Don’t Get Crypt-Hooked: How to Avoid Falling for Crypto Scams

“Bitconnect” was a cryptocurrency exchange and lending platform that promised investors high returns on their investments. The company’s website claimed that investors could earn up to 40% monthly returns on their investments through a lending program. They also had a referral program where investors could earn even more money by bringing in new investors.

However, Bitconnect was later exposed as a Ponzi scheme, where early investors were paid with the money of new investors. The scheme collapsed in early 2018, causing investors to lose millions of dollars.

Over the years, Cryptocurrencies have become a buzzword, with many people looking to invest in promising digital assets. However, the rise in popularity has also led to an increase in crypto scams, leaving many investors at risk of losing their hard-earned money. In this comprehensive guide, we will discuss the different types of crypto scams out there and how to avoid falling for them.

Let’s dig in!

Don't Get Crypt-Hooked: How to Avoid Falling for Crypto Scams
Don’t Get Crypt-Hooked: How to Avoid Falling for Crypto Scams. Image by Freepik

What is Crypto Scam

A crypto scam is any fraudulent activity that targets individuals or organizations looking to invest in cryptocurrencies or the blockchain industry. These scams are designed to deceive investors into giving away their funds or personal information by making false promises or creating fake investment opportunities. Crypto scams can take many forms, such as Ponzi schemes, fake ICOs (initial coin offerings), phishing scams, fake wallets, and ransomware attacks, among others. The end goal is usually to steal money or sensitive information from unsuspecting victims. 

Cryptocurrency scam comes in different sizes and forms and it is important that as you begin your journey into the ever-lucrative world of Web3, you become aware of them.

Types of Crypto Scam

Here are some common types of crypto scams to be aware of:

Phishing Scams: 

Scammers create fake websites that look like legitimate crypto exchange sites, tricking users into entering their login details or private keys, which the scammer then uses to steal their funds.

Ponzi/Pyramid Schemes:

 Scammers promise investors high returns on their investments but instead use new investors’ funds to pay off earlier investors, with the scheme inevitably collapsing once new investors dry up.

Fake ICOs:

 Scammers create fake Initial Coin Offerings (ICOs) and entice investors to invest in the new coin, only for the scammer to disappear with the funds.

Malware and Hacking:

 Scammers use malware or hacking techniques to gain access to users’ wallets or exchange accounts and steal their funds.

Pump and Dump Schemes: 

Scammers buy a large amount of a low-value coin and then use fake news and social media hype to artificially inflate the price. Once the price has risen, the scammer sells their holdings for a profit, causing the price to crash and leaving other investors with worthless coins.

Fake Wallets

Scammers create fake wallets that appear to be legitimate, tricking users into transferring funds to them, only for the scammer to disappear with the funds.

It’s very true that the world of cryptocurrency is still quite new and new trends keep emerging which makes it difficult to stay shielded against these scams. Since I don’t want a 16 year old to make you cry red in the night, I’ve come up with a subheading you’ll need; scroll.

Red Flags That May Indicate a Crypto Scam

Promises of guaranteed returns: 

If an investment is promising guaranteed returns with no risk, it’s likely a scam. Remember, every investment has some level of risk involved.

Unsolicited messages: 

If you receive an unsolicited message, email, or phone call from someone claiming to offer investment opportunities, be cautious. Legitimate investment opportunities are not typically offered through unsolicited messages.

Pressure to act quickly:

 Scammers often pressure victims to act quickly, claiming that time is running out on a good deal. This is a tactic used to prevent the victim from having time to research the investment and uncover the scam.

Unregistered investments: 

Always check to see if the investment opportunity and the person or company offering it are registered with the appropriate regulatory bodies.

Lack of information: 

It may be a scam if the investment opportunity lacks detailed information about the company, its leadership, and its track record.

Request for personal information:

 If you are asked to provide personal information, such as your social security number or bank account information, it’s likely a scam.

Too good to be true:

 If an investment opportunity seems too good to be true, it probably is. Use common sense and do your research before investing any money.

Protecting Yourself from Crypto Scams: Practical Tips

Now that you know how to recognize and avoid the most common types of crypto scams, it’s time to take some practical steps to protect yourself and your investments. Here are some tips to keep in mind:

  1. Do Your Research: 

This is a frequent phrase used in the crypto world. It is even abbreviated as DYOR.

Before investing in any cryptocurrency, take the time to research it thoroughly. Look for reviews, feedback, and commentary from other investors to gauge its legitimacy and reliability.

  1. Use Trusted Exchanges:

 Only use reputable and established cryptocurrency exchanges to buy, sell, and trade your digital assets. Stick to platforms that have a good reputation, strong security measures, and a solid track record of customer support.

  1. Keep Your Private Keys Safe:

 Never share your private keys with anyone and always keep them secure. Private keys are like passwords, and anyone who has them can access your digital assets.

  1. Use Cold Storage:

 Consider using cold storage to store your cryptocurrencies offline. This can be in the form of a hardware wallet or even a paper wallet. Cold storage makes it much harder for hackers to access your funds.

  1. Be Cautious of Public Wi-Fi: 

Avoid using public Wi-Fi when accessing your cryptocurrency accounts. Hackers can easily intercept your connection and steal your login credentials.

By following these practical tips, you can confidently invest in cryptocurrency and reduce the risk of falling prey to scams.

Conclusion

Investing in cryptocurrency can be a profitable venture, but it comes with its own set of risks, particularly when it comes to scams. Just like the devil who looks for what to steal and destroy, so do hackers continue to look for innocent prey to feed on. It is therefore essential to understand the different types of crypto scams and how to identify them before making any investment decisions. Remember to always do your research and be cautious of any unsolicited offers or promises of quick profits. As with any investment, it’s crucial to diversify your portfolio and keep track of your transactions to detect any unusual activity. By following these tips, you can protect yourself from crypto scams and invest in cryptocurrency safely and securely.

Personal Note From MEXC Team

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Emmanuella Joseph

Ella Joe is a Web3 content writer with a flair for storytelling and analogies. With a deep understanding of the crypto world, she specializes in creating informative and engaging articles that are accessible to readers of all levels. She is your Web3 bestie, here to give you all the trends, share knowledge and update you on the very interesting word of Cryptocurrency. Follow her on Twitter to stay up-to-date on the latest update in the world of Web3.

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Emmanuella Joseph
Ella Joe is a Web3 content writer with a flair for storytelling and analogies. With a deep understanding of the crypto world, she specializes in creating informative and engaging articles that are accessible to readers of all levels. She is your Web3 bestie, here to give you all the trends, share knowledge and update you on the very interesting word of Cryptocurrency. Follow her on Twitter to stay up-to-date on the latest update in the world of Web3.