How to Identify Common Cryptocurrency Scams
If you know what you’re doing, crypto can be a lucrative endeavor, but it’s also ripe with scams. Don’t get duped. Here’s what to look out for before you load up on virtual currency.
While some crypto scams are unique to the world of digital currency, many of them are twists on existing scams. Some target people looking to invest in cryptocurrency, while others rely on spreading digital cash around to steal money without getting tracked.
If someone contacts you with a “once in a lifetime” investment opportunity, chances are you should run the other way. They’ll often claim their company or app is the next big thing, and that you can get rich if you get in on the ground floor. They’ll sell you hard on their product and couple that sales pitch with a sense of urgency, then disappear with your money.
Sometimes this scam takes the form of “investment managers” offering to help grow your assets by giving them to invest. They’ll set up what they claim is an investment account for your crypto, but you won’t be able to access your money unless you pay them a fee.
Other investment scams in the crypto space operate like pyramid schemes. The scammer will convince you to pay them in crypto for the right to recruit other people into their program, claiming you’ll make even more money once you bring in others. They claim the more you “invest,” the more you’ll make down the line, but all you end up with are broken promises.
Sometimes a scam company will launch a new cryptocurrency coin or token, claiming it solves some critical unmet need in the market. They’ll pitch you on their product and ask you to buy into their coin as an investment that will pay off a hundredfold later on, then vanish. The Squid Game-based coin is a perfect example of this.
When investing, check out the company’s website to see what they do to protect their customers. Be on the lookout for abundant grammatical errors and typos, which can signal a scam. Search for verifiable reviews from public sources. Searching the company name with “review” or “scam” is a good way to start.
Where conventional phishing scams go for your email or banking login credentials, crypto phishing scams try to get the keys to your crypto wallet. These can also be labeled “technical support scams,” since the person running the scam will often pose as tech support to try and get your information.
Representatives from fake companies — or claiming to be from legitimate ones — will contact you and offer to help manage your crypto if you’ll give them your login credentials. They might also say they need remote access to your computer or another device or want you to send crypto to a suspicious wallet address.
Never provide sensitive information to people who make unsolicited contact, no matter how convincing or urgent they may seem. If they say they’re with a legitimate company, double-check their information. Coinbase, for example, tells people only to accept calls from the help number or email listed on their website.
Since some celebrities and public figures talk about crypto fairly often on their social media accounts, scammers will organize fake giveaways using their names and likenesses to get money from people. They may even respond to the giveaway post with other fake accounts to make it seem legit. This is what happened when hackers compromised the Twitter accounts of high-profile users with bogus crypto promotions. If it seems weird or too good to be true, steer clear.
The scam posts will often include screenshots designed to make the giveaway seem real, and a link (or even QR code) to a website where people can go to enter. Once there, you’ll be required to “verify” your crypto wallet address by sending payment. Never trust giveaways that require you to pay anything.
If you get a message on social media or a messaging app like Telegram asking for crypto, ignore it. Legit companies will never contact you unsolicited asking for payments or login credentials.
Some scammers will contact you claiming they have embarrassing or incriminating information about you and threaten to release that information if you don’t send them payment in cryptocurrency.
To make the scam more convincing, they might show you something they obtained via a data breach, like an old password. This will often be all they have, and the person is simply bluffing to get you to give in to their demands. If this happens, it qualifies as criminal extortion, and there are a few actions you should take.
First, mark the email as spam. You can then report the incident to the FBI’s Internet Crime Complaint Center (IC3) and local authorities. Make sure you run a malware scan on your computer or device, just to be safe. If the scammer shows you they have a password you’re currently using, change that password immediately wherever it’s being used. Remember, these scam messages are designed to scare you, which is why it’s called scareware. Don’t fall for it!
Loader/Load Up Scams
These scams are pretty brazen and consist of someone asking you for your crypto wallet or credit card credentials because they need a higher account limit. In return, the scammer offers a portion of the proceeds they say they’ll make from their investments.
Instead, the victim’s crypto is stolen and they’re often left holding the bag on fraudulent credit card charges. The “load up” the victim’s account with crypto and then take it all for themselves, leaving the victim responsible for the transactions made with their wallet credentials.
Never provide your credentials to a third party, even if they say you can trust them. If you see this kind of behavior on a legitimate, regulated exchange, report it so they can put a stop to it.