With the popularity of cryptocurrency continuing to increase, so too has the number of cyber-criminals who want to get in on the action. Since the first official transaction of Bitcoin back in 2010, there have been tens of thousands of alternative cryptocurrencies developed allowing for a plethora of scams targeting those looking to invest and even those who already have. In this blog, we’ll break down the most common cryptocurrency scams, how you can spot them and how you can avoid becoming a victim.
The most common types of crypto scams
There are a number of strategies that cyber-criminal have cooked up to scam unsuspecting crypto-investors. Some are well-known, whilst others rely on their clandestine nature to achieve their criminal means.
Phishing scams are one of the most prevalent forms of cyber-attack in the broader digital landscape – so it’s not surprising there are now phishing scams targeting those with digital wallets containing cryptocurrency. Phishing works by using social engineering to trick intended victims into providing personal information, which typically can include their financial details. In the world of crypto, this occurs when bad actors set up fake websites that impersonate legitimate cryptocurrency trading platforms. They then send emails to their victims that contain links to fraudulent websites. Users believe these emails to be from a legitimate company so they follow the website links and enter their information. This includes the passkeys required to open their digital wallets and access the cold hard crypto inside.
Manipulation of the crypto-market
We’ve all heard of stock market manipulation – crypto-market manipulation works on the same premise but is specific to the trade of digital currencies. Crypto investment scams are where cyber-criminals invest significantly in a particular form of cryptocurrency and then use public platforms such as social media, or even email to promote it and encourage others to purchase it. Their intention is to fraudulently inflate it’s value so they can sell their own coins at a higher price.
Fraudulent mobile apps
Fake mobile apps have unfortunately been on the increase of late – and the world of cryptocurrency is not immune. Unsuspecting users download apps that use branding and logos to impersonate trusted crypto trading platforms. Typically these apps either release malware onto the victim’s device or request log in details such as passkeys to access the user’s cryptocurrency.
Fake giveaways and competitions
Fake competitions and giveaways have been around since the dawn of cyber-crime. Where bad actors once tricked victims into trading cash for competition entries or for the promise of a more significant return, they now request cryptocurrency.
Crypto mining scams
Some cryptocurrency enthusiasts aim to build their fortune by mining digital coins. This can be quite a time-consuming process and requires hardware that’s up to the task. In some cases, cyber-criminals offer their mining hardware to users, for a set fee. Typically, this is all a scam and the bad actors make off with the money with minimal or no return seen by the victim.
How to identify cryptocurrency scams
Cyber-criminals can be particularly deceptive and use a multitude of strategies in order to fool an unsuspecting public. A few key things you can look out for to ensure you don’t become a victim are:
Cyrptocurrences that promise the world
Investment is not an exact science and no one can read the market (except maybe Warren Buffett). So if you come across a cryptocurrency that is being sold as providing guaranteed returns – it’s likely a scam.
Whitepapers are developed by cryptocurrencies to explain how they work and why they were developed. A cryptocurrency that has a whitepaper that doesn’t make sense or doesn’t have one at all – should be approached with caution.
Advertising is how all companies promote themselves. But companies that seem to be over-doing it or are promising things that seem impossible, likely are.
So what can be done to avoid falling victim to cryptocurrency scams?
Act with caution
When it comes to your finances, you should always proceed with some sort of caution. Keep your eye out for suspect business practices and do your own research on anything you’re intending to invest money in.
Keep your passwords and passkeys private
The same way you wouldn’t give out your ATM PIN to just anyone – take the same tact with the passkey to your cryptocurrency wallet. If a company requests this from you – that’s a red flag.
The team at FraudWatch are on the lookout for suspect behaviour in the digital landscape 24X7X365. Reach out to us today to discuss how we can help protect you and your business from cryptocurrency scams.