Types of crypto scams
- Phishing scams –
Here the scammers will attract the user of high rewards and steal their credentials and private keys claiming that they are from the maintenance team and an support executive of an exchange. Once they have your private keys, they have access to all your cryptocurrencies.
2) Pump and dump schemes –
In this case the token or coin is hyped by social media influencers, media, celebrities, etc. because of this hype investors and traders buy the token and once the token is inflated enough the price goes up and once the price goes up the scammers will sell their funds.
3) Fake apps –
These apps are built just like an original with the same user interface and working. They can get access to your account and wallet address, resulting in stealing your information and funds.
4) Fake website –
Scammers impersonate legitimate website to get details like email id, passwords, wallet address, withdraw password, etc. to avoid this one must make sure that the website is legitimate and check their SSL certificates by clicking on the lock icon. Double verify it by checking their website on their social media handle.
5) Giveaway scams –
Here the scammers trick to send double money and claim that it is an opportunity of a lifetime and has limited seats left. This urgency forces users to take rapid decision and send their funds to an anonymous wallet and the scammers will disappear with the users’ funds.
6) Cloud mining scams –
This companies claim that they will give you incentives on the profit that they make. They let their user rent the mining hardware, in theory this allows their user to mine remotely without buying expensive mining hardware. In practicality this won’t work out as this technic is ineffective and user will make less money than the rent they are paying to operate or in most of the cases this companies are scams.
7) Check website URLs –
Always check the website that you are logging. You can check the website by the link provided on their official social media handle and the certificates of the SSL by clicking on the lock icon on the website.
8) Email Scam –
Email scam can imitate like they are authentic company and make some offers to attract people. Here they trick people by creating urgency limited time deal, lottery, etc. this urgency trick user to send the cryptocurrency to the given wallet address. So, it is always wise to check the social media handle of the company that has mailed it to confirm whether the offers or rotary is going on or it is a scam. Never share your credentials or funds to anyone, no legitimate company will ask you your personal details.
9) Wallet /Account Hijacking
This can be done by
- Employee Impersonation –
No employee from Cryptorbex will ever ask for your credentials. If someone asks you for credentials then he/she is impersonating to get into your account.
- Fake website –
Always check the URL of the website, if the URL is cryptorbex.com the site is authentic. If it is cryptorbex.in, .org, .us, .uk then the site is fake and is stealing your credentials.
- Sim swap –
hacker can impersonate you and call your network provider and request them for the sim swap. Once they care successful, they can login to your account by clicking on forgot password, that’s why 2FA (2 factor Authentication) is recommended.
10) Fake Wallet –
While storing cryptocurrency in a wallet make sure to check the reputation of the wallet whether the wallet has an insurance in case of wallet hacking. Check the reputation and social media of the wallet. There are lots of fake wallet that claim high returns on your crypto, if something is too good to be true, then it is probably a fraud.
11) Ponzi scam –
In Ponzi scheme early investors get paid with the money collected by the later investors. As the volume increases it becomes difficult to give the returns to all investors. Thus, the Ponzi scheme will fall because the operator disappears with all the investors funds or gets caught.
12) Pyramid scam –
Pyramid scheme will in operated in corporate sectors and relies on the network marketing. Here members get commission when they join the system and bring new recruit. Here the new recruit’s funds are distributed to the people who brings the new recruits and the high table that controls the pyramid.
Methods to Identify Cryptocurrency Scams
In the world of cryptocurrency investment, the ability to distinguish between scams and legitimate operations is paramount. To safeguard your assets, it is crucial to familiarize yourself with the telltale signs of fraudulent schemes. Here are some key red flags to be vigilant about:
1. Payment Demands in Crypto : Fraudsters often insist on receiving payments exclusively in cryptocurrency. Genuine entities usually offer multiple payment options, so be wary if someone demands cryptocurrency as the sole form of payment.
2. Profit Guarantees and Payouts : Beware of promises that guarantee substantial profits or immediate payouts. Cryptocurrency investments inherently involve risk, and anyone guaranteeing returns may have ulterior motives.
3. Crypto Key Requests : Legitimate organizations typically do not request your cryptocurrency keys, as they are highly sensitive and should be kept confidential. If someone asks for your keys, exercise extreme caution.
4. Impersonation Attempts : Stay alert for unsolicited texts or emails impersonating individuals, businesses, or government agencies. Scammers may employ these tactics to deceive you into making uninformed investment decisions.
Should you encounter any of these tactics or receive unsolicited investment advice or cryptocurrency offerings, you could be the target of a cryptocurrency scam.
In addition to these initial indicators, there are four other significant warning signs to consider:
1. Lack of White Papers : Established cryptocurrencies develop comprehensive white papers during their creation process, detailing the new currency’s characteristics and network functionality. Scam projects may either lack white papers entirely or present poorly written, inaccurate, and superficial documents regarding the use of funds. To assess a new cryptocurrency’s legitimacy, compare its white paper with those of reputable cryptocurrencies.
2. Developer Transparency : White papers should also provide information about the development team behind the project. For non-open-source projects, you should be able to identify developers or find information about them on platforms like GitHub or GitLab. A complete absence of this information is a potential red flag.
3. Beware of Freebies : Be cautious when offered free items, especially free cryptocurrency coins. Scammers might request access to your wallet or demand payment after transferring the promised funds. Exercise skepticism when encountering such offers.
4. Excessive Marketing : Cryptocurrency scams are often driven by profit motives, whereas legitimate cryptocurrencies primarily aim to enhance blockchain functionality. Consequently, companies excessively promoting themselves on social media or emphasizing fundraising over technological innovation should be viewed with suspicion.
Tips to Avoid Cryptocurrency Scams
To protect yourself from cryptocurrency scams, adopt the following precautionary measures:
- Safeguard your private keys and share them with no one.
- Ignore unsolicited communications from unfamiliar individuals.
- Avoid clicking on unusual or suspicious links.
- Maintain a clear separation between your cryptocurrency and bank accounts.
- Thoroughly research all businesses before considering investments or partnerships.
- Verify the presence of HTTPS in the URL of cryptocurrency exchanges or wallet addresses.
- Refrain from jailbreaking smart devices, as it can expose vulnerabilities.
- If someone claims your funds are frozen, directly contact the relevant agency.
- Scrutinize job offers and recruiters specializing in cryptocurrency.
- Decline offers of free items or funds, especially when the source is dubious.
- Exercise caution when encountering excessive marketing tactics in the cryptocurrency space.
By staying vigilant and adhering to these guidelines, you can reduce the risk of falling victim to cryptocurrency scams and protect your investments.
