“Beware of scam,” “do your own research,” “don’t put in more than you can afford to lose,” this is some of the most common advice given to new crypto investors. But how do you identify a scam and be sure you don’t lose your hard-earned cash to some pesky thief/hacker?
Beware of scams, a common saying that often circulates around the crypto space. And yes, scams and con artists have been around forever. However, because of crypto’s novelty, crypto scams oofer a new chance for an old trick and sometime even an opportunity for investors to fall for a new trick as well. There are so many different types of crypto scams out there.
Sources say that around 4.3 billion dollars was stolen in 2019 alone. So, crypto scams are definitely profitable for these con artist. From fake giveaway scams, to phishing, to impersonation, to ponzi schemes, there are a bunch of different scams out there.
A super common scam known to many in the crypto world especially this year is the notorious giveaway scam. In this type of scam, a fraudster tries to dupe innocent victims into sending crypto with a promise that they’ll send multiple times the amount of crypto back for merely participating in the giveaway. For example, the fraud will say something like this, “any amount of btc sent to this address will be sent back double.” Scam are very effective, they’re some of the longest running scams in crypto world. Even though oftentimes they sound like broken English but they have a new generations pooping up every few years.
Crypto twitter is a hotbed for these scams because of its massive reach. Not to mention, the last few years, twitter has been known as the most widely used social media platform amongst world leaders and scammer love this. They typically try to impersonate someone famous with deceptive techniques such as using the same profile pic of a verified account with a slight misspelling of the username. In 2018, scammers use this tactic to impersonate celebrities like Elon Musk, John McAfee, and Vitalik Buterin. In response to this scam, Vitalik changed his twitter handle to read: Vitalik “No I’m not giving away ETH” Buterin” and has only recently changed it back.
Occasionally, the verified accounts will be hacked and used to perpetrate this scam. Probably one of the famous example happened earlier this year, when some of the world’s top a lister like Jeff Bezos, Bill Gates, Kim Kardashian, Elon Musk, and Barack Obama had their personal twitter accounts hacked. The hacked account posted a message telling people to send btc to a specific address promising doubling the amount of btc to be sent back in return. Even though the scam was shut down very quickly, the scammers still nabbed over a hundred and twenty thousand dollar from their gullible victims.
These giveaway scams have become less and less common on twitter because the social media platform really started to crack down on them. Unfortunately, that only means scammers have to adapt. And now, they are starting to make their way over on youtube, using videos of live stream or an interview with someone famous in the crypto world to lure victims to a website. The website has a wallet address and similar guarantee of the crypto being sent back doubled. While youtube has taken notes out of twitter’s playbook and started to crack down on these scams. It’s still critical that you know how to recognize these scams so you don’t end up losing your valuable crypto.
Phishing is an old scam in the internet world. However, crypto is now a new breeding ground for this scam. Phishing is when a scammer tries to get personal information from you by disguising themselves as a legitimate third party. There can be multiple flavors of this one like phishing emails, text messages, even phishing websites.
Most of the times, phishing websites are duplicates or close to duplicates at least of real websites that you know and are familiar with. You’ll login as if it were the real website and then the phony site will steal your login credentials and or install ransomware on your computer.
Phishing emails and text messages, on the other hand, are messages sent by what like seem a company you know and trust but the email or text actually is trying to get you to give up your personal information or reply or trying to send you to a phishing website. Some of these fake texts and emails will give you a link that might trigger a virus to download.
Always check the return address and or the url and make sure it’s legit and not a phishing scam.
Another scam that you need to be on the lookout for is the bogus investment scam. These types of scams usually involve someone reaching out to you offering an amazing opportunity to invest in a crypto that’s gonna blow up in value and make the investor a boatload of money. These scams are very intricate because they employ a very personal technique to give the potential victims confidence in their investment. Sometimes, they will take the form of the long con, interacting with their mark for days, weeks, and sometimes months in order to gain their confidence get them to part with their hard-earned cash.
While these types of scams are very common on platforms like telegram and instragram, these scammer are getting cleverer by the minute. Constantly looking for differently channels to use in order to lure their victims into their scam.
The oldest types of crypto scams is the ponzi scheme. This is actually one of the oldest scams in general with the earliest recorded ponzi’s dating back in the late 1860’s in Germany and the United States. However, one of the most famous examples was perpetrated by Italian swindler Charles Ponzi in the 1920’2. So famous that it was forever named after him.
The way that this works is actually simple, the scammer uses money from new investors to pay old investors. This helps to maintain the illusion of it being a legitimate investment and it can keep operating as long as there is a steady stream of new investors or that is until they get caught. Oftentimes, these investments will advertise a type of bonus or incentive for bringing in new investors. So the other common term for a ponzi scheme is called a pyramid scheme.
Con artists have attempted thousands of notorious ponzi schemes throughout the history of the world. So there are numerous of examples to choose from. Of course in crypto, ponzi schemes leave a big impressions on everyone, from the infamous moment with the bitcoin dude all the way to the multi-billion dollar Bulgarian behemoth one coin.
Obvious red flags or signs that the investment is a scam
The person of company contacts you out of the blue. This can be thru messages on social media, an email, or even a text or call to your cellphone. With all the data breaches of major corporations, you’d be surprised how easy it is to get your personal info on the dark web. Even more, recently the scammers are impersonating a crypto vlogger and directly contacting people who are subscribed to his social media channels offering to help them manage their crypto for the most gains.
Oftentimes, scammers try to pressure you to make a rushed and rash decision. This pressure typically is in the form of some kind of special limited time offer or rapidly approaching deadline for a discount or sign up bonus. Scammer will sometimes ask you to keep the investment a secret. They will likely tell you that the amazing investment opportunity is for you alone and that if too many people will know then the investment will somehow lose value.
The biggest red flag of all is that the investment seems too good to be true. The old saying is still around for a reason because it’s usually correct. When something too good to be true, it usually is. Many times this means that they make the investment seem to have an extremely low risk but on an incredibly high return which is the gold standard for a scam.
