As the popularity of cryptocurrency continues to grow, so does the number of scams that target unsuspecting investors.
Bitcoin on a fishhook coming out of a computer representing cryptocurrency scams.Photo byDreamstime #108634225
DISCLAIMER: This article is for entertainment and informational purposes only. It should not be considered financial or legal advice.Whether you're new to cryptocurrency or have been investing for years, it's important to be aware of the most common cryptocurrency scams and how to avoid them.
This article will discuss seven of the most common cryptocurrency scams and offer tips on protecting yourself.
#1—Phishing Cryptocurrency Scams
Phishing scams are when the attacker attempts to steal your personal information, such as your username and password, by pretending to be a legitimate company or organization.
In the case of crypto, this can take the form of fake emails or social media messages that appear to come from a cryptocurrency exchange or wallet provider. These messages will often ask you to provide your login details, claiming there is an issue with your account that needs to be resolved.
Double-check the email address or social media account sending the message to avoid falling victim to a phishing scam. Never provide your login details in response to an unsolicited message or email.
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#2—Rug-Pull Scams
A rug-pull is one of the most common cryptocurrency scams where an altcoin or token project is suddenly abandoned by its developers, resulting in a sharp drop in value for investors.
This can happen when the project developers sell off their tokens or abandon them altogether, leaving investors with worthless tokens. To avoid falling victim to a rug-pull, it's important to do your due diligence before investing in a new project or token.
Do your own research (DYOR) on the developers, their track record, and the project's goals and roadmap. Be wary of projects that promise huge returns with little explanation of how they will achieve them.
Anyone who has been involved with cryptocurrency investing for a while knows about the Squid Game coin that conned nearly $3 million from uninformed investors. However, it was a classic rug pull. The developers wrote a “no re-sale” code into the smart contract.
Investment manager scams involve fraudsters posing as professional investment managers who promise high returns on your investment in cryptocurrency.
These scams often involve promises of guaranteed returns or insider knowledge of the market. To avoid investment manager scams, it's important to do your due diligence and research any investment opportunity thoroughly.
Be wary of “investment managers” who promise returns that seem too good to be true. Always be cautious when dealing with someone who claims to have insider knowledge of the market.
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#4—"Man-in-the-Middle” Scams
A man-in-the-middle cryptocurrency scams are a scam in which a hacker intercepts your communication with a cryptocurrency exchange or wallet provider and steals your login credentials or other sensitive information.
This most commonly occurs in Starbucks because it is a popular hangout for coffee drinkers and phone users. They use a Wi-Fi network named starbucx. com or something similar without thinking or even noticing it is not starbucks. com.
However, this is only one of the methods they use. They also use non-secured Wi-Fi servers to snoop out people talking about investing or cryptocurrency and lure them to a fake website or exchange to con them.
This can happen when you use a public Wi-Fi network or click on a link in a fake email or social media message. To avoid man-in-the-middle scams, always use a secure, private Wi-Fi network when accessing your cryptocurrency accounts, and never click on links in unsolicited messages.
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#5—Dating Apps or Romance Scams
Dating app scams are a type of scam where fraudsters pose as potential romantic partners on dating apps and social media.
These scams often involve requests for money or the promise of high returns on cryptocurrency investments. To avoid dating app scams, being wary of anyone who asks for money or other financial information on a dating app or social media is important.
Always verify the identity of anyone you meet online, and never send money to someone you don't know in person.
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#6—NFT Giveaway Scams
NFT giveaway scams are a type of scam where fraudsters offer free NFTs (non-fungible tokens) to people who provide their private keys or other sensitive information.
These scams often take place on social media platforms and may involve fake celebrity endorsements or other types of social engineering. To avoid NFT giveaway scams, be wary of any offers that seem too good to be true. Never provide your private keys or other sensitive information to anyone.
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Of course, this doesn’t mean every NFT giveaway is a scam. DYOR!
#7—Ponzi Scheme Scams
Ponzi schemes are cryptocurrency scams where fraudsters promise high returns on investment in cryptocurrency, but in reality, they use the money from new investors to pay off older investors.
Usually, these scams are run by seemingly successful investors online who recruit investors to join a group to buy Bitcoin (BTC) or another expensive coin with the promise of high returns. Nowadays, there is no reason to join a group to purchase expensive coins, as in most legitimate exchanges, you can portions of BTC or altcoins.
These schemes eventually collapse when there are no more new investors to pay off the older ones, leaving many people with lost investments.
To avoid Ponzi schemes, it's important to do your due diligence and research any investment opportunity thoroughly. Be wary of investment opportunities that promise high returns with little explanation of how they will achieve them.
Look for investments with a clear plan and a solid track record of success. Read the White Paper.
A cryptocurrency whitepaper enables projects to explain their products and goals to their audiences. Projects can freely choose what kind of information they want to provide, but whitepapers usually include an overview of the project's goals, tokenomics, products, features, and information about the team.—Binance Academy.
It's also important to be cautious when dealing with people who use high-pressure sales tactics or try to convince you to invest quickly without giving you time to think.
In addition to doing your due diligence, staying informed about the latest scams and frauds in the cryptocurrency industry is important. Be aware of the most common scams and stay up to date on the latest news and trends. Consider joining a community of cryptocurrency investors or enthusiasts where you can share information and get advice from others. However, do NOT pay for advice or join a pool to invest.
Finally, it's important to use common sense and trust your instincts. If something seems too good to be true, it probably is. Always be cautious when dealing with new investment opportunities or unfamiliar people, and only invest what you can afford to lose.
BitConnect collected more than $2 billion and was one of the most lucrative cryptocurrency Ponzi schemes.
Final Thoughts & Observations About Cryptocurrency Scams
In conclusion, many types of crypto scams target unsuspecting investors.
By staying informed, doing your due diligence, and trusting your instincts, you can avoid falling victim to these scams and protect your investments.
Remember, the cryptocurrency industry is still in its early stages, with many opportunities for legitimate investments and growth. With the right information and approach, you can navigate this exciting new industry and make the most of your investments.
DYOR, just like your debit card pin, never give anyone your private keys, and never invest money you cannot afford to lose.
DISCLAIMER: This article is for entertainment and informational purposes only. It should not be considered financial or legal advice. Not all information will be accurate. I am not a financial adviser, and you should consider anything I write as informational and friendly banter to show you what is possible if you invest your money in these vehicles. However, there are no guarantees. Consult a financial professional before making any significant financial decisions.
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About the author
Stephen Dalton is a native of Old Town, ME, and a retired US Army First Sergeant with a degree in journalism from the University of Maryland. He is a Certified US English Chicago Manual of Style Editor. Top Writer in Travel, Food, Fiction, Transportation, VR, NFL, Design, Creativity, Short Story, and a NewsBreak Community Voice Pro.
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