Digital currencies are a rather promising and popular direction. Despite the rapid development of the field and the interest of users in cryptocurrency, you should not start cooperation with the first company that promises good financial success. After all, there are various types of cryptocurrency fraud that all users should be aware of.
The main reason for deception is the lack of proper control from specialized bodies. How not to fall into the trap and what is recommended to pay attention to.
How cryptocurrency fraud occurs
Currently, most scammers use phishing. The digital currency industry is no exception. The sole aim of criminals is to obtain the password from the user's crypto wallet and withdraw all the money to their accounts. The crooks send out fake links or emails that contain such hyperlinks. Usually, scammers cover themselves with the brand of a well-known company. After clicking on such a fake link, users end up on a site or page where personal information is immediately leaked.
Fake crypto exchanges and cryptocurrency wallets. Scammers create fake web resources that offer various digital currencies at a price much lower than the official market. The crooks guarantee that on their platform you can save a lot and profitably buy crypto. Trust in such services is very risky. On fake crypto exchanges, they offer high returns but require constant increases in investments. A fake cryptocurrency wallet involves malicious software that needs to be installed on a PC.
Scam brokers are another type of fraud. They use information from real brokerage organizations to gain trust. But in reality, it is an ordinary Bitcoin scam and other digital currencies. Deceptive brokers offer to invest in many cryptocurrencies with attractive leverage. But then traders are not paid their earnings.
Rarely, but there are attacks called "Ransomware". They are usually focused on large organizations and government institutions.
These extortion programs are quite dangerous because they encrypt user data, and then the scammers demand payment in cryptocurrency for decryption. But even after payment, unlocking does not occur.
Cryptocurrency theft by the Pump&Dump principle
This fraud mechanism appeared a long time ago and means "pump and dump". As a rule, criminals acting on this scheme use rare digital currencies. The fraud occurs in the following sequence:
- manipulators start with a small amount of crypto;
- then the "pump" occurs. The fraudsters spread unique and convincing information that the price of a specific coin will soon increase. They use blogger ads, social networks, Telegram channels for this;
- then the crooks do indeed buy up crypto to make their stories believable;
- if there are many users who really want to get rich quickly, the price of the digital currency rises;
- the last stage is the most unexpected – "dump". The manipulators simultaneously sell all the cryptocurrency, leading to a rapid drop in the coin's value, sometimes below what it was during the "pump" stage.
How long the Pump&Dump will last is impossible to predict: several hours, days, or much longer.
Crypto fraud – a marketing method of deception
Fraud in the cryptocurrency industry can take various forms. One of them is the creation of channels that contain information about crypto. The crooks steal it from official sources. All posts are uploaded on behalf of an experienced trader. Such channels contain various advertisements that may be of interest to other investors. Then the scammers publish news about an invented cool coin and urge users to buy it at an attractive price on an unknown exchange before the coin's price goes up. You can buy it without problems, but later it will be impossible to sell it again.
Another variant of crypto fraud is fake Initial Coin Offerings (ICOs). This is a scam with the initial placement of Bitcoins.
Participants in such projects invest in digital currencies developed by a newly created company. Investors hope for a high return. But after the scammers receive enough invested money, the crooks disappear with the money, and the startup is considered a failure.
Protection from cryptocurrency scams
Everyone can protect their digital currencies from fraudsters. There are a few simple rules that will help you avoid cryptocurrency theft:
- ignore calls that pitch earnings from crypto investments;
- ignore intrusive ads on social networks;
- always install applications on PCs or mobile devices from official resources (for example, Google Play Store);
- never disclose keys and passwords from crypto wallets.
Crypto fraud and various scams are very dangerous. And anyone can fall into the trap. A significant disadvantage is the lack of legislative regulation. Recovering lost crypto is quite difficult. Therefore, it is worth following simple recommendations to avoid falling into the nets of cryptocurrency scams.