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These days, cryptocurrency scams are the riskiest type of con in America. Last year, 80% of Americans targeted in these scams lost money.
Why are crypto frauds so prevalent? One big reason is that crypto payments don’t have many legal protections. And without a centralized authority to flag suspicious transactions, most crypto transfers are irreversible.
The good news: learning how to identify crypto fraud isn’t that hard. Here are the most common crypto scams in 2024 and how you can avoid them!
Most Common Cryptocurrency Scams in 2024
Bitcoin Investment Schemes
In this scheme, a scammer pretends to be a seasoned investment manager. They contact investors with wild claims about their investments. Then, they promise their victims they can make millions as well.
The key to this scheme is that the scammer will ask for an upfront fee. Once you give it to them, they’ll steal it and cut off all contact. They may also ask for your personal information to gain access to your crypto wallet.
Many of these schemes involve fake celebrity endorsements. To make this happen, scammers will often impose real photos on fake ads or articles. The defense against this scam is simple: never pay any upfront fees.
Romance Scams
Frauds that promise romance have slowly made their way into the world of crypto as well. The basic setup remains the same: someone pretends to be your love interest online, only to eventually ask for a crypto payment.
Romance scams often take many months to execute. The best way to protect cryptocurrency investments is to never get into these relationships. As tempting as they may seem, they’re almost always frauds.
Fake Employment Offers
If you’re looking for a job, be aware of who you’re sending your resume to. Scammers often impersonate recruiters to gain access to crypto accounts. They may also send unsolicited job offers or create fake job openings.
All these “jobs” have one thing in common: you’ll need to make a crypto payment to get started. The jobs are often in the crypto field, which makes the scam less obvious. Either way, avoid suspicious jobs at all costs.
Phishing Scams
When it comes to crypto scam warning signs, malicious emails are a classic. The scammer will send you an email with links that lead to a fake website. Once you click on it, the site will ask for your crypto wallet information.
Phishing scams are particularly common in the sports betting industry. The biggest issue with them is that you only get one unique key to your digital wallet. If you want to keep it safe, don’t click on suspicious email links.
Man-in-the-Middle Attacks
Do you often log into your crypto account from public locations? If so, know that scammers can steal your private information every time you do it. This includes passwords, account information, crypto wallet keys, and more.
This scam relies on a man-in-the-middle attack approach. If there’s a trusted Wi-Fi network near you, the scammer will be able to intercept its signals. The solution: use a virtual private network (VPN) when in public.
Rug Pull Scams
Knowing how to avoid crypto scams is often about resisting the hype. Rug-pull scams rely on hyping a specific project, such as a new coin. Once enough investors fall for it, the scammers take their money and disappear.
One example of this scam was the Squid coin scam. Based on Netflix’s Squid Game, this scam promised investors they’d be able to play games to earn Squid coins. Once the coin value skyrocketed, the scammers stole everything.
AI Scams
As far as cryptocurrency safety tips go, there’s still not much on AI fraud. However, scammers can use AI in many ways. For instance, they can inflate the number of followers of a crypto project to make it seem popular.
AI chatbots are another popular avenue of attack. Scammers program these chatbots to promote fake tokens and investment opportunities. These are usually pump-and-dump schemes to inflate the token’s value.
Many of these scams involve AI deepfakes of celebrities. For instance, a scammer may pretend to be Elon Musk to promote a project. One common red flag with these scams is the promise of high returns in a short time.
Fake Crypto Exchanges
A great crypto exchange is something most investors are interested in. Scammers know this and will try to lure you into a fake exchange. They’ll often add a little bonus, such as giving you some additional bitcoin.
In reality, of course, all that will happen is that you’ll lose your deposit. This is why it’s best to stick to proven exchanges and discord servers. Do some research about the exchange before giving them personal details.
Social Media Giveaway Scams
Social media is full of fake posts that promise crypto giveaways. If you click on the giveaway, it will take you to a fraudulent side. Once there, you’ll need to make a payment to verify your account and receive the crypto.
On top of stealing this payment, this method may allow scammers to gain access to your crypto wallet. To avoid this scam, stay away from giveaways, no matter how many followers the organizer seems to have.
Flash Loan Attacks
A flash loan allows users to borrow funds and return them right away. You can use it to buy tokens on one platform and sell them on another one at a higher price. The entire trade gets processed in a single transaction.
Since flash loans don’t involve collateral, scammers can manipulate them. They’ll create a few buy-and-sell orders, and then cancel them once the price increases. Always use several oracles to get precise price information.
Spotting Cryptocurrency Scams
As ubiquitous as cryptocurrency scams are, they aren’t that hard to avoid. In general, it all comes down to knowing what to look for.
For starters, don’t fall for promises of large gains. If you’re unsure something is a scam, you can ask someone more experienced, e.g. join a community for traders and learn from experts and ask questions to fellow traders.
Similarly, be wary of investment managers or celebrities promoting a new coin. These scams can be easy to spot by grammar errors and misspellings. It also usually doesn’t make sense for a celebrity to contact you directly.
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