Top 5 Crypto Scams

Top 5 Crypto Scams

As we all know that crypto transactions can't be reversed and that it can be near impossible to track or trace where the crypto ends up, this results in a lot of bad characters joining the space to scam unsuspecting, innocent, and naive people out of their hard earned money. Although this post is intended for those who are just getting started in the crypto space it's still be a good reminder to those who have been around for a while as well.

I'll be talking about 5 ways where people have lost their crypto to either some fraudster, scammer, or hacker. There are obviously more than just these 5 ways people have lost their crypto to others, but these are probably the most common ways that I’ve seen so far.

1. Prize Scams


The first way is with these so called prize scams. Essentially there are people in these Telegram or Discord groups who "randomly" select winners to say that they've won some crypto and that the "winner" can claim the prize from a given website or link. After the "winner" makes an account with that website, it'll show that the "winner" has indeed won some coins. However, the catch is that in order to withdraw the coins, the "winner" first needs to "verify" him or herself or is given another lame reason and is told to deposit some coins first in order to withdraw the coins that have been won. After the "winner" has sent some coins, the scammer will come up with another excuse as to why the prize crypto can't be withdrawn and will then ask the "winner" to deposit even more.

The only time that crypto is genuinely free is when you're not prompted to create an account on some shady website and that all you need is a wallet address, where you own the private keys to, where you wish for the coins to be deposited to. There's no such thing as free crypto when you need to make a deposit first, so don’t send your coins to anyone unless you want to lose them. 


2. Social Media Impersonation Giveaways


The second way is with these social media giveaways. This is kind of similar to the first method but a little bit more sneaky. The scammer will impersonate someone famous and say that the individual is giving away some crypto for whatever reason. Probably the most famous person out there who these scammers like to impersonate is Elon Musk. I've seen and read countless times on Reddit where the poster is complaining, feeling sad or angry that he or she was foolish enough to send some crypto because he or she really thought that Elon Musk was giving away some free crypto.

As you can see from the image above, the impersonator says that he or she is giving away some free crypto and that all you need to do in order to participate is to send x amount first and you will then be returned with a multiple of the amount sent. Another way is the scammer will run a live stream of some pre-recorded video footage of someone famous giving a talk on YouTube and in the description there will be instructions on how to get some free crypto. The instructions will say that crypto is being given away and that you can get a multiple back of whatever you send. To get people to act quickly, they'll add in that the giveaway is limited to a certain number of coins and that afterwards it's all gone. Again, there’s no such thing as free crypto when you need to send some first in order to receive some back so don’t send your coins to anyone unless you want to lose them. 


3. Phishing 


The third way is with phishing websites, emails, and or applications. So phishing websites, emails, or applications all look very genuine but they're obviously not. The intention here is to deceive you in to thinking it's the real thing to get you to enter your information as you would on the legitimate websites or applications. You need to be very careful and very suspicious in the crypto world. So for websites, don't Google search the websites you are trying to access because the phishing website will have an advertisement placed right at the top making you believe it is the authentic website you are trying to access when it's actually a link to their phishing website. A workaround this is to just bookmark the legitimate sites that you go to often.

For phishing emails, you are sent an email saying that your account information has been breached and that you need to login to fix this or something along the lines of that. Again the intention is to get you to click on their link provided in the email so you then enter your information as you would on the genuine website. You’ll want to carefully check the sender’s email address for authenticity or you can just login to whichever website you're trying to access outside of the link provided in the email.

This is the same thing with mobile applications. There are applications that look like the real thing but are obviously not. The intention of this is to get you to enter the private key of your crypto wallet. So to avoid wondering if the app is legitimate or not, go to that application’s direct website and use the links provided to download the application. This is assuming you’ve gone to the real site though.


4. Ponzi Schemes


The next way is with scam coins or with people who guarantee to multiply your investment really quickly, or there’s some sort of promise to give you decent daily returns, i.e. a Ponzi scheme. If you recognize the photo above, then you've been in the crypto space for some time and know exactly what I'm referring to. For those of you who don't, the picture was taken at a BitConnect conference in October 2017 where the man, Calos Matos, was giving a talk on how much he loves the coin and how much it has changed his life. If you haven't seen his talk before and want a good laugh, you can view his talk here.

So BitConnect, on the surface, was a lending platform where you would lend out your Bitcoin and in return you would get BitConnect coins (BCC) which offered a high yield return on the coin. Shortly before they shut down in January 2018, which was after the peak of the crypto market when prices started tumbling, they were already being called out as a Ponzi scheme by different authorities globally. When BitConnect shut down and as people found out that it was indeed a Ponzi scheme, the value of the coin plummeted to pretty much nothing. So be careful when it comes to giving people your crypto who are offering really attractive guaranteed returns because there are no guarantees in crypto. 


5. Sim Swap Hacks


The last way is with something called a SIM swap hack. A SIM swap hack is when someone calls up your cellphone provider pretending to be you. The hacker tells your phone provider that your phone's been lost and that you need to change SIM cards. When the hacker is asked for identification, he or she provides all the information needed to the cellphone provider for them to proceed. The cellphone provider then deactivates the old SIM and activates a new one where the hacker has access to. After gaining access to your phone, the hacker can then access websites where you've set up SMS 2FA (2 factor authentication).

Although SMS 2FA is better than nothing, there are even better ways to secure your accounts. One would be using Google Authenticator, assuming that the platform allows for that. In order for anyone to access the account that's using Google Authenticator, the person would need the physical device that the authenticator is on. With Google Authenticator however, you need to ensure that you keep that secret code safe when setting it up with whichever account you're using it with.


So there you have it, those are probably the 5 most common ways that people lose their crypto to scammers, fraudsters, and hackers. If there’s anything that you should take away from this post, it’s that you need to be smart about protecting your coins as there are others out there who are trying to take them from you. Don’t let your greed compel you to send crypto to anyone you don’t know. Make sure that what you’re seeing is really legitimate and that you’re not going to some fake place or that you’re giving your information to the wrong people.

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