Between October 2020 and April 2021, Americans lost over $80 million in cryptocurrency scams according to fool.com. More than 7,000 people reported losses to the Federal Trade Commission. The average loss was $1,900. With crypto trending these days, it’s not surprising that fraudsters are targeting its users. Here are the typical crypto scams and what you can do to avoid them.
Fraudulent websites make an effort the make their URLs appear like the real thing. For example, instead of “amazon.com,” a scam URL will look like “amazon1.com.” It will even look almost exactly like the Amazon website. The additional character “1” won’t be instantly noticeable to the ordinary user. As the user shops in the fake Amazon website, usernames, passwords or credit card information is captured and used illegally.
Always make sure that the correct URL is on the website you intend to visit.
This often happens in social media platforms like Instagram, Twitter, or Facebook. Impostor accounts of celebrities or well-known company executives are made by these scammers. They will offer to give you a big amount of crypto if you send a certain number of crypto coins or your private wallet address. When you do send the crypto, you’ll never get the big number of coins they promised or you discover that your virtual wallet has been emptied.
No legitimate entity will ever ask for your wallet’s private keys nor will people give something for practically nothing. Don’t ever fall prey to these tricksters. Make sure that the social media account you’re following belongs to the real celebrity or company executive. Most social media platforms have an indicator beside the profile pic that shows the identity has been verified. Look for that indicator if you notice anything suspicious with a post.
Investment / Business Opportunity / Employment Scams
Usually done through e-mail, this kind of scam starts off with an unsolicited offer for an investment or a business opportunity. They lure you in to a phony website where you’re urged to begin investing or take advantage of a business opportunity by using your crypto coins to make money immediately. Once you send in your coins, you never get any returns. You may not even be able to get in touch with anyone in the website to file a report. Employment scams work in a similar way except that you receive an unsought job offer, but you’re also enticed to visit a fraudulent website to get more information. Victims are usually asked to pay for training in cryptocurrency which is never returned.
Be wary of unsolicited offers. If you didn’t seek any information from any company, don’t click on any links or visit the website stated on the e-mail. For unsolicited job offers, companies don’t normally ask payment for training and that should be a red flag for you. Report these e-mails as spam and never reply.
Trading Bot Scams
Trading bot scams promise users high returns every month. The websites or platforms operate similarly to a Ponzi scheme where money from new investors is used to pay people who invested earlier. Once the creators of the website or platform have amassed a substantial amount of crypto, they disappear and close down the website or platform.
If it’s too good to be true, it usually is. Don’t be seduced by high rates of return and only use reputable platforms or websites. If it’s new, always do your research before signing up.
E-mail Scams or Phishing
Fraudsters use e-mail to announce fake initial coin offerings (ICOs) or pose as a government official, credit card employee, or banks and ask you to complete a crypto transaction. Completing something means clicking on a link they provide. The link may contain a virus or a malware that’s activated once you click on it. The virus or malware may be programmed to steal the crypto you’ve stored in your device or your private keys to gain access to your digital assets. Be very careful with e-mail scams as the e-mail may look exactly like the logo or branding of the company. Another term that’s used for these scams is phishing. Other phishing e-mails will ask users to reset passwords, send money, or reconfirm their seed phrases. Once you’ve sent the information, they will use this to get at your digital assets.
When in doubt, don’t be afraid to contact a real person from the company that sent you an e-mail before clicking on anything in the body of the e-mail. Always check the sender’s e-mail address and verify it’s the correct one from the legitimate company. Remember the cardinal rule in crypto: NEVER EVER share your passwords, private keys, or seed phrases to anyone.
An additional measure of security is getting an online wallet from a trustworthy and reputable source such as XMRWallet. For those with XMR coins, signing up with a secure Monero wallet will keep you in complete control of your XMR coins and keys.