Types of crypto scams and identification of deceptive crypto projects
Fraudsters are constantly looking for new ways to steal hard-earned money, and the huge expansion of crypto in recent years has provided many opportunities for fraud. Blockchain data firm Chainalysis reported that thieves stole $14 billion in cryptocurrency in 2021, setting a new record. You should be aware of the risks if you are interested in crypto.
Date and fraud
Scammers often use dating sites to trick naive victims into believing they are in a genuine long-term relationship, and once trust is established, discussions often shift to lucrative cryptocurrency opportunities and the eventual transfer of the coins or account authentication keys. According to the Federal Trade Commission (FTC), nearly 20% of the money wasted in romance scams was in Bitcoin.
Fraudster scam
Many scammers posing as celebrities, established businesses and bitcoin influencers organize these giveaway scams where they pose as legitimate organizations or established people and promise to multiply the bitcoins donated. The illusory opportunity compels people to act immediately and expect a greater return on investment.
NFTs and ICO scams
Crypto-based investments, such as initial coin offerings (ICOs) and non-fungible tokens (NFTs), have given fraudsters even more ways to steal your money. What is important to understand is that while crypto-based investments or business prospects may appear to be lucrative, they do not always reflect reality.
For example, some scammers set up fake ICO websites and advise people to deposit cryptocurrency into a hacked wallet. In other cases, it is possible that the ICO is to blame. Founders may distribute uncontrolled tokens or deceive investors about the quality of their products through deceptive marketing.
Scams in Cloud Mining
Platforms will appeal to retail customers and investors to entice them to put down money to ensure a continuous flow of mining power and rewards. These sites do not genuinely control the hash rate they claim to have and will not fulfill the rewards after your initial investment. Although cloud mining is not always a scam, thorough investigation of the site is necessary before investing.
Business opportunity scams
The age-old adage “If it sounds too good to be true, it probably is” still holds true and is worth remembering for anyone considering investing in general. This is especially true for cryptocurrency. Countless profit-seeking speculators are drawn to deceptive websites that offer so-called guaranteed returns or other schemes that require investors to commit to large sums of money in order to receive even greater guaranteed returns.
Summary
Many people have compared the mad rush into cryptocurrencies to the Wild West. As the crypto ecosystem grows in size and complexity, it will surely become a target for fraudsters.
Socially engineered campaigns to obtain account or security information, and having a goal of paying cryptocurrency to a compromised digital wallet are the two types of crypto scams.
You should be able to recognize a crypto-related scam early and avoid it happening to you if you understand the common ways scammers try to steal your information.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional money exchange systems. She is also fascinated by blockchain technology and its function.
