Unfortunately, as cryptocurrencies become more popular, so do the associated scams, the more well-known of which I will describe in detail in this article. Scammers can also use a variety of spyware, so it is your top priority to ensure that your devices are protected.
Secure browser
The first thing I recommend is installing Brave Browser on your desktop. (You can also install it on your mobile, but since you will mostly be working with apps on it, it is not important.) It is the most secure browser possible, built on the Google Chrome engine, but it has a lot of security settings that keep a lot of tracking and unwanted content away. It is worth managing your investments and finances on this platform, completely separate from your other browsing, for which you can continue to use your usual browser.
Secure email client
The second thing is a secure email program. This would be Proton Mail, which handles your messages securely and encrypted. It is also recommended that you use this completely separately for your investment work and register with this email address on exchanges and other platforms that you use for your crypto and other financial operations. If you already have previous registrations, it is worth changing them to this email address. Its phone application is also available.
Secure password storage
The quality and storage of your passwords is also a fundamental thing. It is generally recommended to create a random password of at least 16-20 characters, containing a mixture of lowercase and uppercase letters, numbers and special characters, but it is quite tedious to enter this every time you log in. An extremely useful tool for this purpose is Proton Pass. After you have installed Proton Mail, you can download the free version as a browser extension (you can later download it for mobile) and assign it to your Proton Mail, with the same password. Never save passwords in Google or Apple cloud, and preferably not in any electronic notes! This application is very secure and easy to use. You can find out how much more it is good for in its detailed description.
Encrypted IP address
Using a VPN also adds another layer of security, as it provides a hidden IP address, making it even more difficult for scammers to track your activity. Furthermore, you can change your IP address to another country if necessary. This may be necessary if, for example, a platform is blocked in a specific country. In such a case, you can set another country and, “miracle happens,” the given website becomes accessible. NordVPN is one of the best tools for this. Proton also has such an add-on, but according to surveys, it is slightly better. Both are subscription-based, but their fees are not high, which is worth paying for at a discount, with an annual fee.
Safely manage your Seed Phrase
Another extremely important thing that I have to say at the very beginning: When creating digital wallets, you will receive a 12 or 24-word Seed Phrase. This will be your real key through the wallet to your assets stored on the blockchain. Anyone with this can immediately access your assets and drain it instantly! Therefore, remember this from the very beginning and never save it electronically on any of your devices. Only offline! Write it down on a piece of paper or find another manual way, but the point is that it is outside of your electronic devices. However, keep it in such a way that without it you will not be able to access the coins and tokens stored on it, and there will be no way to restore it. It is worth storing it in at least two separate places so that no one else can access it, but you will find it if necessary. You will not need it daily, because you will use the shorter temporary code you set to log in. That code will only be valid on the device where you set up your wallet. (See wallets for more details.)
Connecting wallets to applications
Another very important security thing with decentralized wallets is to never connect a wallet that you store a larger amount of value on to any platform! I even use well-known DEX exchanges with wallets created on separate Seed Phrases. You can create as many as you want, and although it is a little more labor-intensive, security is the most important thing. It is useless to save and work on your investments if your capital is taken away in an instant.
Fraudulent links
Another important thing to remember! NOTHING IS NEVER FREE!
There are many scams and copycat sites. You must be very careful not to click on links you receive in emails thoughtlessly (this is why Proton Mail is good, because it filters out and blocks most of the similar junk right away). When they promise rewards, e.g. with "Claim Rewards" or similar calls, delete them immediately! Don't try, because you'll get cold feet very quickly!
There are so-called Airdrops, in connection with various projects, when they want to advertise them before their launch, for example (there are other options), and after completing various tasks, they give you free tokens in exchange for your work, the value of which may increase later. I personally don't participate in such things, but for those who really have time for this, there are sometimes good opportunities. In any case, you should first thoroughly check the given platform, its community, etc. and if you decide to participate in the action, then with a wallet where you store nothing but the minimum number of coins necessary to pay the fees for executing any transactions.
In the list below you will find the websites and applications that you can use to achieve the highest possible security.
SCAM - Fraud in the digital world
The number of financial scams targeting users was already almost endless, but that number has exploded as digital currency—also known as cryptocurrencies—became commonplace. According to the Federal Trade Commission (FTC), more than 46,000 people reported losing more than $1 billion in crypto assets to various scams between January 2021 and June 2022, and that number only includes people who shared that information with authorities.
The fact is that users generally know very little about how digital currency works or how to keep their digital assets safe. And because cryptocurrency payments don’t come with any legal protections or government guarantees, crypto fraud is particularly attractive to thieves. Also, consider that there is no bank or other centralized authority to flag suspicious crypto transactions, and all crypto transfers are irreversible. With these details in mind, it’s easy to see why this scam industry has grown.
If you’re interested in crypto investing or already own digital assets, you need to understand how the most common crypto scams work, how to spot them, and what to do if you fall victim. Read on for an overview of the most common crypto scams currently being seen by authorities, as well as how to spot them in time.
Crypto scams to watch out
Scammers are incredibly creative when it comes to tricking you into giving up your personal information or information. As a result, many crypto scams involve some type of impersonation, as well as carefully crafted lies that are often tailored to the intended victim. The most common types of crypto scams currently being committed include:
Virtual Ponzi schemes
Cryptocurrency criminals advertise non-existent opportunities to invest in digital currencies and create the illusion of huge returns by paying out old investors with new investors’ money. These can be compared to previous pyramid schemes. Early entrants may get lucky, but most will lose their entire investment. In fact, those who enter the “game” in good faith will also be involved in a crime to some extent. Especially if they receive commissions at different levels by recruiting additional entrants. Everyone loses in such a project. If only because no one can have a good conscience even if they feel they have won with it, since their profit is the loss of those who join later!
In general, most similar MLM projects that pay commissions in many stages are scams (statistics show that at least 99%)! With such rates, in my opinion, it is not worth trying them. If you are really interested in any of these projects, if someone offers it, it is worth considering whether the commission system is even sustainable. Is there any concrete, verifiable evidence of the source of income.
I have also noticed the interesting thing that in fair projects, those who join earlier always get the biggest discounts. In pyramid schemes, it is exactly the opposite. This has happened in all the cases I have observed, without exception.
Virtual currency traders
Otherwise, scammers may pose as legitimate virtual currency traders or set up fake exchanges to scam people out of money. Another crypto scam involves fraudulent sales offers for individual retirement accounts in cryptocurrencies. Then there is simple cryptocurrency hacking, where criminals break into the digital wallets where people store their virtual currency to steal it. This is mostly only possible with Hot Wallets, if the owner does not pay attention to maximum security.
Fake websites
Fake websites with fake offers that promise huge, guaranteed returns provided you roll over your investment. Of course, you will not get anything back from your investment.
Blackmail scams
Some scammers claim to have embarrassing personal information about XY victim, including photos or videos of themselves, to blackmail them. They usually threaten to make the information public but promise to keep your information private if you do what they want. Their demands are always the same – they will fix the problem if the victim immediately sends them a crypto transfer. You should report extortion scams to the police immediately. Also, never send money to the thief or communicate with them at all.
Gift fraud
This type of scam promises free money or other rewards to the targeted victim if they comply with what they want them to do. Many scammers impersonate celebrities or influencers to lure new victims who can’t tell the difference between the two. For example, crypto scammers constantly try to impersonate Elon Musk on social media and in videos to trick people into sending in digital assets. An Elon Musk “Freedom Giveaway” crypto scam that took place on Twitter even promised free crypto to the first 1,000 new followers who signed up, but it was all a hoax.
Remember: Nothing is free!
Impersonation scams
The gift scam example outlined above is also an impersonation scam, but there are many other impersonation scams you should be aware of. For example, crypto thieves will say they are from the government or law enforcement to gain some credibility. From there, they will convince you that your accounts or assets have been frozen as part of an investigation and that you can pay them in crypto to resolve the issue. Other times, they will say they are from a large company like Amazon, Microsoft, FedEx, or even your bank to convince you of a different story. Ultimately, the goal is to get your crypto, no matter which lie they use.
Investment scams
This scam can happen in several ways, but it usually involves someone approaching you with a business opportunity promising to help you get rich. In some cases, scammers will try to get you to trade your crypto assets, saying they will provide exceptional returns, or they can double or triple your crypto assets overnight.
Either way, you should know that there is no such thing as a "guaranteed return", and this is especially true when it comes to digital assets. If someone contacts you and says they can do wonders with your crypto and make you rich in a hurry, don't respond.
Of course, the process would start with you sending crypto to their online account or downloading an app that will help you get rich, and you need to do this urgently because the deadline is very short.
In many cases, these scammers will have legitimate-looking websites that use complicated investment jargon to make themselves seem genuine. However, if you log into your account on the platform, you may not be able to withdraw your funds, or you may only be able to access your funds if you pay a high fee.
Guaranteed return promises
No one can promise guaranteed investment returns, and this is just as true for the crypto industry as it is for traditional financial investments.
Phishing scams
A phishing scam occurs when someone pretends to be someone else, usually a company, to trick you into willingly sharing your personal information. Many crypto phishing scams aim to trick you into sharing your private crypto wallet keys, usually by sending an official-looking email asking you to log in to your account.
"Pump and dump" schemes, "celebrity" support
This scam occurs when a group of people get together to try to get others to invest in a particular coin, usually by posting an ad on social media.
Scammers may pose as billionaires or well-known names online, promising to multiply your investment in a cryptocurrency, but instead steal what you send them. They may also use messaging apps or chat rooms to start rumors that a famous businessman is endorsing a particular cryptocurrency.
From there, the scammers work together to drive up the price of the asset, then once it reaches the target price, they sell it almost simultaneously, leaving all the new and excited investors holding the assets behind. This causes the price of the remaining assets to drop suddenly and dramatically.
Romantic scams
Remember, romance scams are alive and well in the cryptocurrency world. In this type of scam, someone pretends to be interested in you online, on some dating platform, usually by weaving an elaborate web of lies about themselves. These scammers can spend months trying to arouse romantic feelings for you, at which point they will ask for a crypto payment or convince you to invest cryptocurrency with them so that you can spend the rest of your life together.
In the end, however, the romantic encounter was always a scam, and the other person was not who they said they were.
Fake job posting scams
In other cases, thieves create fake job postings or send unsolicited job offers to lure new victims into their scheme. The “jobs” they hire for are often in the crypto space, including crypto mining and recruiting other crypto investors.
Either way, these jobs have one thing in common – you need to pay in crypto to get started. The scam can take many forms from there. The scammer may also try to convince you to make additional payments.
You should never pay a fee to complete a job or obtain a position in the crypto industry. If someone offers you a job that requires an upfront payment, “run away.”
Unexpected communication
If you receive an email, phone call, text message, or message from someone on any social platform or messaging service and they want you to log into a crypto account, send crypto to solve a problem, or participate in a business opportunity, ignore it immediately.
How to spot crypto fraud and avoid becoming a victim
When it comes to crypto scams, there are quite a few telltale signs that they are trying to scam you.
„Stealing yourself”
This is the most beautiful of all!
This is a relatively new and very tricky theft, which if you think about it, is not theft at all.
The scammer writes positive comments in the comments under various social media posts and videos, and then asks for advice on how to transfer, for example, his crypto asset from his OKX wallet to, say, the Binance crypto exchange. He does this by making it seem like he is completely naive, a beginner, and gives his 12-word seed phrase.
The person who is so kind as to write to him to delete the post immediately is the best off. However, the majority does not think this way and immediately sets up the OKX wallet with the seed phrase, and indeed there is, for example, 300 USDT in it on the Ethereum network, but there is no Ethereum in it to cover the gas fee.
Whoever tries to take that money quickly deposits a small amount of Ethereum, which may be enough to cover the transaction fee. However, as soon as they deposited the Ethereum, it immediately goes to another wallet address, since it is a smart contract wallet and is programmed that way.
Is this theft?
After all, whoever deposited the Ethereum did it for to take that USDT from another people!
Anything that seems too good to be true
If you come across a crypto offer that seems too good to be true, your instincts are probably right. No one is going to offer you free crypto to make money without doing anything. A little research can help you quickly spot big claims that aren’t backed up by any data.
While you’re on the lookout for the crypto scam “red flags” outlined above, there are other steps you can take to protect your digital assets that can help you avoid problems.
Consider the following steps to avoid becoming a victim of a crypto scam!
Protect your crypto with a hardware wallet (cold wallet)
Crypto can be stored in web-based, mobile, or desktop wallets, all of which are considered "hot wallets". Cold storage, or choosing an external device, can help keep your assets more secure. You can also store your crypto in a hardware wallet, which is a small device you can keep at home. This type of wallet allows you to always have your crypto keys with you.
Ignore unwanted communication
If you receive strange emails or phone calls from someone who seems eager to talk to you and quickly brings up cryptocurrency, the communication is almost certainly a scam. Try to ignore messages from unknown people and only respond if you can verify that the person and the situation are legitimate.
Check contact details
If you receive phone calls or emails from your bank or other institution you actually use, do not respond to the email or phone number they contact you from. After all, the first contact could be fake. Instead of responding directly, look up the company's contact information on its official website and call or email them (it will definitely be the official address or person).
Go slowly before investing
There are legitimate ways to invest in crypto and other assets, but scammers will always use high-pressure techniques to get you to invest before you have time to do any research. If you are looking to start investing in any kind of asset, take some time to learn more about the companies you might want to work with.
Report crypto scams
Whether you think you've spotted a crypto scam or have already been duped into one, it's your duty to report it to the police immediately. Even if the chances of catching the scammers are slim, it will at least increase their chances of potentially deceiving others into the same scam.
The bad news about crypto scams is that it is virtually impossible to get your money back once you fall for a scammer.
Once you send cryptocurrency to another person, they must willingly send it back to you, otherwise you can consider your digital assets lost forever. That’s why it’s best to spot the signs of a crypto scam early and avoid it. If you end up sending crypto to a stranger, giving away your private keys, or being scammed with a fake job offer that requires upfront payment, these kinds of lessons can have huge financial costs.
Can you be scammed by someone sending you crypto?
It could be an outright scam if someone sends you crypto, but fraud can take many forms. For example, someone might send you crypto with the goal of gaining your trust, only to have you send them more crypto in return.
So, I will repeat once again what I think are the most important rules:
- If something seems too good to be true, it probably is!
- Never give out your private keys or passwords to anyone (not even to government agencies)!
- If a stranger sends you a direct message with a business offer, delete and block it. Forget about it!
- Only connect your wallet to a site that you know and trust!
- Nothing is free, everything has a price. If you accept free tokens, do your research first!