Scams are unfortunately commonplace in the crypto community, and many new investors have lost money to various forms of cryptocurrency scams.
Knowing how to identify these scams can save you time and money, allowing you to focus on legitimate investment opportunities rather than focusing on convincing the other party that you’re actually interested in what they’re offering.
Here are 10 top crypto scams to avoid so that you can invest your money wisely and trust that you won’t be scammed out of your hard-earned cash!
Top 10 Crypto Scams to Avoid
1) Fake Exchanges
One of the most effective ways for scammers to steal your money is through fraudulent exchanges. When cryptocurrency first came out, exchanges were very informal and unregulated. Anyone could start an exchange in their basement and take peoples’ money without consequence.
If you are going to make a deposit into an exchange, make sure it’s a well-known site that has a clear track record. For more information on checking out an exchange before investing in cryptocurrency, check out our Beginner’s Guide to Exchanges.
Another common scam involves impersonating a team member. An impersonator will reach out and try to get you to send them money in order for them to secure an ICO you want to participate in. It’s important not only that you do not fall for these scams, but also that you let others know so they don’t either.
2) Fake Wallets
We’ve all heard horror stories about online wallets being hacked or people getting their personal information stolen. While it’s a relief that we’re not on our own in securing our digital currency, you shouldn’t feel completely secure if you have any money stored in an online wallet.
Fortunately, there are several precautions you can take to protect your funds and keep your accounts safe. If you follow these simple rules, you should be able to steer clear of most scammers and keep all of your coins—and your hard-earned profits—safe and sound. Here are some of the things that can help: 1) Check Out Your Exchange: If it seems too good to be true, it probably is.
The first thing you should do is check out your exchange. If there are no reviews of it online, or if you find any complaints about it, stay away from it. Investigate and make sure you’re dealing with a legitimate exchange before signing up for an account and depositing any of your coins in their wallets. 2) Use Two-Factor Authentication: Most exchanges offer two-factor authentication—and for good reason.
3) Wallet Sellers
Many sites advertise scam wallets that claim to offer a way for you to earn money or get free crypto by clicking links and filling out forms.
These are often phishing sites set up by hackers. Stay safe—don’t click on any links on these sites, and don’t enter your information anywhere. If you want more information about how to spot a phishing site, check out our post: Cryptocurrency Phishing Tips You Need To Know!
Another common crypto scam is an offer to exchange your crypto for gift cards. Once again, never send your crypto to anyone asking for payment in a different type of currency. Once you do, it’s gone and there’s no way of getting it back.
4) Botting Services
In recent months, reports of cryptocurrency influencers posting fraudulent endorsements for fake initial coin offerings (ICOs) have become increasingly common. In a new twist on that scam, bots are now being used to make some false endorsements look legitimate.
While it isn’t unheard of for influencers and celebrities in other industries to make money from brands or PR firms in exchange for a simple tweet or post about a product, such endorsements are at least often labeled as such; many times these phony promotions aren’t disclosed at all.
For those interested in promoting their cryptocurrency projects using more conventional methods, here are ten signs that you might be dealing with a crypto scam.
Before you post anything about a project, you should do some research into its background. If it sounds too good to be true, it probably is. Check out its founders and executive team; have they been involved in similar projects before?
What are others saying about it online? Spend some time looking for reports of impropriety or fraud before you put your reputation on the line.
5) Cloud Mining Websites
Avoid Cloud mining websites, many of them have turned out to be Ponzi schemes. If you’re curious about cloud mining, you can check out Genesis Mining, which has been operating for almost 4 years with a solid track record.
You can also learn more about it here on Investing News Network. Be careful and make sure to only send money that you’re not worried about losing—many of these sites are just scams.
Another way scammers are trying to scam people out of their money is through fake ICOs. There has been a lot of talk about Bitcoin’s cousin, and a lot of companies have emerged claiming that they will create new coins and tokens, but often times it’s just a fraud.
6) Tech Support Services
With all of these scams going around, it’s important to be able to identify them before they can scam you. The two most common types of crypto-related scams involve malicious websites that steal your data, and phishing attempts through email or text messages.
Below is a list of some of our favorites, which we’ve divided into two categories: web-based and mobile. Web-Based Cryptocurrency Scams Phishing Sites: Phishing attacks are one of the easiest and most common ways for scammers to steal your information.
You may already be familiar with these attacks if you’ve used online banking before, but cryptocurrency accounts are even easier for scammers to target. Cryptocurrency uses digital wallets that store your funds and private keys, which are required in order to access them.
Your private key is similar to a password: if someone else gets it, they can control your account. If a phishing site gets its hands on it, it can easily transfer your funds out of your account and into theirs.e
7) Pump and Dump Groups
One of the most common scams in crypto is called a pump and dump. The group (often a discord) will talk up one coin relentlessly. Each time someone is convinced it’s going to go up, they take out all their BTC/ETH/whatever and put it into that coin, driving up demand.
Then they hype another one like crazy until everyone buys it too. The organizers make all their money off people buying high and selling low. It sounds obvious, but if you’ve never seen anyone do it before (and most people haven’t), it can be easy to get sucked in! So don’t fall for groups that endlessly hype coins; do your own research instead.
8) New Token Launches
If there’s one lesson for crypto investors, it’s: if something sounds too good to be true, it probably is. New token launches are one of many ways bad actors can dupe investors into parting with their money.
They’re not easy to spot from a distance, which is why you should learn how these frauds work and what indicators point towards them before they even begin.
The best protection against scams is to recognize them before they get anywhere near your wallet. Let’s take a look at some red flags for new token launches so you can start your research on a healthy note—and avoid losing your shirt when it comes time for an investment decision.
9) Pyramid Schemes
Unlike many other crypto scams, pyramid schemes are less common. That said, they do still exist and are actually rather easy to spot. Simply put, a pyramid scheme is an investment opportunity where you pay a fee in order for someone else to make money for you.
There’s nothing wrong with paying a fee for investment advice (in fact, it’s quite common). However, when that fee is paid upfront and there is no guarantee that your advisor will invest your money in any way shape,
or form – well then you have a pyramid scheme on your hands. To avoid pyramid schemes in crypto, simply don’t engage in any transaction where you pay fees upfront with no guarantee of return on investment.
Also Read: Crypto Traders Who Became Millionaires
10) Get Rich Quick Sites
Let’s face it, getting rich quick is a powerful notion. And as cryptocurrency explodes in popularity, get-rich-quick schemes are appearing left and right. There are even entire websites dedicated to teaching these scams (although I don’t recommend visiting them).
If you start seeing ads for get-rich-quick sites, don’t click on them. These companies have one goal: To steal your money with false promises of crypto riches. The sooner you stop falling for scammy marketing, the better off you will be!
If you see a get-rich-quick scheme, don’t engage. It might look like it’s telling you exactly what you want to hear, but it’s not true! Just keep in mind that there is no way for anyone to make that much money by doing very little. If someone tells you otherwise, they are lying and trying to scam you out of your hard-earned money.
