How do I avoid scams in cryptocurrencies?
it is for the above that today, in the midst of a context of economic variations and inflationary trends worldwide, the search for new income and investment instruments — that generate greater profitability — seems to attract more and more attention from Chileans. That is why the co-founder and CEO of \ Finance and Academic Director of Blockchain Academy Chile, Cristóbal Pereira, explained how these pyramid scam mechanisms operate, linked to investment in cryptocurrencies, which, like any other item or market, respond in fraudulently in view of the high expectations of its clients and the search for new investment opportunities.
Build a token bridge In this sense, Pereira pointed out that, although investment in cryptocurrencies is usually safe due to its traceability and difficulty in hacking, scams usually occur due to misuse or delivery of personal information or trust in unrecognized platforms in the market. Therefore, the risks associated with this type of digital investment can be classified according to different criteria:
Do not provide personal data to an entity or person who contacts us without having requested it : whether through an email, a text message or social networks, etc., Pereira points out that scammers can even Impersonate the identity of friends and contacts through social networks, email and even WhatsApp.
If you created an account on an exchange platform to buy cryptocurrencies, always activate two-factor authentication, and any other security tips that the platform gives you.
Rule out any investment “opportunity” that requires an upfront payment, exorbitant short-term rents, or finding friends or colleagues.
Never use unofficial app stores or websites . Always verify the web address to which we are entering, to avoid phishing.
Never give private keys on web pages, unknown people, support services or public portals.
Most important of all: always look for a way to have your cryptocurrencies in your own digital wallet.
Most common types of scams :
The Academic Director of Blockchain Academy Chile , Cristóbal Pereira, also referred to the most common types and routes of scams and fraud that will allow us to be alert regarding the different “investment offers” that hide various scam formats, where many times changes the support, but the mode of operation remains. For this reason, Pereira explains that there are everything from Ponzi schemes, fraudulent applications, false testimonials and celebrity success stories to Phishing/implantation, where a payment request in cryptocurrencies is falsified, appearing to be a legitimate source of said request, such as a credit card provider.
Ponzi Schemes: This is a type of investment pyramid scheme in which victims are tricked into investing in a nonexistent company or “get-rich-quick scheme” that actually does nothing more than line the pocket of the swindler. Cryptocurrencies are ideal for this, as scammers are always inventing new “cutting edge” technologies to attract investors and generate higher virtual profits. Falsifying data is easy when the currency is virtual.
Pyramid scams: also known as “Pyramid Schemes”, as their name indicates, they build block systems in pyramids, where the participants themselves must make it grow through the creation of a network in which they attract new participants with the objective that the new ones produce benefits for the original participants. These types of systems often go bankrupt as soon as not enough new investors come in for the company to pay the promised profits.
Generally, these types of scams are usually camouflaged under the sale of some product or service that is supposed to be the center of the business and the sales objective, but in reality the only thing that matters and what sustains it is the entry of new participants. , which normally have to make some initial payment to enter.
‘Pump-and-dump’: Scammers encourage investors to buy little-known cryptocurrencies, based on false information. Subsequently, the stock price rises and the scammer sells his own cryptocurrencies, making a nice profit and leaving the victim with worthless cryptocurrencies. Sometimes scammers even manage to trick journalists into publishing false information about the companies involved in the scam.
This is a sophisticated type of scam where developers build a seemingly legitimate crypto-related project and then suddenly lose their liquidity doubting the project’s own developers, who take the money into their personal wallets.
Build a cross chain bridge Scammers impersonate celebrities or create fake accounts to encourage their followers to invest in fake projects. In 2021, a scam became popular in which Elon Musk was impersonated in a campaign promising free bitcoins. Some $2 million was lost in the hands of the scammers.
Fake trading platforms: Scammers send emails or post on social media promising access to virtual money stored in cryptocurrency exchanges. The user usually has to pay a small fee first, where later the exchange does not exist and his money is lost forever.
Imposter Apps — Cybercriminals spoof legitimate ‘crypto’ apps and upload them to app stores. Installing them opens the door to theft of personal and financial data or implanting malware on devices. Others may trick users into paying for non-existent services or try to steal logins from their cryptocurrency wallet.
Phishing/implantation: Phishing is one of the most popular ways for scammers to operate. Emails, text messages and social media are spoofed to appear to be from a legitimate and trusted source. Sometimes that “source” — for example, a credit card provider, a bank, or a government official — requests payment for something in cryptocurrency.