There are many crypto scams out there. Crypto scammers always figure out ways to steal from people. I have been a victim of crypto scam myself, but that is a story for another day. Usually, scammers will do whatever it takes to make sure they gain the trust of a potential victim, no matter how much time it takes them and this is because, they want victims to trust them enough to reveal their private information or send money to the scammer through cryptocurrency and their digital wallet.
A simple sign to identify a scammer is when anyone demands you have to pay by cryptocurrency for any reason.
Due to the rapid growth in the cryptocurrency world, it attracts fraudsters who want to steal your money through different crypto scams.
To ensure we all have the safest journey in the crypto world, I will be sharing ways scams can be avoided.
People think all unsuccessful cryptocurrencies are scams but that is not the case, many investors lose money when a genuine coin fails. Usually, it is advisable to do some of your own research especially when a coin is promoted through social media (Twitter, Facebook, etc).
Let us cast an eye over some facts and figures, in the United States, investors lost more than $80million dollars to crypto scam in 6 months, between 1st October 2020 and 31st March 2021, according to a report by the FTC- Federal Trade Commission.
The report stated that almost 7,000 people had fallen victim to cryto scam with average loss of $1,900 dollars. These figures suggest that, compared to the same period in 2020, more than 12 times the number of people had been targeted by crypto scams, with the amount of money stolen is up by nearly 1,000%.
The FTC programmer analyst Emma Fletcher once said “They blend into the scene with claims that can seem plausible because crypto is unknown territory for many people”. This means that the newness of cryptocurrency and the interest of people combined with high crypto prices attracted scammers . The FTC’s report said people aged between 20 and 49 were more likely to be victims of crypto scams while people aged over 50 were more likely to lose higher sums, with the average loss for people in that age group standing at 3,250 dollars.
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Let us take the story of the people that invested in XYZ cryptocurrency investment company as a case study.
This investment company promised people, their investors, daily return of 10% in cryto. They keep to their promise for about a few months then they disappear, I mean they literally vanish into thin air like they never even existed. People invested their life savings, school fees, pension and a lot more, only for this company to ghost. They were all scammed! Some of these people couldn’t bear the loss, some even took their own lives, many others died and suffered from depression.
Potential cryptocurrency scams are not limited to the United State, but a global issue.
TYPES OF CRYPTOCURRENCY SCAM INCLUDES :
• PONZI SCHEMES : This usually promises huge return on investment if one gets involved, but an important part of their reward is by referring friends and family to sign up whereby the money gotten from new members is then used to pay off older members. It will collapse when no new recruit meets payment.
• MALWARE : This attaches itself to people’s computers and devices to steal their private information.
• FAKE CRYPTOCURRENCY EXCHANGES : These are usually what looks like legitimate companies but they then disappear overnight with no trace, taking customers investments with them.
• BOGUS INVESTMENT SCHEMES : Here, people are promised massive returns. Sometimes, celebrities and successful business people are either involved or endorse the scheme.
• EXIT SCAMS : In exit scams, companies take people’s money without delivering products. In the case of cryptocurrency fraud, it involves a company raising money through an initial coin offering (ICO) and shutting down either during the ICO or shortly after it ends.
• IMPERSONATION: People set up fake websites or hack phone numbers to persuade people to send them money. Also, people set up fake cryptocurrency mining websites with certain percentage of ROI - Return On Investment.
HOW YOU CAN SPOT CRYPTOCURRENCY SCAM;
• When something sounds too good to be true, it probably is.
• Always do your research, double check things as well. If a social media account claims a celebrity or famous person is endorsing a product, coin or investment company, then make sure it’s true.
• Do your sums, never always believe everything you hear. Doing your calculations will help you realize that for instance, a deposit of 1,000 dollars would raise impossible returns of 50million dollars just 5years later.
• If websites are cloned or if documents and websites are filled with typos and mistakes, then you are most certainly dealing with a crypto scam.
• Don’t let other people have access to your computer or phone.
• Do your research, check for “reviews”, “scam” or “complaint”.
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You may be dealing with something genuine but because cryptocurrencies are in a volatile market, there is no guarantee that you will make money.
Always do your research! Remember to never invest more than you can afford to lose especially because cryptocurrency prices go up and down.