Crypto scams are on the rise. How can you protect yourself?

04.08.2021 1,893 5

The rise of cryptocurrencies and other crypto-related technologies has made a lot of waves in the worlds of IT and finance. Millions of people all around the world have begun investing, mining, or trying out their luck with crypto assets in various ways. Some of them made big money as a result. Others lost a lot. It is down a lot to simple luck and being able to act fast enough when it matters.

All of this requires a great deal of patience, endurance, and the acceptance that you may end up with losses. Some people do not want to do that but do want the potential big financial gains from crypto. So, they decide to cut corners and, as with any other lucrative thing in this world, scams are born. What started as simple, even way too obvious scams, now has been developed and honed into a well earning machine.

It seems that cryptos cams are just getting started and their potential threat is massive. Recent data from the FTC shows that since October 2020 consumers have reported that they have lost more than $80 million by cryptos cams only in the US. That is an increase of more than 10 times on a yearly basis. Moreover, a lot of the losses remain unreported.

In fact, there have been only 7000 reports of crypto investment scams and the median loss is $1900. “All of this plays right into the hands of scammers. They blend into the scene with claims that can seem plausible because cryptocurrency is unknown territory for many people,” says Emma Fletcher, a program analyst with the FTC to CBS News.

Massive temptation

It seems that luring people into paying up for various causes and services with cryptocurrencies is drawing a lot of interest from hackers and not only. In fact, classic hacks seem to be less used for crypto scams. Instead social engineering and phishing seem to be the preferred venue for crypto scammers.

This allows little to no coding, malware, or other complex ways to try and steal someone’s cryptowallet. Instead scammers rely on various lies and scenarios to lure people into their cobwebs. Sadly, it seems so easy, that even somewhat public figures are tempted into various scams.

For example, several members of the FaZe Clan esports organization were suspended after being accused of a serious cryptos cam, reported by BusinessInsider in July 2021. These members ran a Save the Children cryptocurrency and had “tons of fans pump money” into it. Their investments were lost “almost overnight” as the money disappeared.

This prompted a massive backlash and FaZe Clan responded: “FaZe Clan had absolutely no involvement with our members’ activity in the cryptocurrency space and we strongly condemn their recent behavior”, they wrote on Twitter. Said members who were suspended.

Popular cryptos cams

There are so many different cryptos cams out there that it is difficult to describe them all. However, we can talk about the most popular types. Keep in mind that there are plenty of variations and combinations out there, as scammers can be very, very creative.

Here are some of the main “weapons” scammers use:

Fake websites

This is the most popular category and for good reason. It gives a lot of room for variations. There can be thousands of ways to create a fake website to lure victims for crypto scams. For instance, a site that promises tips or “unique information which will help you make millions”. Of course, you can get this info for a “small” price.

Other sites might offer legitimate info, but then try to sell you “special offers”. A lot of scammers also opt to make a fake crypto exchange which lures in customers with great prices and rates.

Some try to make a site which is a copy of a legitimate exchange down to the last detail. It then tries to lure people in via phishing emails and online and social media ads. Users come and think they are still using the site they normally trust, but they are entering their crypto information in a scam site. These sites are usually as close to the original as possible but can have tiny difference. For example, a single different letter in their URL.

Fake apps

The approach here is the same as with fake websites. Scammers know how popular smartphones are. People spend a massive amount of time using their phones and apps. More than half of the internet usage is already coming from mobile devices. So, taking part with a fake app is vital for scammers and their goals for maximum profits.

In relation to what is mentioned above, it is not that easy to get a fake app to people’s phones. Both iOS and Android have very strict rules for allowing apps on their official stores. People can sideload them in various ways on iOS and can simply use a third-party app store for Android, so they still have to be very careful when installing such apps. It is common that fake app stores offer popular apps at a discount or for free, but it is highly likely that those apps are reworked and contain malware.

Fake emails

Email communication is far from its glory days where people were using emails instead of chat apps. Despite that, every internet user needs an email to register to various services and platforms. Email is usually a means for official communication with these services, platforms, banks and so on. As such, email is and will continue to be a major point of interest for hackers and scammers.

Fake emails are a staple in phishing. It is common for scammers to try and grab the attention of their victim with a frightening email. For example, that you have lost money from your cryptowallet, or that someone has withdrawn a large sum from your PayPal or bank account and so on.

The possibilities and scenarios are endless. What is common is that these emails almost always require you to click a link where you have to enter your credentials as “proof” and to rectify said issue. Another variation is to redirect you to a “support chat” or line where instead of the actual customer support service, you are taken to a scammer who can spend even hours trying to “help” you and have you install a screen share app and all sorts of other stuff to win your trust and then get your data and money.

Fake social media

This method is getting more and more common. Scammers can spend months building legitimate social media pages, profiles, and groups. At some point they start using these groups to promote their fake sites and/or apps or they can use the social media platforms for their scam campaigns.

These can also vary greatly. They can include fake “tips” for big trades, fake ICOs, fake cryptocurrency launches, fraudulent NFTs and a plethora of other ways to tempt users into thinking they are about to get in on the launch of something new, special and highly lucrative. It is all these things, but only for the scammers.

Fake celebrity endorsements

This tactic is especially popular on social media. It can have different versions, but usually it uses the name of someone famous. For instance, they can have a fake profile of a popular singer claim support for a cryptocurrency or use a screenshot of the real profile and photoshop a fake message that claims that a new project is backed by that person.

Another popular scheme is to use a popular name and say “send 0.01 Bitcoin to my address and I will send you 1 Bitcoin back. Only for the first 1000 people”. Of course, no one receives anything, but the scammer.

Ponzi schemes

These are a bit different and more complex. They usually feature the launch of a new cryptoexchange, a new cryptocurrency or something in this area. It relies on initial investors to fund the project and promises them huge returns in a short amount of time. It only uses new investors’ money to pay to the initial ones and tries to lure the old ones not only to keep the investment, but also to increase it, thus increasing potential gains.

In reality, there is no real business effort. It is simply taking money from people and giving parts of it to others. The aim is to create an illusion of a successful project but it can only end one way – with the collapse of the scheme and either the scammer manages to run away with the money (if they aren’t too greedy and try to get out early) or with someone figuring it out and notifying the authorities.

Telltale signs of a cryptos cams

As we said, the scams above are just a fraction of what is truly out there. With so many possibilities and variations, it is entirely up to each person to protect themselves. Educating yourself and forming a good understanding of basic financial tools, practices and rules is a must for anyone who wants to dip their toes into the world of crypto or any other form of investment.

There are some telltale signs that even the best cryptos cams cannot avoid. Again, they are not a guarantee, and nothing cannot beat a proper, deep-dive research which you should do before investing in any project. However, these signs can help you out spot the potential bad eggs a bit faster.

  • Too good to be true – it is an obvious one, but some scammers still can contain themselves and promise all the stars in the Universe to their victims.
  • Promising that it is all legit – Offers that feel the need to constantly promote they are “totally safe”, “100% guaranteed”, etc. usually are not what they preach.
  • Lots of unrelated information – Offers that string you along with promises, examples and lots of other information while carefully avoiding giving you any actual, precise details about what you have to do and expect.
  • Lack of contact and legal information – if you cannot see where the firm is registered you cannot know if the country it is based in provides any form of crypto regulations and investor protections. Plus, it means there is no real team behind the effort.
  • Little to no information about the project on other sites after a Google search – it could be so new that there is nothing yet, but it is also a major red flag.
  • Lots of “coming soon” features promising a great future – it is a way to lure in investor to get in early, so they have an advantage and in turn – higher returns. It also means that often these features never materialize and instead your investment disappears.

Do not get us wrong. Cryptoassets do indeed have a great future. As with any financial product, you must be very careful and do proper, detailed research before diving into them. As Elon Musk has said: “Cryptocurrency is promising, but please invest with caution.”   

If the topic of cryptocurrencies is still interesting to you, you can take a look at the following articles:

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