There’s a great deal of excitement surrounding the world of digital assets. With its advertised benefits of decentralized currencies and presenting an alternative to traditional financial channels, it’s not hard to see why. Resultantly, a plethora of people are eager to take their first step on that alluring fintech ladder.
Unfortunately, it’s precisely this eagerness that crypto scammers have increasingly been exploiting over the past few years. Combined with the fact that many cryptocurrency exchanges are still finding their feet regarding user security and weeding out the scammers (as we’ve previously covered on the SSLs.com blog), it can be difficult to parse what’s a legitimate opportunity and what’s a scam.
This blog is here to help. Before investing your life savings into the alleged next big thing, you should watch out for:
1. Fake apps and websites
Fake websites and apps are a common means for cybercriminals to exploit victims. Sometimes they might be for fraudulent or fake exchanges, while others impersonate real cryptocurrency exchanges. A fake app or website may manipulate users in a few ways, for example, phishing schemes that trick users into sharing their wallet information or bank account details.
2. Pump and dump schemes
A longtime means of economic fraud in the stock market, pump and dump schemes are increasing in the crypto world. Pump and dump schemes are a way to artificially inflate the price of a coin or token. This can be done through hype and spreading fake information on social media and messaging apps, with scammers encouraging traders to stock up on said coins, thus increasing the price. Once the price has risen to a satisfactory level, the scammers sell their own assets for the higher price, causing the coin or token’s value to crash significantly in the aftermath.
3. Romance scams
Romance scams use social engineering tactics to steal money or cryptocurrency from a victim. Very often, the scammer reaches out to a victim on a dating app or social media site. Once the scammer gains the victim’s trust, they’ll either ask them to send a certain amount of cryptocurrency or tell them about an excellent trade investment that should earn them a lot of money. Of course, the investment opportunity is typically a way to steal money or something like a pump-and-dump scheme.
4. Social media scams
As the name suggests, these are posts on a social media site advertising something to do with cryptocurrency. This can encompass anything from fake celebrity endorsements, friends who have been hacked, or fake giveaways. These posts will likely lead to dodgy websites or apps that are out to steal your money.
5. Blackmail scams
These involve the scammer reaching out to victims, informing them that they have incriminating information about them and that they’ll release it publicly unless the victim sends them a certain amount of cryptocurrency.
How to spot a scam
You should already be assessing everything you read online with a critical eye, especially anything to do with cryptocurrency. Sometimes, it can be pretty obvious. Other times, scammers do an effective job at making fact and fiction indistinguishable. Here are some key warning signs that should help you spot a scam right away:
- Messages or posts riddles with bad spelling and grammar
- Overly positive reviews on such posts
- Too-good-to-be-true offers, such as promises of getting rich quick
- Anyone requesting your login details
- Cryptocurrency payment requests from Internet strangers
- Websites without SSL
To avoid being tricked, it is imperative always to do your research about a cryptocurrency, particularly if it’s not one of the more popular options. See what others have to say by finding genuine reviews online. Investigate who operates it and whether or not they’re someone you should trust. And only ever deal with official websites or download apps from legitimate platforms like Google Play or the Apple app store.
When it comes to any industry still developing rules and regulations, it’s wise to exercise caution before placing complete trust in it. Critical thinking is paramount if you want to invest in cryptocurrency safely. By familiarizing yourself with common scams and key warning signs, you should be in a good position to protect your finances.
Cora is a digital copywriter for SSLs.com. Having eight years of experience in online content creation, she is a versatile writer with an interest in a wide variety of topics, ranging from technology to marketing.