Cryptocurrency OR Tricktocurrency: Save yourself from these Crypto Scams

Cryptocurrency’s popularity has not only attracted investors but has also attracted fraudsters who leave no chance to exploit the opportunities that revolve around scamming individuals and enterprises. Scams involving cryptocurrencies have exploded in recent years because of the cryptocurrency boom. “Therefore, it is very important for an investor to educate himself and think twice before getting involved in any project that seems too good to be true”, says Advocate P.M. Mishra, Managing Partner of Finjuris Counsel FZ-LLC, UAE, Finlaw Associates, India, BCH Consulting, Europe.

As per Adv. P.M. Mishra, Crypto scams are broadly classified into Social Engineering Scams and Investment Scams.

Social Engineering Scams: In this type of scam, scammers employ psychological manipulation and deception to obtain access to sensitive account information. People are led to believe that they are working with a trustworthy institution, such as a government agency, a well-known corporation, tech support, a concerned citizen, a coworker, or a friend. Obtaining trust is the essential aspect of scamming in such a situation. Following are the categories that fall within the ambit of social engineering scams:

• Phishing: Scammers who use this method to scam people usually send an email that directs recipients to a custom-built website where they must submit private key information. Once the hackers obtain this information, they proceed to steal the cryptocurrencies stored in the wallet.
• Honey Trapping: The scammer entices the victim and makes them believe that they’re open to staying in a long-term relationship with the victim. After the trust is gained, the subject of profitable cryptocurrency prospects and the ultimate transfer of either funds or account authentication credentials frequently comes up in conversation.
• Extortion: Scammers use the method of blackmailing to extort vital information regarding an individual’s crypto wallet. They claim to possess a database of the user’s visits to pornographic websites or other unlawful websites and threaten to unmask them unless the user shares their private keys or transfers cryptocurrency to the scammer.
• The “Influencer” Scam: Many fraudsters pretend to be celebrities and influencers who pledge to replicate or multiply the cryptocurrency supplied to them in what is known as a giveaway scam to entice potential victims.

Investment Scams: Investment scams usually take place when a business opportunity sounds too good to be true. Profit mongers usually fall into this trap because they are made to believe that they would gain guaranteed returns on investing a huge sum of money in the business. Many crypto-related Ponzi schemes function in this manner. Investment scams include:

• NFTs and ICOs: Although cryptocurrency-based investments and business possibilities may appear to be lucrative, that’s not necessarily the case. Some scammers, for example, establish bogus ICO websites and advise people to deposit cryptocurrency into a hacked wallet. In some cases, the ICO itself may be to blame.
• Cloud Mining: Retail buyers and investors will be marketed via platforms in order to assure a continual stream of mining power and profit. These platforms do not genuinely possess the hash rate they claim to own, and they will not provide the benefits once you make a deposit.
• DeFi Rug Pulls: The creation of DeFi platforms has its own set of issues. Through such channels, bad actors have gotten their hands on investor funds. This activity, known as rug pulling, has grown in popularity as DeFi protocols have become popular among crypto investors looking to increase profits by seeking out yield-bearing crypto assets.

Scammers will definitely continue to target the crypto ecosystem as it grows in size and complexity. You’ll be able to spot a crypto-related scam early and avoid it from occurring to you if you know the typical ways fraudsters try to steal your data and money. Therefore, it is very important to know how the crypto markets function legitimately and how to not get lured by attractive investment schemes.