Cryptocurrency Scams And How to Avoid Them

Monica Morris • Apr 29, 2021

Bitcoin and other cryptocurrencies’ unprecedented rise attracted a lot of attention including those of cybercriminals who perpetrate cryptocurrency scams. As the public becomes more involved in digital cryptocurrencies, the risk of scams will continue to increase.

The unregulated and private nature of various cryptocurrencies makes them a magnet for various fraudulent schemes and scams.

Whether through investment scams or impersonations there are various ways fraudsters trick victims into parting with cryptocurrency.

In this article, we will discuss various cryptocurrency scams and explore ways to avoid them.

1. Ponzi Scheme

Promoters of Ponzi schemes promise a consistent and high return on investment to lure in unsuspecting victims. This fraudulent scheme which is common with traditional investment has been successfully adapted to the crypto space.

While pretending to be a legitimate investment, scammers use crypto deposits from new investors to settle older investors’ profit. The scheme continues until new investments dry up and it becomes unsustainable. The scheme collapses, trapping investors’ money.

Cybercriminals often use fake testimonials and endorsements to promote such schemes.

2. Fake Giveaways

 

Fraudsters have devised means to convince victims to send them cryptocurrency by promising higher rewards. For example, victims have been asked to show loyalty to a public figure or company by donating bitcoins.

 

In return, they are promised a higher reward which never comes.

The scheme involves impersonating celebrities or organizations and deceiving their followers into parting with crypto.

3. Phishing Email Scams

Phishing for cryptos is also a popular scam. Hackers send messages from what appear to be legitimate companies.

They may ask targets to invest in new crypto portfolios or steal their crypto platform credentials by including links to fake websites controlled by the attackers.

Some scammers also set up a fake ICO and announce it via mass mailing to get as many victims as they can.

4. Pump-and-Dump Scams

In this scheme, a group of scammers gets together to buy a particular cryptocurrency in order to drive up his price.

The crypto price’s upward trend will deceive unsuspecting victims into thinking that there is a valid market move behind the rise. The crypto price will be further inflated when the public starts buying it.

When the promoters of the scheme hit their investment target, they will dump all their portfolio which will crash the crypto price and lead to panic selling by duped investors. Social media hashtags may be used to enhance this fraud.

The scammers can then move to another cryptocurrency to repeat the same pump and dump scheme. This fraud is difficult to detect even for seasoned investors.

5. Old Scams

Scammers can send emails or call victims to inform them that they owe the IRS a certain tax amount that must be paid immediately to avoid legal penalties.

In this case, the fraudsters ask for payment in crypto instead of giving out their bank account or requesting a wire transfer that can be easily traced.

Many victims only get to know that they have been defrauded after transferring crypto to the scammers.

6. Fake or Cloned Apps

Mobile apps are popular names for many people to be introduced to cryptocurrency investments and access their online wallets. Hackers take advantage of this to divert victim’s crypto funds.

Scammers convince victims to install fake crypto apps or clones of popular ones. They do this by promising freebies and rewards for using such apps. However, installing such apps can be used to compromise the target device and steal cryptos.

It may also be used to convince a target to deposit crypto for investment which is then stolen by the malicious app developer.

This scam is made easier by the proliferation of unvetted third-party app stores for Android devices.

How to stay safe from Crypto Scams

  1. Be skeptical of every crypto investment, especially those with unrealistic promises. Scrutinize all crypto offers and confirm that they are from legitimate sources before participating.
  2. Educate your employees on the dangers and risks associated with cryptocurrency and the various crypto scams that might be directed against your organization so they can be on the lookout for fraud attempts.
  3. Avoid visiting questionable sites and set up security policies to block potentially malicious websites on your company’s systems.
  4. Never click on any link that is asking for your password or wallet details whether through emails or SMS.
  5. Do not follow anonymous crypto investment tips.

Volatility risks are not the only issue you have to worry about in cryptocurrency. Even if you are not an investor, there are various ways you could lose money to scammers via cryptos. Educate your employees about crypto scams so your organization can stay safe. Contact us today for more information about cyber security.

Fort Wayne Indiana downtown
05 Jan, 2024
In an era where digital transformation is at its peak, businesses are increasingly vulnerable to cyber threats in Fort Wayne, Indiana. With cybercriminals becoming more sophisticated, local companies must avoid these threats to safeguard their digital assets. As cybersecurity experts, SDTEK is dedicated to helping Fort Wayne businesses fortify their defenses against these ever-evolving threats. Understanding the Cyber Threat Landscape in Fort Wayne Like many thriving urban areas, Fort Wayne is home to a diverse range of businesses. The variety of enterprises here makes the city a vibrant economic hub, from bustling tech startups to established manufacturing companies. However, this diversity also makes the area a target for cybercriminals. The most common threats include phishing attacks, ransomware, data breaches, and malware. Small and medium-sized businesses (SMBs) are particularly vulnerable, often due to limited IT security resources. Recognizing these threats is the first step in building an effective defense strategy. Why Cybersecurity Matters More Than Ever for Local Businesses The consequences of cyber attacks can be devastating. They can lead to financial loss, damage to reputation, and legal implications if customer data is compromised. In today's interconnected world, the fallout from a security breach can extend far beyond the immediate damage, impacting customer trust and business continuity. Tailored Cybersecurity Strategies for Fort Wayne Businesses At SDTEK, we understand that there is no one-size-fits-all solution to cybersecurity. This is why we offer customized security strategies that cater to the specific needs of Fort Wayne businesses. Our approach includes: Risk Assessment: Evaluate your business's particular risks, considering factors unique to your industry and operational model. Employee Training: Empowering your staff with knowledge and best practices to recognize and prevent potential cyber threats. Implementing Robust Security Measures: This includes firewalls, anti-virus software, and secure Wi-Fi networks tailored to your business's specific needs. Regular Monitoring and Updates: Continuously monitor for threats and keep your security systems up-to-date to combat new and emerging threats. Best Practices for Cyber Hygiene In addition to tailored strategies, there are general best practices that every business in Fort Wayne can implement: Regularly update software and systems to patch vulnerabilities. Use strong, unique passwords and consider multi-factor authentication. Regularly back up data and store it securely. Establish a clear policy for handling sensitive data. Collaboration and Continuous Learning Cybersecurity is not a one-time effort but a continuous process. Collaboration between businesses and cybersecurity experts like SDTEK is crucial. We encourage Fort Wayne businesses to engage in local cybersecurity forums and workshops to stay informed about the latest threats and defenses. Conclusion In Fort Wayne, staying ahead of cyber threats is essential for the longevity and success of your business. By understanding the risks, implementing tailored strategies, and practicing good cyber hygiene, local businesses can significantly reduce their vulnerability to cyber-attacks. At SDTEK, we are committed to partnering with you in this journey, providing the expertise and support you need to protect your digital assets and thrive in a digital-first world. For more insights and assistance on cybersecurity solutions tailored for your Fort Wayne business, contact SDTEK . Your digital safety is our priority.
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