Scammers all around the world are drawn to cryptocurrencies because the irrevocable and irreversible nature of blockchain-based transactions makes it difficult to recover investment cash. The cryptocurrency market’s overall capitalization of $2.2 trillion has piqued investors’ curiosity in this new asset class.
The Investment Center broker, Vincent Koston says, As more people are willing to put their money into highly speculative assets, scammers’ appetite for marketing and promoting fraudulent tokens or cryptocurrencies to people who don’t know much about this new asset class has grown significantly, exposing gaps in investor education about digital assets.
Perform due diligence as an investor: Scammers frequently use deceptive investment schemes that promise large returns on investment, such as telling investors that their money would be doubled or tripled, to deceive unwary investors. As a result, investors should always conduct due diligence and look for warning flags on the website, read the whitepaper, and ask questions about the promises made by the team members. Furthermore, the investor should verify the company’s legal presence, such as its registration, office address, and the persons who are promoting such investments.
Impersonation, misrepresentation and social engineering through fake profiles: This next social engineering scam can take many various forms, but the idea is the same: it necessitates the establishment of false accounts that are customized to appear as genuine individuals and give the project with legitimacy and authority.
In 2017, we witnessed several examples of fraudulent ICOs posing as the company’s CEO, creator, or team members using stolen photos of actual individuals collected from social media of unwary consumers.
In such instances, a Google image reverse search can tell an investor if the image is real or false. Scammers are now using phony AI-generated faces to construct false team member profiles to pitch fraudulent investment schemes to investors, thanks to advances in machine learning in the field of generative pictures.
Detecting Ponzi schemes in crypto industry: Ponzi schemes have existed for many years. In a crypto Ponzi scheme, investors are promised big payments in exchange for bringing in new users, friends, and relatives in order to grow the pyramid.
For example, in 2019, the Ponzi scheme PlusToken made $2.9 billion in profits, and in 2020, WoToken, a similar operation managed by many of the same crooks as PlusToken, robbed investors of $1.1 billion in an exit scam. As a result, the golden rule for spotting a crypto Ponzi scam is that if anything seems too good to be true, it probably is.
Conservative approach the way forward: Even while these scams may appear frightening, customers may stay safe by performing basic due diligence measures. Users can prevent becoming victims of these scams by taking a cautious approach. Furthermore, only interact with legitimate representatives of a bitcoin exchange or company, and keep your digital devices and passwords safe.
As digital assets become more widespread, we will regrettably see more of these kind of scams on a bigger scale, necessitating more rules or steps from authorities to assure investor protection and market integrity throughout the world.
Malware: New entrants don’t always grasp the ins and outs of cryptocurrencies before and after they invest. As a result, numerous malicious systems have been given the chance to grow. Malware programmes are increasingly launching new and more severe attacks on people.
Modern software meant to target cryptocurrency users and investors may access a user’s online wallet balance, empty the account, and replace the user’s real address with a scammer’s.
You can make sure you’re on a safe and trustworthy platform that doesn’t compel you to download.exe files or challenge you to open suspicious attachments by updating your antivirus and device firewall.
Pump and Dump Schemes: It’s not uncommon for fraudsters to buy a new cryptocurrency in large quantities. This generates FOMO (fear of missing out) among other buyers, momentarily raising the cryptocurrency’s share price. Scammers sell their coins at a lower price when new purchasers begin to invest in the new coin and prices rise.
Pumping and dumping are prohibited in the securities market, but they are all too common in the shadowy world of cryptocurrencies.
Several online tools are available to track volume changes and increases in certain cryptocurrencies, which aids in the detection of such scams.