Cryptocurrency scams are unfortunately common these days, so if you’re looking to invest you need to know how to identify and avoid them.

If you want to avoid throwing money away, you need to proceed with caution and make sure any money you invest in cryptocurrency is going to the right place.

The last thing you want to do is invest a significant sum of money into what you believe is an excellent cryptocurrency offer, only to find out later that you’ve been deceived.

Familiarise yourself with the various types of cryptocurrency scams out there, and you’ll put yourself in a much better position to recognise them when they inevitably pop up.

To give you an idea of what kind of scams you might come across as you try to invest in cryptocurrency, here are some of the different types:

computer graph
Due to the rising value of many cryptocurrencies, everybody wants in - even scammers unfortunately. Source: Unsplash
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The giveaway

One cryptocurrency scam to be on the lookout for is the giveaway. Since cryptocurrency has become such a prized investment, the prospect of sending any as part of a giveaway should have alarm bells ringing.

Usually, these fake giveaways take place on social media platforms, with the scammers posting up links that take you to a fraudulent website. What’s worse, there will be several fake accounts appearing to reinforce the legitimacy of the giveaway on the social media platform, making it seem all the more convincing.

The scam will be successful once the unsuspecting victim has sent cryptocurrency to the scammer in order to verify their address, or something along those lines.

The job offer

man in suit
Believe it or not, that job offer that landed in your lap could well be a cryptocurrency scam! Source: Unsplash

Jobs can be hard to come by, especially in the wake of the covid-19 pandemic, which swept the globe and ravaged the economies of many countries.

Unfortunately, scammers are well aware of this, and use this knowledge to entice victims into their employment scam.

The way this scam works is a scammer will reach out to those seeking employment, and request cryptocurrency payment to begin with a training program for a promising-sounding job.

The high-earning investment

The following example of a common cryptocurrency scam is the high-risk investment.

In this scam, a scammer will invite you to put your money into an investment scheme for the chance to win big.

This type of scam depends on you bringing more people into the fold, so that the scammer can earn a tidy profit.

In case you weren’t already skeptical about ads that promise you a significant financial return for a small investment, you should be now.

Mobile app

While it might not seem feasible that scammers would go through the effort of creating a fake mobile app to trick people into giving them money, there are few lengths they wouldn’t go to.

Yes, even while looking for apps that can help you learn more about investment and where to put your funds, you could unknowingly fall prey to a scam.

In fact, there are reportedly thousands of smartphone users who have fallen for these fake cryptocurrency apps, so always check the legitimacy of the app you are downloading by searching for reviews and checking the spelling etc.

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Fake website

The fake website is another common type of cryptocurrency scam, and the trouble is it’s very easy to click on one wrong link or follow a social media post and be taken to one such site.

These fake websites will often try to imitate reputable company’s websites, though there is one way you can tell for sure whether they are for real. Look out for the lock symbol on the left of the URL bar, and if it isn’t there, leave the website straight away.

Social media scam

Social media offers us many new ways to communicate with one another and stay abreast of current affairs.

Unfortunately, though, it’s incredibly easy to set up an anonymous account and that opens the doors for scammers.

In general, when you’re on social media, be cautious of cryptocurrency giveaways or offers.

Email scam

gmail
Email phishing and the soliciting of personal information are among the most common types of cryptocurrency scam. Source: Unsplash

Scam emails have been around since the internet first came to be.

The way scammers try to trick you out of your cryptocurrency is by sending you an email that looks like it could have been written by a legitimate cryptocurrency company.

The number one rule with emails is never to click on links, unless you are 100% sure it is safe. Even then, it might be better to head to google and type in the web address yourself just to be sure.

When it comes to cryptocurrency, you probably shouldn’t relinquish any of it as a result of something someone has said to you in an email.

If the offer seems to be legitimate, and it’s from a company you know and trust, then visit their website to see if the content of the email is true.

DeFi scam

The DeFi scam is a relatively new type of scam to plague the cryptocurrency markets, and it refers to decentralized finance platforms.

A DeFi platform is one that aims to streamline the trading process by removing the middle man or the gatekeeper of transactions. However, this new innovation has led to the creation of new scams.

When a contract that has funds locked in for a set period of time expires or spills over a threshold limit, that’s when the scammers strike and attempt to steal Bitcoin.

There was a famous example of a DeFi scam back in December 2020, in which a group of developers made off with $750,000 worth of cryptocurrencies.

Social engineering

An unfortunate Bitcoin trader scam that also affects other cryptocurrencies, is what is known as a social engineering scam.

The social engineering scam encompasses a wide variety of techniques such as phishing, in order to extract personal information from cryptocurrency owners.

The goal of many social engineering scams is to end up with the private keys that allow them access to a customer’s cryptocurrency wallet. One approach could be to send an email bluntly asking for the private key information, under the guise of one of the legitimate cryptocurrency companies.

Another method is to send out what are known as Bitcoin blackmail emails in which the hackers hold some power over the customer by claiming to have their search history and threatening to release it to the public.

To deal with social engineering scams like these, your best bet is to steer clear of any hyperlinks you see on social media or websites regarding cryptocurrency.

Tech Support

The tech support scam involves a group of scammers impersonating customer support companies, such as Coinbase, in an attempt to extract personal data from cryptocurrency owners.

As you might imagine, the scammers will make sure that their fake customer support company’s phone number or contact details are widely dispersed on the internet and social media to lure people in.

Using social engineering tactics like deception, the scammers will do their best to get information out of the unsuspecting victims.

To avoid falling prey to this scam, know that it’s rare for customer support to reach out to you. Plus, if you genuinely do need assistance with your cryptocurrency wallet or funds, then you should find the customer support page on the company’s website rather than relying on social media.

Of course, you also shouldn’t ever provide personal information such as the private keys of your cryptocurrency wallet to anyone. It would be like giving out your bank account number and PIN code to someone you don’t know on the internet.

Extortion

It isn’t uncommon to find yourself on the end of an extortion scam when it comes to cryptocurrency.

This social engineering scam preys upon people’s fear of the internet and f personal information getting into the public domain.

Scammers will reach out to you and try to convince you that they have one of your passwords that has been ‘leaked’ or they will flat out threaten to release information about your search history or from your phone.

Loader

A loader, or load-up scam is one in which a scammer will offer up a loading service to a cryptocurrency owner.

For example, the scammer will offer to give you some of the proceeds if you hand over your details.

They will then typically use a variety of stolen cards and fake accounts to commit payment fraud, which will put you in hot water and leave them with all of the money.

If you come across any accounts like this as you’re trading with cryptocurrency, it’s a good idea to immediately report them to the trading platform so that they can’t take money from more people.

Phishing

Scammers these days operate through various mediums, so you have to be on your toes at all times if you want to avoid falling into one of their traps.

Gone are the days when the most prevalent form of scam was email phishing. Scammers have diversified their tactics and now target victims across many platforms. With that in mind, here are some of the different types of cryptocurrency scams you might encounter:

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