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4 Common Crypto Scams and How to Avoid Them

Scammers are always looking for new ways to exploit people and steal their money, and the massive expansion of cryptocurrencies in the past few years has provided many ways for scammers to defraud people. Each day, new sorts of cryptocurrency scams emerge. From January 1, 2021, to March 31, 2022, people reported to the Federal Trade Commission that $417 million were lost in cryptocurrency due to fraud originating on social media. This shows the extent of crypto scams. If you’re not careful, you could also fall victim to it. To help you, we have discussed some of the most common crypto scams and provided advice on how you can avoid them. 

1. Fake Websites

To deceive customers who are new to the crypto market, scammers often develop bogus cryptocurrency trading sites or false versions of legitimate crypto wallets. New cryptocurrency users may fall victim to misleading websites that claim lucrative investment possibilities or cryptocurrency mining. Most of these websites appear to be genuine, and they may tell you that your money will increase over time. Since these websites look like any other site, it is easy to fall victim to this fraud. Fake websites may often ask for your crypto wallet password and recovery phrase and then use it to complete the scam. 

You’ll need a digital wallet and private keys to engage in cryptocurrencies or perform trades. If a website asks you to disclose your private keys, it’s almost certainly a scam, and you should avoid it at all costs. Sharing your digital wallet’s private keys with anybody is a bad idea, so never disclose it. 

2. Phishing

Phishing attempts using cryptocurrency frequently target important information about online wallets. Crypto wallet private keys, which are required for accessing funds within the wallet, are the subject of scammers. Their mode of operation is similar to that of other phishing scams and is linked to the bogus websites as described above. 

An email may appear to be from a reputable cryptocurrency company, but a false entity actually sends it with the purpose of stealing your funds. The majority of these emails seek instant cryptocurrency payments, and their goal is to increase tension so that the user responds to the email as quickly as possible without giving it a second thought. To avoid falling prey to this scam, it is important to be aware of legitimate websites and never click on random links that appear in your emails or in the notification bars on websites.

Every company promotes itself, but crypto scammers entice consumers by investing heavily in marketing, which comprises online advertising, paid influencers, and offline campaigns. This is intended to reach as many individuals as possible in the shortest amount of time to raise funds quickly. If the advertising for a crypto asset makes exaggerated statements without justifying them, take a step back and do additional research to avoid being misled and scammed.

3. Impersonating Scams

Scammers aim to persuade people that they are a trustworthy agency by mimicking well-known businesses or state agencies. They may claim that your bank account has been hacked and insist on getting cryptocurrency payments to resolve the issue. Fake celebrity advertisements are also included in this category. 

To capture the attention of potential victims, crypto scammers may impersonate or pretend to have endorsements from celebrities, businesses, or influencers. This can include selling investors such cryptocurrencies that do not even exist in reality. 

For instance, in 2021, scammers impersonated Elon Musk and used a tweet to scam users. They were able to make $2 million in cryptocurrencies through this impersonation scam. It is important to know that no credible agency will ever ask for payments in just cryptocurrency. They have many forms of payments suited for various customers. 

It is also important to double-check the representative who is sending the email. To do this, you can contact the agency or business and verify the email address and content of the mail itself from them. By following these practices, you can be safe from the ever-increasing impersonating scams in the crypto sector. 

4. Giveaway Scams

Scams promoting cryptocurrency giveaways can be found on Facebook, Twitter, WeChat, YouTube, and other social media sites. Usually, these offers claim to be from superstars or well-known members of the cryptocurrency industry. 

To encourage uninformed and new users to transfer their tokens to them in the hopes of huge profits, fraudsters offer various incentives, such as increasing the number of tokens twofold or providing high returns. 

Scammers frequently share screenshots of fake messages from companies promoting giveaways, along with links to fake websites. Fake profiles will then reply to these posts, confirming the authenticity of the fraud. The scam websites will then request that you confirm your address by transferring cryptocurrency to the phony giveaway.

All giveaways offered on social media should be especially evaluated and checked.  Reply messages that have screenshots attached should never be trusted since they might be fabricated and manipulated. You can also conduct research on any business approaching you on social media using a credible search engine. If an offer appears to be extremely profitable, it most likely is a scam. Because there have been several reputable and accredited giveaways on social media, separating fraudsters from genuine people can be challenging. This is why you must conduct proper research and investigation before engaging in any transactions with them.

Final Thoughts

While crypto usage is becoming more frequent in today’s digital world, safeguarding yourself against crypto frauds is necessary. Remember never to share your personal information like a crypto wallet key or any other detail with anyone. If you identify a celebrity or influencer making promises that seem good to be true, then know that they are likely to be a scam. You can also report scams to the appropriate authority in your jurisdiction.

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