Beginner Guide to Cryptocurrency Scams and Fraudulence

Crypto scams, fraud and complaints are rampant. If you're willing to protect your invested asset, here's how to identify these cryptocurrency scams.

Bitcoin and cryptocurrency scams are very rampant!

As the entire industry is still at infant stage, it already has many potentials that can be used to make money fast online.

Either good or through the bad ways mostly known in Nigeria as Bitcoin format scams.

Many people have tried investing in cryptocurrency, but instead, they got scammed of their fortune.

Maybe, they invested in the wrong asset that looked, or claimed to be better than the first cryptocurrency.

Due to decentralized nature of crypto, scams on Telegram capitalizes on the anonymity to steal funds from unsuspected individuals.

If you’re keen to invest in crypto world, then it’s necessary that you familiarize yourself with some of the most common scams.

This will definitely help to protect you and your investment finances from getting lost.

Before we get started, let me explain to you, what these scams are all about – just in case you’re not all that familiar with it yet.

Let begin...

What is a crypto scam?

Cryptocurrency scam is an activity that raises crypto complaints against some practices, which convince people to invest in fake projects.

These techniques are used by scammers to make people invest in fake crypto projects, or loose their investments entirely.

Back in the days, I lost money to high-yield investment program and ponzi schemes which projected to me as a way to make money fast online with Bitcoin.

Little did I know they were all cryptocurrency scams.

Types of crypto scams

In this post, you will see the most popular BTC scams you should always try to avoid loosing your funded investment.

So, let’s get to dive straight into all the types of crypto scams already!

1. Mining cryptocurrency scam

Crypto mining is a specialized activity that requires a huge involvement of financed funds and technicality to yield any substantial profit.

However, newbies are being told otherwise by these ‘make-believe individuals’ who claim to offer you fixed returns for investing in their mining programs.

They normally use edited images, big profit promises and fake testimonials to convince clients to part with coins; after which they will disappear.

2. HYIP crypto investment scam

A high yield crypto investment website mostly comes with variety of investment options to attract prospect.

For instance; when Bitcoin Crypto Doublers (Bitcoins – invest up-to $50 to get $500 in 7 days, or invest $100 to get $1000 in 10 days) kind of platforms.

Others are just regular persuasive comments on social media pages.

Sometimes, they could send out direct messages seeking to persuade you into pseudo-investing on their platforms.

3. Fake bounty and airdrops

An example is the fake ‘5000 BTC Binance Giveaway’, where a perpetrator created fake social media profiles and web links.

They also come with a promise to get a part of the 5000 BTC available for grabs, while it’s been promoted on Telegram.

These kind of Telegram crypto scam is the type you’ll be asked to deposit some crypto, so you can be eligible to win in the giveaway.

Or you’ll be asked to register on a clone platform similar to the original, as they try to steal your log-in details for later access through phishing.

4. Crypto pump and dump scams

These ones mostly happens to day traders, when new crypto-coins are freshly introduced into the cryptocurrency market.

These coins sometimes, may lack the basic features that determines the value of crypto.

The people behind such crypto projects may use FUDs, or controversies to push the price high, so their own investment can increase.

As soon as people starts buying into the coin due to price spike, they will start selling their own stakes in the project, which drastically drops the value.

Always do thorough research on any cryptocurrency you intend to start trading to avoid loosing your invested funds due to FOMO (most times).

5. Shit-Coin crypto project scams

Shit coin refers to fake cryptocurrency coins, or tokens with no potential for the long term value.

This type of scam tries to convince an investor of the benefits of a relatively unknown coin – asking him to buy the fake project.

It is no longer news that most of these projects have either failed, leaving the investors with worthless ICO tokens, or have pulled exist scams.

6. E-mail phishing and hacks

This level of crypto-coin scam is an advanced model which employs tools and behavioural predictability of the victim.

In e-mail phishing hack, they try to get access to your passwords, or cryptocurrency wallet by sending clone links of websites.

They will also try infiltrating your device with malware, and the phishing e-mails could have attractive headlines and call to action.

They usually send out mass-mail to their victims telling them that their crypto investments account have been tampered, and they should reset their password(s).

7. Fake crypto exchanges

Cryptocurrency scammers also take advantage of the market anonymity to set up a fake exchange.

These fake exchanges may trick users into thinking they’ve got cheap fees platform, with quick access to some cheap cryptocurrencies.

Be sure to use a reputable exchange when buying and selling Bitcoin.

8. Blackmailing for Bitcoin

Be wary of blackmail attempts in which strangers threaten you in exchange for bitcoin as a means of extortion.

The common execution of this method is by email, where the sender transmits a message claiming that he/she hacked into your computer.

They’re mostly operating it via RDP (Remote Desktop Protocol), and VPN (Virtual Private Network).

The sender says that a key logger has been installed and that your web cam was used to record you doing something you may not want others to know about.

The sender provides two options, whichare;

  1. Send Bitcoins to suppress the material
  2. Send nothing and content i sent to your email contacts and across your social networks.

Cryptocurrency scammers use stolen email lists and leaked user information to mass-mail thousands of individuals.

9. Social media scams

Social media networks (like; Instagram, WhatsApp and Telegram) are most popular as den of cryptocurrency and Bitcoin scammers.

The usual ways of they use these social media networks to scam people, is by projecting as an escrow service.

Once you use them as an escrow to pay business clients online, as soon as you make transfer to their wallet, your funds will disappear forever.

Sometimes, they would even go as far as extorting more money from you by telling you to pay for charges, so your deposit can be released.

If you fall for these social media format, they would keep going until you waste most of your crypto investments in their hands.

In conclusion

Always use long and strong alphanumeric passwords you can remember to protect your investment on exchanges.

Do not share Bitcoin wallet info with anyone, or third party, and it could be better to enable 2-factor authentication on your wallet and storage devices.

If you must participate in free crypto giveaways, look out for crypto airdrops organized by official handles.

Ignore and block off comments, or direct messages promising quick profits.

Stick to trusted pltforms, and always check that their URL (i.e. website link) is correct, and check if it has SSL (i.e. https) before clicking.

I strongly recommend using Binance exchange for all your transaction, as they are trusted by many professionals.

To avoid spam mails, you can use VPNs with an email filtering services which requires e-mail sender to pay before his/her mail is delivered to your inbox.

This would deter phishing attempts and help blacklist them without stress, but you must do your own diligent research.

Study the coin’s development team, product and industry backers to avoid leaving your crypto investment in an exchange wallet to avoid getting hacked.

The crypto market is highly volatile hence, no guarantees on a fixed amount of profit over a given period of time.

Profits vary with the market; so when promised a fixed return in quick succession set your red alerts.

If it looks too great to be true, please take a good look into the project and do thorough research before investing in it.

About The 'Staunch

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I am a financial nerd with a Bachelor’s Degree in Accounting and Finance, but found digital currency and asset investment to be more lucrative. The Crypto Staunch website is established to help individuals learn how digital currency and assets work through in-depth articles. Go-to the about page to learn more.

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About The 'Staunch

I am a financial nerd with a Bachelor’s Degree in Accounting and Finance, but found digital currency and asset investment to be more lucrative. The Crypto Staunch website is established to help individuals learn how digital currency and assets work through in-depth articles. Go-to the about page to learn more.