors who invested in their projects. So, instead of blaming your fortune, you can avoid such scams by reading the project’s documentation properly, checking the accuracy of code’s functions flagged as dangerous or safe, or estimating the percentage of control of developers in these projects.
2. Social Media and Fake Apps/Websites Scams
Scammers know that social media, apps, and websites are an unavoidable part of the people surrounding them. Worldwide, to date there are more than 3 million social media users according to oberlo, approximately 250 million mobile apps are downloaded by users (as per decibel), and around 1.88 billion websites are accessed from the year 1991 to 2021 (by statista.com). All this is opening gates for scammers to:
- Use social media to steal information by creating fake profiles on Facebook, Instagram, or Twitter.
- Then, they will run multiple types of advertisements, offers, with the only purpose of attracting you to pay them money in the form of cryptocurrencies.
- And if they feel you are still not convinced, then offering you financial relief such as rebates, cashback through fake shopping websites as per your choices and preferences will be their next move.
Besides all the above, they won’t hesitate in sharing a bond of love with you so that you feel attracted to their sense of humor, looks, kindness, and intelligence. Thus, instead of being a victim to these illegitimate online dating and romance scams, social media, or fake websites/apps, better avoid those scammers by not accepting their requests online. Do check if the web pages or mobile applications you are reviewing/scrolling down are one-hundred percent legit and true as per the laws or not.
3. Unwanted Crypto-Investment Schemes
This type of scam occurs in forms like scams through Ponzi schemes, pyramid schemes, and so on. And the scammers involved in such fraudulent scams are experts in convincing you to invest in unsolicited business offers just by:
- Mentioning some celebrity testimonials or endorsements (on their websites) that isn’t legit, safe, and true.
- Then, these scammers will fascinate you with the long-term benefits like larger returns only after you make a payment in cryptocurrency to their virtual accounts.
Thus, besides falling into their traps and losing your hard-earned money as a result, what you should do is report such scams to some law enforcement agencies or federal authorities. And if required – take follow-up via emails or chats. It will help many others not fall into those unsolicited traps promising you higher returns corresponding to your investments in their offers.
4. False Cryptocurrency-Based Job Offers
Decided to accept a cryptocurrency-based job offer over the phone but didn’t research about the company or the source available online thoroughly? If this is so, the chances, of getting scammed by such cryptocurrency-based job offers, increase which in the beginning will:
- offer you a job as a product designer, miner, crypto-investor, or recruiter.
- Now, those scammers will ask for some additional charges so that you may apply and get selected for the job role.
Stop yourself here because as soon as you make payment to their crypto wallet or any other mode that accepts those volatile crypto coins, they will start blackmailing you saying that all your personal information (like name, pictures, account details) in their control will now be leaked on social media handles. Hence, instead of pouring your love into those job offers, research thoroughly about the team members offering you those jobs and be extremely cautious before you make an investment!!!
5. ICO Scams
Though ICOs or Initial Coin Offerings can be used for charitable fundraising and corporate finance, yet they are prone to absolute frauds/scams. And mainly, these scams are visible to various investors, cryptocurrency ventures, and common people as:
- Pump and dump schemes
- Exit Fraud
- Securities Fraud
In all the above forms, scammers will make false claims like talking about their connections with celebrities, making you believe that the startup they are running gives higher returns to its customers once they invest in their cryptocurrency platforms (free from consensus bias) just like Bitcoin, Ethereum. And in the end, those scammers will fly away with all the investors’ money leaving them helpless!!
6. SIM Swapping Scams
Also known in the market as SIM Hijacking/SIM Jacking Scams, these SIM Swapping Scams help scammers and hackers find another way to enter into your crypto wallet or account. Thinking about how these scams start!! At first, these hackers:
- find all your personal details like email, home address, or phone number through social media platforms like Facebook, Instagram.
- Then, they identify the wireless service provider of your phone number, call him/her, and pretend to talk just like you. Their goal is to transfer your number to another SIM (obviously the SIM belongs to those scammers).
- Once the work is done, they enter flexibly into your crypto wallet or account instead of targeting you through phishing emails and drain the wallet completely within a fraction of seconds.
Instead of crying over these swapping scams that happened to your close relatives or employees working with you, set a unique PIN number from the security perspective. It will surely protect your crypto wallet or account.