There will always be scams where money is concerned. Cryptos follow the same rules.
Wormhole, a crypto platform, suffered a 320,000,000 USD loss as a result of a cyber-attack in winter 2022. Plus, a study by the FTC claims that cryptocurrency fraudsters have taken more than 1,000,000,000 USD since 2021.
Digital asset is a form of currency that may be stored in an electronic or online wallet and transferred by the holder into a bank account to be used as actual currency. Different from cryptocurrencies such as bitcoin is virtual currency. It is more challenging to recover from theft because it operates independently of financial institutions and relies on blockchain for validation.
Even if crypto is a more recent trend, crooks are still stealing via traditional means. Here are a few typical crypto scams to be aware of.
1. Investing Strategies for Bitcoin
Scammers pose as experienced “investment managers” when approaching participants in cryptocurrency investment tactics. The “financial advisers” deceive their victims by boasting extravagantly about their experience in trading cryptocurrency and promising them a reward on their money.
To start, the con artists demand a deposit in advance. Then, instead of generating cash, the criminals merely take the advance payments. The con artists could also request personal identifying details under the pretext that they need them to move or deposit cash in order to gain access to a person’s cryptocurrencies.
Another type of investment fraud involves the use of fictitious celebrity endorsements. Scammers utilize real photographs and overlay them on fake accounts, advertisements, or articles to give the impression that the celebrity is advocating an investment that would yield a big financial return. These claims are made by sources that give the impression of being trustworthy because they employ well-known known brands like CBS and have slick websites and logos. However, the sponsorship is fake.
2. Rug-pull Frauds
Fraudsters “pump up” a new company, NFT, or cryptocurrency in rug pull frauds to entice investors. As soon as they get the money, the scam artists just disappear with it. The software behind these investments prevents anybody from selling cryptocurrencies after purchasing them, leaving them with a useless investment.
A typical form of this fraud is the Squid token scam, which got its name from the popular Netflix comedy Squid Game. Those that wanted cryptocurrencies had to: People would buy tokens for engaging in online gaming, and as they earned more, they could exchange these for some other assets. The cost of a Squid token soared from one dollar to over ninety dollars per token.
The money disappeared when the trading stopped. The token value finally decreased to zero as users attempted to sell the coins but were unable. The con artists managed to defraud these investors out of almost 3,000,000 USD.
Rug pull frauds are also typical with NFTs, or special digital assets.
3. Relationship Frauds
Scams using crypto are not new on online dating apps. Relationships that develop gradually over time, typically over large distances and with just internet interaction, are included in these scams. One side eventually convinces the other to provide contributions or make bitcoin purchases.
The romance fraudster leaves with your money when they got it.
4. Phishing Frauds
Phishing methods have been here for a long, yet they are still often utilized. In order to get sensitive data, such as the private key for a cryptocurrency wallet, criminals send messages with malicious links that take recipients to a fake website.
When a person is logged in, a hacker can get this confidential information by using a man-in-the-middle attack technique. Wi-Fi signals from reliable networks are snatched up when they are close by.
The best defense against these attacks is to use a VPN to cut out the middleman (VPN). Through the VPN, all data is encrypted, guarding against hackers’ access to personal information and asset theft.