Cryptocurrencies are a convenient option for paying for goods and services while remaining anonymous. These currencies use blockchain technology to verify and record transactions, a feature that contributes to your safety.
However, criminals often cryptocurrencies because it’s easy to remain anonymous while using Bitcoin and other virtual currencies. Here are a few tips for staying safe and avoiding common cryptocurrency scams.
Phishing was one of the three most common types of scams reported in 2020. Criminals can send fraudulent emails to trick recipients into following a link to a spoofed page and sharing their credentials, including their cryptocurrency wallet information.
Don’t open emails from unknown recipients, don’t click on links, and always double-check the URL if you follow a link from an email. You should also be wary of emails that create a sense of urgency and ask you to log into an online account to resolve an issue.
You should also know that not all phishing attempts target your mailbox. Some scammers check message boards and will reach out to you if you report an issue with your wallet or a cryptocurrency exchange. You can stay safe by never sharing your seed keyword, even when dealing with a legitimate company.
Initial Coin Offering Scams
There are currently more than 4,000 different cryptocurrencies, and new ones launch regularly. When a new virtual currency launches, the creators typically give people a chance to be the first ones to get tokens.
Because there are no regulations in the cryptocurrency space, it’s easy to scam investors by promising them tokens and not delivering. Some scammers even launch cryptocurrencies on fake exchanges and use a name that is similar to another coin to trick investors.
You can avoid ICO scams by sticking to well-known cryptocurrencies or only purchasing tokens on exchanges you trust.
In 2018, a Ponzi scheme launched by Chinese criminals brought in $2 million in Bitcoin, making it one of the largest Ponzi schemes ever.
A Ponzi scheme is a type of scam where criminals ask victims to make an investment with the promise that they will get a return later. They might ask you to contribute to an investment by sending Bitcoin or promise a high return on a new ICO.
You can identify Ponzi schemes by the promises that sounds too good to be true. You should always be wary if someone approaches you and asks you to invest in a project, especially if they are looking for funding in the form of Bitcoin.
Fake Mobile Apps
Malware that can steal your information isn’t new, but criminals have recently been using fake mobile apps that target cryptocurrency wallet owners.
These fake mobile apps are crypto-themed to target users who have a wallet app on their phone. These malicious apps can empty your crypto wallet or replace the wallet addresses that you can copy to your phone’s clipboard with an address the criminals control.
Fake mobile apps can be difficult to spot. For instance, some criminals recently created a copy of the cryptocurrency wallet app Trezor and stole $1 million in cryptocurrencies.
Be careful with what you install on your phone, and always check the developer when downloading a new app.
Cryptocurrencies attract criminals because it’s possible to remain anonymous. It’s important to know about common Crypto scams and to always watch out for red flags. You can stay safe by protecting your devices and never sharing your personal information with anyone.