First of all, let me tell you that crypto crime had a record year in 2021: According to a report by blockchain data firm Chainalysis, fraudsters stole $14 billion worth of crypto that year.
If you are interested in cryptocurrencies, it is important that you know the risks, I will tell you some very common ones:
There are many types of cryptocurrency scams. The most common include the following:
Scammers sometimes create fake cryptocurrency exchanges or fake versions of cryptocurrency wallets to trick unsuspecting victims. These fake websites often have similar domain names to the ones they are trying to copy, but with a few minor differences. They look very similar to legitimate sites, so it’s hard to tell them apart. Fake cryptocurrency sites operate in one of two ways:
Like phishing pages: Any data you enter, such as your cryptocurrency wallet password or recovery phrase and other financial information, ends up in the hands of scammers.
As a direct robbery: Initially, the site may allow you to withdraw a small amount of money. As your investments seem to perform well, you will likely invest more money on the site. However, when you later want to withdraw your money, the site may be closed or the request may be rejected.
With cryptocurrency phishing scams, information related to online wallets is often sought. Fraudsters target the private keys of cryptocurrency wallets, which are necessary to access the funds they contain. Their working method is similar to other phishing attempts and is related to the fake websites described above: they send an email to lure recipients into a specially crafted website and ask them to enter sensitive private information. When they acquire that information, they steal the cryptocurrencies from the wallets.
Inflate and sell strategies
It consists of fraudsters promoting a particular coin or token through emails or social networks, such as Twitter, Facebook or Telegram. In order not to be left out, the merchants rush to buy the coins and, in this way, shoot up the price. Once they manage to inflate the price, the scammers sell their holdings, causing the value of the asset to drop. This can happen in a matter of minutes.
Another common way scammers trick crypto investors is through fake apps available for download on Google Play and the Apple App Store. While these fake apps are quickly detected and removed, they take a toll on many balances. Thousands of people have downloaded fake crypto apps.
Fake celebrity endorsements.
Cryptocurrency scammers sometimes pose as, or claim to endorse, celebrities, businessmen, or influencers to catch the attention of potential victims. Sometimes this includes selling phantom cryptocurrencies that don’t exist to inexperienced investors. These scams can be sophisticated, using flashy websites and flyers that simulate celebrity endorsements like Elon Musk.
They happen when scammers promise to match or multiply the cryptocurrencies sent to them in what is known as a gift scam. They send clever messages from what often looks like a valid social media account to create a sense of legitimacy and urgency. This so-called “once in a lifetime” opportunity can see people transfer funds instantly, hoping for an instant return.
Blackmail and extortion scams.
Another method that scammers use is extortion. They send emails stating that they have a record of adult websites visited by the user and threaten to expose them unless they share private keys or send them cryptocurrency.
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Cloud mining scams
Cloud mining refers to companies that allow the mining hardware they operate to be rented, in exchange for a fixed fee and a share of the revenue that users are supposed to earn. In theory, this allows people to mine remotely without purchasing expensive mining hardware. However, many cloud mining companies are scams or at least inefficient: users end up losing their money or earning less than promised.
Fraudulent Initial Coin Offerings (ICOs).
An initial coin offering, or ICO, is a way for crypto startups to raise money from prospective users. In general, customers are promised a discount on new cryptocurrencies in exchange for sending active cryptocurrencies, such as bitcoin or another popular cryptocurrency. Many ICOs have turned out to be fraudulent; Criminals have gone to great lengths to deceive investors, including renting fake offices and creating high-profile marketing materials.