Top 10 Common Cryptocurrency Scam: Over the past 10 years, cryptocurrencies have become a lot more famous, and more and more people are interested in investing and trading them. Even though the chance of making money is appealing, the cryptocurrency world is full of scams that take advantage of people who don’t know what’s going on. Here are the top 10 most common Bitcoin scams you should know about to protect yourself and your investments:
Rug Pull Scams
The rug pulls scammers “pumping up” a new initiative, NFT, or coin for money. The con artists depart with the money. These investments’ coding stops customers from selling bitcoins, making them worthless.
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The Squid coin hoax was famous. The Netflix hit Squid Game inspired its name. Cryptocurrency investors played games.
They bought tokens for online games and played more to acquire more tokens. Squid tokens rose from 1 cent to $90.
Trade ceased, and money vanished. People couldn’t sell tokens, hence their worth was zero. Con artists stole $3 million from purchasers. Rug pull scams are common with NFTs.
Romance Scams
Scams involving cryptocurrencies are not uncommon on dating apps. These cons concern relationships that are conducted entirely online and are often long-distance.
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During this phase of the relationship, one side takes their time to win the other party’s confidence. With the passage of time, one side gradually begins to convince the other party to either buy or give money in the form of cryptocurrency.
The person who perpetrated the dating fraud vanishes after taking the money. Frauds of this nature are often known as “pig butchering scams.”
Bitcoin Investment Schemes
Bitcoin investment crooks posing as “investment managers.” Deceptive investment managers claim to have made millions investing in Bitcoin and offer to make money if their victims follow their recommendations.
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The scammers want upfront money. Instead of making money, robbers take the upfront deposit. Scammers may request personal information for cash transfers. Access a person’s cryptocurrency.
Another investment swindle uses fake celebrities. Scammers utilize real photos on fake accounts, ads, and stories to make it look like a celebrity is making a lot of money. The sources for these comments use ABC or CBS and have professional websites and logos. The support is phony.
Phishing Scams
Scams involving phishing have been around for quite some time but continue to be widespread. Scammers will send emails containing malicious links that lead to a false website in order to collect sensitive information, such as the key information for Bitcoin wallets.
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Users of digital wallets are only given one private key per, in contrast to the use of passwords. However, if a private key is lost or stolen, changing this key might be a difficult process. Because each key is exclusive to a wallet, the person will need to generate a brand new wallet in order to update this key.
Never enter sensitive information from a link in an email in order to prevent falling victim to a phishing scam. Always navigate directly to the website in question, regardless of how credible the website or link may appear to be.
Man-in-the-Middle Attack
Scams involving phishing have been around for quite some time but continue to be widespread. Scammers will send emails containing malicious links that lead to a false website in order to collect sensitive information, such as the key information for Bitcoin wallets.
Users of digital wallets are only given one private key per, in contrast to the use of passwords. However, if a private key is lost or stolen, changing this key might be a difficult process. Because each key is exclusive to a wallet, the person will need to generate a brand new wallet in order to update this key.
Never enter sensitive information from a link in an email in order to prevent falling victim to a phishing scam. Always navigate directly to the website in question, regardless of how credible the website or link may appear to be.
Social Media Cryptocurrency Giveaway Scams
There are a lot of fake posts on social media that say they will give away bitcoins. Some of these scams also use fake famous accounts to get people interested in the giveaway.
But if someone hits on the link, they are taken to a fake site that asks them to verify their identity before they can get the Bitcoin. To show that the account is real, you have to make a payment as part of the verification process.
The victim could lose this payment or, even worse, click on a malicious link and have their personal information and cryptocurrency taken.
Fake Cryptocurrency Exchanges
Swindlers may entice potential investors by making false promises of a profitable cryptocurrency exchange or even the acquisition of additional bitcoin.
However, in actuality, there is no exchange, and the investor is not aware that it is a scam until after they have lost their initial money.
Because cryptocurrencies are verified through the usage of blockchain and do not go through traditional financial institutions, it is more difficult to get your money back if they are stolen.
If you want to avoid dealing with an unfamiliar exchange, you should stick to well-known cryptocurrency exchange marketplaces such as Coinbase, Crypto.com, and Cash App.
Before inputting any of your personal information, you should first do some research and visit the websites of relevant industry organizations to learn more about the legitimacy and reputation of the exchange.
Employment Offers and Fraudulent Employees
For cryptocurrency accounts, scammers mimic recruiters or job seekers. This deception is intriguing but requires cryptocurrency training. Remote labor recruitment scams exist. North Korean IT freelancers get remote jobs by acting as Americans and submitting good resumes.
The Treasury warned crypto companies about this North Korean scam. This is a shadow workforce scam. Shadow workers hired Sky Mavis engineers in 2022 via LinkedIn recruiters.
The engineer prepared this shadow worker for the next interview after a phone interview. This document’s malware let North Korean Lazarus steal $600 million in a bridge strike.
Virtual currency exchangers are used by IT freelancers. Hacking computer networks earns DPRK money or steals data. These people perform advanced IT tasks and get DPRK cyberattack insider access. Chainalysis says shadow workers stole $3 billion last year through fraud.
Flash loan Attack
Flash loans are granted for seconds to make a deal. These loans are popular in the cryptocurrency market because traders can buy tokens at a lower price and sell them immediately for a profit. All profitable deals happen at once and the flash loan is repaid.
An attacker can borrow money and modify DeFi prices via flash loans, which are unbacked and don’t require credit checks. The attacker places many buy and sell orders to create the appearance of demand and manipulate prices.
After prices rise, the attacker stops orders, causing prices to plummet immediately. The attacker can then profit by buying on another site for less or more. Platypus Finance lost $8.5 million in February 2023 to flash loan attacks.
Ponzi Schemes
Older investors in a Ponzi scheme are repaid with money from newer investors. Scammers in the cryptocurrency industry often use the promise of Bitcoin to attract new investors.
Since there are no actual investments involved, the scheme just continues in a never-ending pursuit of new investors to fleece.
The promise of quick and easy wealth creation is the primary allure of a Ponzi scam. However, these investments carry inherent dangers and offer no assurance of profit.
Conclusion
In the end, the fact that cryptocurrency scams are so common is a stark warning of the risks of the digital financial world.
The top 10 common cryptocurrency scams listed above show how important it is to do detailed research, stay alert, and be careful when making decisions in the cryptocurrency world.
As the market changes, it’s important for investors and market fans to know about the latest scams and put security steps at the top of their list to protect their investments.
The cryptocurrency community can work to reduce these scams and make the market a safer place for everyone by encouraging education, regulatory oversight, and responsible trading.