7 Common Crypto Scams to Avoid
Humans have probably been scamming each other for long as we’ve existed, and sadly, cryptocurrency has given rise to new variations on common scams. In this article we’ll describe 7 common types of cryptoscams, and some basic tips on how to protect yourself.
1. Imposter Websites
Setting up a fake website to mislead people looking for a real coin or ICO is one way that crypto scammers dupe people into either 1) revealing private information or 2) sending coins to their own address rather than the real ICO. Protect yourself by double checking the web address and a project’s social media channels for instructions and any warnings prior to sending money anywhere! Also avoid clicking on paid advertisements rather than genuine search results.
2. Fake Tech Support and Remote Access
A common scam that isn’t specific to cryptos is fake tech support which asks for remote access to your computer to help troubleshoot a problem with your account. Avoid scams like this by refusing remote access to anyone claiming to respresent an exchange, wallet, or general computer repair company. Legitimate tech support will not ask to reveal your account password, two-factor authentication code, or private keys. Also be sure you’ve got the correct number if you call for tech support; don’t select a number you find in an advertisement. If you can’t find a number directly on a site’s contact page, use their help desk or chat instead.
3. Phishing Emails
Phishing emails are designed to trick people into giving up sensitive information like account passwords, private keys, or credit card numbers. Phishing emails are usually designed to look like they were sent from a genuine company you have an account with, such as an exchange. They often pretend to alert you to an urgent account issue and provide a fake login link to collect your information and gain control of your account. Be wary of any unexpected email asking you to click a link and provide personal information. If you’re not sure if an email you receive is real, check the senders email address, the reply to address and the URL of the link they ask you to click, but be aware that email addresses can be spoofed (faked) to appear to come from someone they don’t. If you’re still not sure, don’t click. Delete the email and report it as a potential phishing email to the company.
4. Ponzi Schemes, Investment and Lending Scams
There are wide variety of crypto investment scams including ponzi schemes and related lending scams that promise unbelievable investment returns for relatively small initial investments. Ponzi schemes depend on the investments of newcomers to provide payouts to early investors, a plan that typically crumbles when the influx of new investors slows. Recent examples include OneCoin and Bitconnect. You can protect yourself from this type of scam by saying no to any investment that guarantees returns, or makes other promises which are too goo to be true.
5. Pump and Dump Groups
Pump and dump groups coordinate trading to manipulate the price of a selected coin. During the pump phase, they hype a coin and encourage group members and outsiders to buy. Then they sell off suddenly to take profits at an inflated price. While this is unethical in and of itself, it gets worse. Most public pump and dump groups are just the outer circle of traders being manipulated by one or more smaller circles of traders who gets the signal first and are able to make a profit at the expense of the members who get the signal just a short time later. The biggest risk is trading too slowly, and losing money as the selected coin dumps before you can sell.
6. Mining Scams
Because crypto mining requires expensive hardware and technical expertise, fake mining pools and cloud mining setups offer another avenue for scammers looking to steal Bitcoins or other cryptocurrency. Typically, these scams involve a person who asks for a relatively small amount of crypto upfront to connect their victim to a mining rig or pool which will pay out a specific return. Similar to Nigerian check scams, the scammer often returns with a report of some sort of technical problem that requires just a little bit more money or crypto to resolve prior to sending a full payout. Be wary of anyone who solicits payment for mining by private message or who promises a specific steady investment return via mining.
7. Sob Stories
Some people take advantage of the fact that real people are constantly becoming victims of cryptoscams to bilk kind hearted people out of crypto with sob stories about being scammed themselves. You’ve probably seen this flavor of scam before, with people outed for faking things like cancer or a sick child to solicit donations from strangers. The only way to really avoid this type of scam is to limit your giving to real charities and people you know in real life, but you can protect yourself by thinking before you give, and avoiding making donations to brand new group or platform members who lead off with a sob story that makes you feel skeptical.Connect with us