Latest Crypto Scams and How to Outsmart Them

Crypto and blockchain are being integrated into our current financial systems to add an extra layer of security and transparency to transactions. Unlike exchanges of money in cash or by card that can slip under the radar, cryptocurrency transactions are verified and recorded on a public distributed ledger that can be accessed at anytime, anywhere. While this has certainly helped improve the way we trace different transactions, this system can only help protect users if they are putting their money in the right place and using it wisely.

The crypto space in still in its early stages, leaving lots of room for opportunity, innovation, and growth. With all the excitement around this new technology, many have been tempted to jump right in without doing the proper research. Like with any financial decision, it’s crucial to do a proper assessment of the risks to avoid falling in the traps of different scams. To learn more about some common scams and best practices for outsmarting them, take a few minutes to read through this guide.

Romance scams

This type of scam is certainly not exclusive to crypto. But as of lately, more and more romance scammers have their eye on digital currencies. Romance scams are when a scammer builds a relationship with a victim under false pretenses to gain their trust and profit from their assets. They are more common on dating apps but can be initiated through many channels including social media, online gaming, and even email.

Generally, the scammer will initiate a conversation through one of these channels that will seem innocent at first. They can be very patient and build relationships with the victims over a long period of time by sending thoughtful messages and taking an interest in their lives. They may even send their victims’ money at first to gain their trust. The whole point is to make the victim feel good and let their guard down.

Some scams are very straightforward and involve the victim sending their crypto directly to the scammer. Others can be much more low-key. After some time, romance scammers may encourage their victims to make investments in cryptocurrency through real exchanges and then transfer that crypto into fake apps that can look very legitimate. From there, they are able to lock the victim’s assets and disappear without leaving a trace.

Once crypto is sent, it cannot be reversed. This is why it is essential to be 100% sure who you are sending your crypto to and avoid following the instructions of others blindly.

Investment scams

The internet is full of fraudulent ads, websites, social media profiles, and apps promoting different “get rich quick” schemes. A general rule of thumb to protect yourself against investment scams is: if it seems too good to be true, it probably is. Investment scams involve the use of fake platforms to solicit investments with promises of higher-than-normal returns.

The purpose of investment scams is to collect your personal and financial information, as well as your money and crypto. Generally, this type of scam starts from clicking on an ad, profile, or webpage promoting an attractive investment opportunity. From there, scammers may reach out asking to move money or crypto to their platform or even offer to do it on your behalf. More elaborate schemes may even show victims that they are profiting from their investment and lead them to believe that the app of website is real and functioning. Although, when the victims will try to withdraw their earnings, or even their initial investment, it will be impossible to do so.

If you are ever unsure about an investment opportunity, you can always confirm its legitimacy with your provincial or territorial securities’ regulator before giving away your personal information or putting down any money.

Imposter scams

Social media platforms are working to increase their security, but that hasn’t stopped scammers from recreating real business pages as their own. Scammers can create profiles with the same name, profile picture, and content, as a famous influencer or business, and offer fake giveaways and promotions to encourage followers to give away their personal information. For example, in the months leading up to March 2021, it was found that more than $2 million in crypto had been lost to Elon Musk impersonators.

These types of scams often involve creating a sense of urgency for followers to participate in fake giveaways or sign up and reveal personal information on fake websites. Some of these accounts may even reach out to users through direct message claiming to be an influencer or business to encourage you to reveal information about yourself. In terms of Bitbuy’s social media pages including Instagram, Facebook, Twitter, TikTok, and LinkedIn, we will never give away any cryptocurrency over social media or contact our users regarding their accounts through direct message.

Phishing scams

Everyone with an email address can be subject to phishing scams. Your junk mailbox is probably full of poor attempts at stealing your information. While most scam emails are pretty easy spot with their poorly written text, strange links, and mismatched email domains, phishing scams are evolving to pass unnoticed. To avoid falling victim to a phishing scam, you should always verify the origin of the email before taking any action on it.

In terms of crypto, phishing scams are generally looking to retrieve your private key so that they can take the crypto directly from your wallet. These emails include links and attachments that direct you to a page where you will be asked to enter your personal information, including details about your crypto account. As a rule, you should never give out your private key to anyone or enter it on any external pages.

Best practices

Now that we’ve covered some of the most common scams that you should look out for, let’s circle back to best practices to help protect your assets:

  • Always do your research before making an investment
  • Double check website URLs before taking any action on them
  • Don’t send your crypto to anyone that you don’t know
  • Only buy crypto from regulated exchanges like Bitbuy
  • You can find other regulated crypto asset trading platforms here
  • Never share your private key or seed phrase with others
  • Use multifactor authentication when applicable to protect your accounts