crypto scams

Crypto scams, how to not be scammed

Cryptocurrency scams had a record-breaking year in 2021, Scammers Stole $14 Billion in Crypto according to data investment firm chainanalysis.

Scammers are now taking advantage of the ongoing craze around cryptocurrencies to trick potential victims and steal their digital money. In fact, a report by Chainalysis revealed that hackers have exploited vulnerabilities within crypto platforms or used traditional scamming methods like ‘rug pull’, stealing billions of dollars.

Cryptocurrency is less regulated than other assets, which can lead to scams, fraud, and financial ruin. There are various forms of crypto market manipulation, including pump-and-dump schemes and rug pulls. Investors can avoid several common crypto scams by performing thorough due diligence before trading.

Here’s a look at the more common scams and ways to avoid becoming a victim as you join the exciting future of cryptocurrency.

1. Fake Websites and applications

There’s a surprising number of websites that have been set up to resemble original, valid crypto startups. If there isn’t a small lock icon indicating security near the URL bar and no “https” in the site address, think twice.

Even if the site looks identical to the one you think you’re visiting, you may find yourself directed to another platform for payment. For example, you click on a link that looks like a legitimate site, but attackers have created a fake URL with a zero in it instead of a letter ‘o’. That platform, of course, isn’t taking you to the cryptocurrency investment that you’ve already researched. To avoid this, carefully type the exact URL into your browser. Double-check it, too.

Another common way scammers trick cryptocurrency investors is through fake apps available for download through Google Play and the Apple App Store. Although stakeholders can often quickly find these fake apps and get them removed, that doesn’t mean the apps aren’t impacting many bottom lines. Never enter the 12-word seed or any login credentials in the fake applications.

2. Bad Tweets 

If you’re following celebrities and executives on social media, you can’t be sure that you’re not following impostor accounts. The same applies to cryptocurrencies, where malicious, impersonating bots are rampant. Don’t trust offers that come from Twitter or Facebook, especially if there seems to be an impossible result. 

If someone on these platforms asks for even a small amount of your cryptocurrency, it’s likely you can never get it back. Just because others are replying to the offer, don’t assume they aren’t bots, either. Unidentified hackers broke into the Twitter accounts of technologý moguls, politicians, celebrities, and major companies in an apparent Bitcoin Scam. The ruse included bogus tweets from Barack Obama, Joe Biden, Mike Bloomberg, and a number of tech billionaires including Amazon CEO Jeff Bezos, Microsoft co-founder Bill Gates and Tesla CEO Elon Musk. Celebrities KanyeWest and his wife, Kim Kardashian West, were also hacked. The fake tweets offered to send $2,000 for every $1,000 sent to an anonymous Bitcoin address.

3 Scamming Emails

Even if it looks exactly like an email you received from a legitimate cryptocurrency company, take care before investing in your digital currency. If you have doubts about an email, ask someone who works there. And never click on a link in a message to get to a site.

4. Scammers on social media and cross-platform messaging apps:

Beware of people who directly message you on Facebook, Twitter, Instagram, and especially Telegram where major crypto communities interact. Scammers pretend to be the admin or support team of the particular dapp/platform/wallets you are invested in and ask for your 12-word seed or private keys in order to resolve the issue you are facing. Always remember to not share any of your details with anyone pretending to be part of the team in which you have invested the money.

5. Fake ICO and Defi scams

Squid Coin: One of the most popular television shows also spawned one of the most enormous rug pull scams of 2021. The popular South Korean show, Squid Game, gave rise to an altcoin that had investors salivating. Even legacy media fell for it as the coin went from a few dollars to $3,000 in a matter of a few weeks. Although the scam was very well-planned, there were tell-tale signs of a scam from the beginning.

Poly Network Hack: A lesser-known name in the world of crypto, Poly Network is decentralized finance (DeFi) platform that saw one of the biggest hacks of the year. A hacker spotted a flaw in the DeFi platform that let him transfer $600 million from the network to his account. But the good news was that the hacker was a ‘white hat hacker’, a hacker who exposed vulnerabilities in a network to help the platform tighten its security.

In a few weeks, the hacker returned the complete sum of money and even got rewarded $500,000 by the poly network for exposing the vulnerability.

How To Avoid Cryptocurrency Scams:

Scammers are always finding new ways to steal your money using cryptocurrency. One sure sign of a scam is anyone who says you have to pay by cryptocurrency. In fact, anyone who tells you to pay by wire transfer, gift card, or cryptocurrency is a scammer. Of course, if you pay, there’s almost no way to get that money back. Which is what the scammers are counting on. 

Even the most advanced and enthusiastic cryptocurrency experts understand there are many new and evolving risks in the world of crypto right now. Financial experts advise most passive investors to keep crypto holdings to under 5% of their portfolios, and never to invest in crypto at the expense of saving for emergencies or paying off high-interest debt. 

Cryptocurrency Red Flags 

For starters, watch out for some common red flags :

  • Typographical errors and obvious misspellings in emails, on social media posts, and during any communication
  • Promises to multiply your money
  • Contractual obligations that lock you into holding crypto without being able to sell
  • Fake influencers or claims to be a celebrity
  • Psychological manipulation like blackmail or extortion
  • Large social media crypto schemes
  • Promises of free money
  • Vague details about where your money is going
  • Know When to Use a Crypto Wallet
  • Just like your physical wallet, you need to protect your digital wallets from hackers. Practice good digital security habits.

Many experts believe small-scale investors with a few hundred dollars worth of crypto are fine keeping it on mainstream exchanges like Klever Exchange and Coinbase etc. However, if you amass thousands of dollars worth of crypto, it probably makes more sense to incorporate a wallet for additional safekeeping.

There are two types of crypto wallets, typically described as “hot wallets” and “cold wallets.”

Hot wallets are hosted, or stored online. They are secure but more susceptible to hacking than cold storage, which is when you store crypto offline on a piece of hardware. Think of cold storage as kind of like a safe in USB-drive format. It’s more secure, but if you forget your password or lose the device, you could lose access to your money forever.

You’ll therefore want to make sure that whatever platform or wallet you store your crypto in has robust security measures, including:

  • Two-factor authentication.
  • Storing a portion of holdings in its own cold storage.
  • Private insurance policies in case of theft or hacking.
  • Keep Track of Your Wallet Keys.
  • You only get one unique key to access your wallet. Losing your key or having it stolen could mean losing the crypto altogether. So never share your 12 word seed or private keys with anyone or input those details in any unknown link when you are using self custody wallets.

Cryptocurrencies, Decentralized finance are considered as 21st-century paradigm shifts. On one side, the lack of a singular governing body allows community-wide decisions and can open the doors to additional opportunities. On the other side, without standardized oversight, bad actors can commit fraud and deceive unsuspecting investors in a variety of ways.

However, much like in traditional asset markets, crypto investors can lower their risk of succumbing to market manipulation by being wary of these schemes and taking proactive measures. That includes using reputable exchanges and performing thorough research before making any investment decisions. 

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Disclaimer: This article is for informational purposes only. The information does not constitute an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Klever.Finance does not provide financial, tax, legal, or accounting advice. There is no responsibility on the part of the company or the author for any loss or damage arising from or related to the use of or reliance on any content, goods or services mentioned in this article.

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