How to Avoid Cryptocurrency Fraud and Investment Scams
Cryptocurrency is a digital asset used as a virtual currency and does not exist in any physical form. If you are interested in crypto nowadays, you are probably taking a big fraud risk. The world of cryptocurrency is almost like the new Wild West. An unregulated world with cryptocurrency fraud and investment scams everywhere.
The usual rules for preventing fraud also apply here. You should carefully review everything that you read on the Internet and check to see if it is real. Don’t let the deceiving ads fool you, and stay alert. The cybersecurity firm ESET issued warnings about increasing cryptocurrency scams. Cryptocurrency scammers are experts at using current events and trends in their agenda to trap their victims. According to the FTC, between October 2020 and May 2021, Americans lost an average of $80 million (€71 million) due to cryptocurrency scams. In the UK, this figure is much higher. According to police records, the victims lost over £146 million (€172 million) in the first nine months of 2021.
The reasons why investment scams are on the rise are:
There are very few regulations when compared to the traditional stock exchanges.
Intense media attention makes cryptocurrency a suitable trap for phishing and scams.
Ever-increasing cryptocurrency prices are attracting the attention of consumers who dream of getting rich quickly.
Some of the most common scams include:
Ponzi schemes:
Named after Charles Ponzi, these scams make payments to existing investors with the funds deposited by the new investors.
Cryptocurrency is ideal for scammers, as they have always invented a new and ambiguous ‘advanced’ technology in order to attract investors and get more virtual profits. It’s easy to mislead data when money is virtual.
Fraudulent transactions:
Scammers mislead investors with false information, convincing them to buy shares in cryptocurrency companies, for whom the markets have only little information. As a result, the price rises, the fraudster receives a regular income, and the shares in the hands of the victim lose their value.
Fake ads featuring celebrities:
Scammers hijack celebrities’ social media accounts or create fake accounts of celebrities. These false ads encourage followers to invest in the companies they are directed to.
Fake exchanges:
Fraudsters send emails or share social media posts promising access to virtual currencies found on cryptocurrency exchanges. But for this, the user must pay an entrance fee. Since there is no such exchange, the money disappears forever.
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