Typical forms and ways to avoid them

Cryptocurrency scams: Typical forms and ways to avoid them

Typical forms and ways to avoid them Scams using cryptocurrency are on the rise, and criminals are stealing money through both traditional and novel methods. The most recent scams include phishing scams, Ponzi schemes, and rug pull scams. Typical forms and ways to avoid them

When it comes to money, scammers are inevitable. The same may be said for cryptocurrencies Typical forms and ways to avoid them

Bitcoin and cryptocurrencies reached an all-time high in 2024. This will probably lead to a rush to invest in cryptocurrencies in order to profit, as well as an increase in con artists attempting to capitalize on this trend. Scams increased significantly in 2023, and according to the FBI’s Internet Crime Complaint Center, losses were over $5.6 billion, or over half of all reported fraud losses. With prices skyrocketing in 2024 and a 45% increase in overall losses in 2023 compared to 2022, scammers are coming up with new ways to exploit those trying to make money. Typical forms and ways to avoid them

The owner of digital money can convert it into cash by moving it to a bank account. Digital currency is a type of currency that is kept in a digital wallet. Digital cash is not the same as cryptocurrency, like bitcoin. It is more difficult to recoup from theft since it relies on blockchain for verification and lacks a central authority like a bank. Typical forms and ways to avoid them

Despite cryptocurrency’s recent rise, fraudsters are still stealing using traditional techniques. Here are a few typical bitcoin scams to be aware of. Typical forms and ways to avoid them

Schemes for investing in bitcoin

Investment schemes are the most commonly reported form of fraud, according to the FBI. Fraudsters in bitcoin schemes approach clients under the guise of experienced “investment managers.” The alleged investment managers who are part of the scam convince their victims that they will profit from their investments and boast that they have made millions of dollars investing in cryptocurrencies. Typical forms and ways to avoid them

The scammers ask for an upfront payment to begin. The crooks then just take the initial fees without earning any money. In order to obtain access to a person’s cryptocurrency, scammers may also ask for personal identity details under the pretense of transferring or depositing money. Typical forms and ways to avoid them

The use of phony celebrity endorsements is another kind of investment scam. In order to provide the impression that the celebrity is encouraging a significant cash benefit from the investment, scammers use authentic images and overlay them on phony accounts, advertisements, or articles. With respectable brand names like ABC or CBS and polished websites and logos, the sources for these assertions seem to be authentic. But the endorsement is phony. Typical forms and ways to avoid them

Rug pull frauds

Investment scammers “pumping up” a new project, coin, or non-fungible token (NFT) in order to obtain funds is known as a rug pull scam. Once the scammers have the money, they take it and run. Investors are left with a worthless investment since the coding for these products prohibits users from selling bitcoin once they have purchased it. Typical forms and ways to avoid them

Fake initial coin offerings (ICOs), in which con artists advertise a project or coin that does not exist, are a prevalent kind of rug pull scam. The Squid coin fraud, which took its name from the well-liked Netflix cartoon Squid Game, was a well-known variation of an initial coin offering scam. In order to earn cryptocurrency, investors had to play: They would purchase tokens for online games and then exchange them for other cryptocurrencies. The Squid token’s value increased from one cent to almost $90 per token. Typical forms and ways to avoid them

Trading eventually ceased, and the funds vanished. When people tried to sell their tokens but were unsuccessful, the value of the token dropped to zero. These investors gave the crooks roughly $3 million.

NFTs, which are unique digital assets, are also frequently the target of rug pull frauds. Typical forms and ways to avoid them

Scams involving romance

Crypto scams are not new to dating apps. These scams involve relationships in which one party takes the time to earn the trust of the other, usually over large distances and exclusively online. One side gradually begins persuading the other to donate or purchase cryptocurrencies. Typical forms and ways to avoid them

The dating scammer vanishes after they have the money. Another name for these frauds is “pig butchering scams.” Typical forms and ways to avoid them

The FTC estimates that customers lost $1.179 billion in 2023 as a result of romance scams. Typical forms and ways to avoid them

Phishing schemes

Phishing scams are still common even though they have been around for a while. To obtain personal information, including cryptocurrency wallet key information, scammers send emails with harmful links to a phony website. Typical forms and ways to avoid them

Users of digital wallets are given a single private key, unlike passwords. However, changing a private key is difficult if it is taken. Since each key is exclusive to a wallet, updating this key requires creating a new wallet. Typical forms and ways to avoid them

Never submit sensitive information from an email link to prevent falling victim to phishing attacks. Regardless of how authentic the website or link seems, always go straight to the website. Typical forms and ways to avoid them

Attacks from the man-in-the-middle

Users’ sensitive, private information can be stolen by criminals when they access their bitcoin accounts in a public setting. Any information exchanged over a public network, including account information, cryptocurrency wallet keys, and passwords, can be intercepted by a scammer. Typical forms and ways to avoid them

A burglar can employ the man-in-the-middle attack technique to obtain this private data whenever a person is logged in. If trusted networks are nearby, this is accomplished by intercepting their Wi-Fi transmissions. Typical forms and ways to avoid them

Using a virtual private network (VPN) to block the man in the middle is the best defense against these attacks. All data being transmitted is encrypted via the VPN, making it impossible for hackers to access private data and steal cryptocurrency. Typical forms and ways to avoid them

Scams involving cryptocurrency giveaways on social media

Numerous bogus posts that promise bitcoin giveaways can be seen on social media platforms. In order to trick consumers, some of these frauds even use phony celebrity accounts to advertise the giveaway. Typical forms and ways to avoid them

But when someone clicks on the offer, they are redirected to a fake website that requests verification before they can get their hands on the bitcoin. To demonstrate the legitimacy of the account, a payment is made as part of the verification procedure. Typical forms and ways to avoid them

The victim may lose this money, or worse, they may click on a malicious link and have their cryptocurrencies and personal data taken. Typical forms and ways to avoid them

Ponzi schemes

Ponzi schemes use the money made from new investors to pay out to older investors. Scammers using cryptocurrency will use bitcoin to entice new investors. It’s a cyclical scam as there are no genuine investments; it’s all about snatching up new investors. Typical forms and ways to avoid them

The promise of enormous riches with minimal risk is the primary allure of a Ponzi scheme. However, there are never any guarantees of profits and there are always risks associated with any investments. Typical forms and ways to avoid them

In 2024, brothers Jonathan and Tanner Adam ran a Ponzi scheme that enticed investors with the promise of 13.5% monthly profits by saying their bot could take advantage of price fluctuations on cryptocurrency exchanges. However, expensive expenditures were made with the $60 million that this Ponzi scam raised. The SEC imposed charges Typical forms and ways to avoid them

False cryptocurrency trading platforms

Scammers may use promises of a fantastic cryptocurrency exchange or even more bitcoin to entice investors. In actuality, however, there is no exchange, and the investor is unaware that it is fraudulent until they have lost their deposit.

To avoid an unfamiliar exchange, stick to well-known cryptocurrency exchange marketplaces like Coinbase, Crypto.com, and Cash App. Before entering any personal information, do some research and visit industry websites to learn more about the legitimacy and reputation of the exchange.

Offers of employment and dishonest workers

In order to gain access to bitcoin accounts, scammers will often pose as recruiters or job searchers. They use this tactic to promise an intriguing position but demand cryptocurrencies as payment for on-the-job training.

Hiring remote labor might sometimes lead to scams. For example, North Korean IT freelancers are attempting to take advantage of remote work opportunities by posing as U.S.-based and showcasing good résumé. The North Korean fraud that targets cryptocurrency companies was warned about by the U.S. Department of the Treasury. We refer to this kind of fraud as a shadow workforce.

Shadow workers pretended to be a LinkedIn recruiter in 2022 in order to target a Sky Mavis engineer. This shadow worker was interviewed over the phone by the engineer, who also provided him with a document.

Attack on flash loans

Loans for brief periods of time, such seconds to execute a trade, are known as flash loans. These loans are common in the cryptocurrency market because traders use the money to purchase tokens at a discount on one platform and then quickly sell those tokens on another platform to profit. The flash loan is paid back after all of these profitable trades are completed in a single transaction.

Because there are no credit checks or collateral requirements for flash loans, an attacker can use the money borrowed to manipulate prices on a decentralized finance network. The attacker creates many buy-and-sell orders to give the impression that there is a lot of demand in order to manipulate the pricing. Following prices, the attacker cancels orders.

AI frauds

As artificial intelligence (AI) advances, hackers are coming up with new strategies to trick the bitcoin market. AI chatbots can be used by attackers to interact with users, offering guidance and endorsing phony tokens. Chatbots that are designed to alert investors to high-yield investment possibilities are actually pump-and-dump operations that use artificial inflation to raise the value of tokens before dropping them.

Additionally, AI has the ability to falsify proof of work, which exaggerates the cryptocurrency project to give the impression that it has more devoted supporters and that the token is authentic. It becomes more challenging to determine whether a token is genuine when the number of followers is inflated.

ATMs for Bitcoin (or BTMs)

Scammers are coming up with new ways to exploit devices to steal as a result of the proliferation of bitcoin ATMs, also known as BTMs, in convenience stores, gas stations, and other locations. Fraud losses at BTMs are on the rise, according to the FTC Consumer Sentinel Network, with losses totaling $65 million in the first half of 2024 alone. Since not all losses are reported, this figure might be significantly higher.

Similar to other scams, BTM scams begin with calls or texts claiming that there has been illegal charges made to an account or that there has been suspicious behavior. Scammers will pose as banks or big businesses like Apple and claim that a person’s identity or money is in danger. The con artist might even divulge the victim’s details.