Where money is at stake, fraud will always follow. And virtual currency is no exception in this sense.
The crypto space has evolved dramatically during the last couple of years, but serious risks also accompany this development. Scams have been around forever, but it seems cryptocurrency makes for the perfect occasion for hackers to try their talents to steal digital money. Virtual currencies like Bitcoin and Ethereum are lucrative and luring targets for criminals, so if you’re on the verge of investing, apart from checking the Bitcoin price, ensure you store your precious coins in a safe place and are mindful of the scams that have started to proliferate.
You may want to be aware, in particular, of the following types of scams. This will further help you devise an appropriate safeguarding strategy.
Types of crypto scams
The diversity of scams in 2023 is downright overwhelming, and a single article won’t cover all of them. So, we’ll focus on the most common and spooky ones.
Rug pull scams
A rug pull implies sneaky tactics to be made look like a real investment opportunity. In this type of scam, a team of people, aka scammers, raise crypto or capital to fund a coin, non-fungible token (NFT), or project. After they get the funds, they vanish with them, and people who’ve put their money into this ghost project are unlikely ever to recover it. That’s because the coding for these investments makes it impossible for individuals to sell the crypto after purchase – the asset is purely valueless.
A famous scam of this sort is related to a Netflix series, Squid Game, and also named after it. People had to play to earn cryptocurrency – a popular concept called P2E. But the thing is that they had to buy in-game features and items using Squid coins, and these coins were first worth 1 cent and then almost $100 per token. You’d be surprised how many players fell into this trap trying to sell their Squids but finding out these coins’ value reached zero. This devious game made a sum of about $3 million.
This type of scam is fraudsters’ old favorite. The logic behind it is simple – scammers send emails or texts on social media, luring victims into clicking on a malicious link. This link will further lead them to a suspicious site aimed at stealing their crypto. Actually, it’s the wallet’s private key; as any enthusiast knows, whoever possesses the key possesses all the cryptocurrency. Phishing scammers have improved their tactics over the years, so be ready to see the associated emails in the form of formal announcements from your bank or some prestigious company. This fraud isn’t a joke and must be paid attention to. Even big names such as Bored Ape Yacht Club fell prey to a phishing attack, so if you’ve ever thought of keeping your crypto on an exchange or hot wallet, reconsider your options.
According to a recent Federal Trade Commission (FTC) report, crypto romance scams seriously affected victims who were conned out of $139 million in 2021 alone. Although this is an old-school cyberattack, it continues to impact the lives of many individuals who fall into the trap of a fake romantic relationship. Cybercriminals, in this regard, act using a dating app, attempting to gain the victim’s trust by behaving like they’re interested in having a relationship. All fine and dandy until they start asking for funds in the form of cryptocurrency. Once the transfer is done, the cybercriminal disappears without a trace.
Crypto-based opportunities: NFTs and ICOs
Since NFTs and initial coin offerings (ICOs) have taken the crypto space by storm, scammers benefit from the hype by urging users to deposit their virtual coins into a compromised wallet. They often create fake web pages for ICOs for this purpose, instructing people on this kind of investment opportunity. Sometimes, cybercriminals deceive investors into putting their money into fake NFTs. Whatever the case, you should never share your private information until you’re 100% sure you’re collaborating with a truthful entity.
Social media scams
Everything happens on social media these days, and scams are no exception in this regard. Social media cyber attacks are some of the most frequently encountered, so you’d better be wary of who you’re sharing your private info with. Typical stealing attempts involve fake social media advertisements or posts asking users to make a crypto payment. If you ever see such a scam, you’re also likely to see seemingly real reviews. In reality, these are merely bots. Other types of social media scams include false giveaways and influencer scams. The former, for example, entices users into clicking on a giveaway that will ask for verification. This “verification” often implies making a payment in cryptocurrency. In other cases, criminals will try to pose as influencers, businesspeople, or celebrities to catch the attention of possible victims. They’ll promise some sort of goods or multiplication of the crypto sent to them, but the reality is this is never going to happen. Instead, you’ll lose the payment and get your private data stolen.
Blackmail or extortion scams
Just like romance scams, blackmail is another type of social engineering scam. It involves receiving an email or text saying that there’s some compromising information about you – it could be everything from confidential data to photos and videos. In this case, criminals ask for cryptocurrency, or else they’ll release whatever they’ve got about you – oftentimes, nothing. But did you ever wonder why these scammers ask for a payment in crypto? Because it’s typically impossible to be reversed. So, be cautious about blackmails and never expose any data about you to threatening strangers. You either ignore the attack or report it to an enforcement agency.
Other types of crypto scams include:
- Investment or business opportunity scams
- Cloud mining scams
- Imposter or impersonation scams
- Loader or load-up scams
- Employment scams
As you can see, you could fall prey to a range of attacks, so be sure you protect your crypto adequately by never sharing the associated private key and storing it in a cold wallet.