It’s no secret that there is serious money to be made in the crypto market through savvy investing. But wherever serious profits are made, there are inevitably scams. Sadly, the crypto market is plagued with an abundance of them.
Since 2021, over $1 billion has been stolen via crypto scams. In 2022 alone, a brutal attack on the Wormhole crypto exchange saw over $320 million stolen.
Compared to fiat currency, crypto relies on blockchain technology for verification and doesn’t operate via traditional banking institutions. As a result, it is significantly more difficult to recover if stolen.
Despite crypto being at the forefront of cutting-edge financial technology, scammers and hustlers still rely on an array of old-school scams to rip people off. So, should you still be afraid of crypto scams? After this article, you shouldn’t be.
This guide will expose five of the most common crypto scams you’re likely to face. To round off, we’ll tell you exactly how to tackle them. Now, let’s begin!
Avoid fake cryptocurrency exchanges
As the number of cryptocurrencies and altcoins surges, so does the number of cryptocurrency exchanges popping up to provide people with an avenue to buy digital currencies. However, not all are created equally.
Across the crypto market, there is an abundance of illicit exchanges posing as reputable platforms. Operated by scammers, they aim to attract crypto investors with fake promises.
The reality? The exchange is a fraud that will drain the savings of those who make the fateful choice to invest in it.
The solution to this crypto scam? Avoid unfamiliar, unregulated exchanges and platforms like the plague, and don’t give them any personal details or financial info.
Make sure you do your research and only stick to tried and tested exchanges highly recommended by experts across the crypto industry, such as Coinbase, Binance, or Bitcoin Loophole.
Bitcoin investment scams
The original and most popular cryptocurrency, Bitcoin, is often the primary source of bait used in investment scams.
These scams work via fraudsters reaching out to new and experienced investors and lying about being well-experienced “investment managers.”
These fake investment managers will then make bold but false claims that they’ve successfully made millions of dollars through their cryptocurrency investments. Then, they’ll promise to make their intended victims the same amount of money through their tried and tested methods.
This ‘’golden ticket’’ to crypto riches comes with an advance fee to get started. After the victim has paid the often hefty fee, the scammer disappears with the money, and the victim is left empty-handed.
Another threat that comes with this type of crypto scam is when the scammer requests personal details to get started with the plan. In doing so, they will attempt to gain fraudulent access to a user’s crypto holdings and steal everything.
The rug pull scam
The next type of crypto scam to be aware of is the rug pull. Through this method, fraudsters will create fake hype around a new crypto project, a nonfungible token (NFT) or digital coin, to secure funding from investors.
Once the funding has been secured, which can often be millions of dollars in the case of rug pulls like the Squid Coin incident, the project’s founders will simply disappear with the funds. In turn, those who invested are left with nothing.
The Squid Coin incident is a prime case study of the rug pull scam. Formed during the global hype surrounding the immensely popular Squid Game series on Netflix, the value skyrocketed from around 1 cent to $90 per token.
Suddenly, the coin stopped trading, and all of the money invested in the Squid Coin project vanished. In a panic, investors attempted to sell off their coins as the value plummeted to zero. Those behind the project made over $3 million, and most investors were left empty-handed.
Crypto Romance scams
Romance and crypto aren’t a combination most people think of. But in the world of digital currency scams, it sadly is. This crypto scam often occurs online via various dating websites or apps.
The crypto romance scammer will invest a lot of time in gaining the victim’s trust over weeks or even months. Once a solid online relationship has been formed, the scammer will make a move to convince the victim to give them cryptocurrency to secure a date or to continue talking.
Of course, once the cryptocurrency is successfully handed over, the scammer vanishes, and the victim rarely has any chance of getting their funds back.
Phishing scams
And last but not least are phishing scams. One of the most common forms of online scams, phishing tactics, has been around for years. Nonetheless, they still manage to successfully rip off many inexperienced investors online.
One of the most common ways a phishing scam happens is via email. Scammers will send emails to victims that look like legitimate correspondence from trustworthy sources.
Inside the email will be one or more malicious links to direct the victim to a fraudulent website. The aim is to extract as many personal details from the victim as possible. Most commonly, these are their crypto wallet or trading account credentials.
So, how do you avoid them? The key to dodging these attacks is always to go directly to the website of your crypto wallet, exchange, or another place where you hold crypto. Regardless of how trustworthy and legitimate an email link may look, play it safe and spend a few extra seconds by going direct to the website URL in your browser search bar.
Conclusion – How to Avoid Crypto Scams?
In addition to a working knowledge of the most common types of crypto scams to look out for (which you’ve gained from reading this guide), the key to staying safe in the world of crypto investing is to utilise the services of a platform, service, or app that has developed a positive reputation for enforcing strict security protocols and being a reliable service.
For example, one only needs to sign up for a well-established, watertight crypto platform like the ones we previously mentioned to gain full advantage of beginner-friendly trading tools and strict security protocols. All of which can help you in being protected against common crypto scams.
