14 Biggest Crypto Scams You Should Know About
With the introduction of cryptocurrency to the general public, came the risks of crypto scams. Like all industries, scammers are regularly trying to extract money in the form of cryptocurrency for their personal benefit.
Today, we’ll be discussing 15 different techniques of the biggest crypto scams that you should know about so that you can increase your chances of surviving a malicious attempt.
What Are Crypto Scams?
Just like any other financial scam, crypto scams are targeted toward the cryptocurrency you have in your possession. Hackers and other malicious third parties try to steal your crypto assets via different methods.
The scams work out like regular financial scams as well. Hackers will always common tactics like a fake claim or other schemes. Other times they will straight up steal digital assets from an individual.
When stealing assets, hackers try to break into your digital wallet and try to transfer all the assets from your account to your personal account. The main goal here is to manipulate you into giving up your crypto or NFT (Non-Fungible Tokens) assets.
Types of Crypto Scams
Even with different cybersecurity measures available, scammers are getting creative with their approaches every single day. Let’s take a loop at the biggest crypto scams that hackers and other malicious entities pull off for exploiting someone:
- Investment scams
- Phishing Scams
- Upgrade Scams
- SIM-Swap Scams
- Fake Crypto Exchange Scam
- Market Manipulation
- Pump-and-Dump Schemes
- Rug Pulls
- Traditional Hacking & Stealing
- Initial Coin Offering
- Romance Scams
- Social Media Crypto Scams
- Ponzi Schemes
- Employment Offers With Crypto Donations
An investor scam is when a scammer manipulates and encourages people to hand their cryptocurrency over with the promise of a large profit with simple investments.
A scammer will either pretend to be some sort of celebrity or a finance expert to convince others that they know what they’re doing and that you should make an investment for a huge amount of profits.
These offers always start with a very low offering, since it’s designed to lure people with the promise of getting more for less. But once you give in to it, there’s no doubt that all your investment that was through crypto is gone forever.
Phishing is one of the oldest methods of scamming an individual. A scammer is constantly trying to access your financial accounts, including your crypto wallets. To access crypto wallets, they need the crypto key that you have, and that’s where the phishing method comes in.
Phishing scammers will often create a replica, fake website for the real website that you use for your transactions. When you input your personal information on that fake website, the website relays that information to the scammer, and they can easily access your account with your credentials.
It doesn’t just stop at fake websites. They also can impersonate other organizations, including:
- Online delivery services
- Your bank
- Different utility companies
- Financial advisors
- Government agencies
It can be as simple as a mail that says someone withdrew a large amount of money from your account, and you can cancel the transaction by clicking the link attached to the mail. When you enter the link, you’re entering all your information in an interface that acts as a portal for the hacker to collect information.
These attacks can come from anywhere, and anyone can fall victim to a phishing incident.
All software is constantly getting updated, which includes cryptocurrency platforms. People are used to different software updates and upgrades these days, so no one suspects that malicious software replaces the real software with an update.
Scammers also use different tricks to collect private crypto keys as a part of the upgrade. For example, Many scammers offer a free upgrade to a professional version of certain software in exchange for crypto wallet keys. It’s a simple social engineering attack and it’s effective almost every time.
There are times when hackers will piggyback on legitimate upgrades as well, launching their schemes right around the time of an upgrade for a certain crypto platform. They do it to target the user base of a certain crypto to catch them at an unaware moment since they’re already expecting an update.
A SIM swap is a more recent method. In this case, a scammer can create an exact copy of your cellphone and can use that SIM card to access your phone data. But how?
The clone SIM card works as a transmitter, from which the hacker receives signals about the information you’re sharing through the phone and every input you’re making.
In some cases, the SIM card is more advanced, working as a module through which the hacker can take complete control of the phone it’s inserted into.
The information collected from the phone can easily be used to access your crypto wallet, or retrieve your crypto keys to gain access.
The damage that can be done with this scam method is severe. Since the hacker has direct access to your devices and credentials, it will not be counted as “an invasion” on your account, and you will not catch wind of the damages until it’s too late.
Fake Crypto Exchanges and Crypto Wallets
There are many random accounts on social media platforms that will offer you cheap coins or wallets and offer an unimaginable amount of ROI. If you see offers like this, it’s a scam.
These crypto products will offer you an outrageous amount of ROI but will ask for a high initial fee in return. Also, they will keep asking you, again and again, to invest in their scheme.
If you give into temptation and invest, there’s a high chance they will vanish when you try to withdraw your funds.
You’ll also come across fake crypto wallets that you will find are very affordable to purchase. But there’s a trick here.
Most of the time, these wallets just contain trojan malware. Once you log into these wallets, this malware enters your computer to steal your credentials, personal information, and everything in between.
Market manipulation is when hackers try to influence the crypto market artificially to interfere with asset prices. They do it to tip the scales in their favor for extra profits and quick ROI.
Here are a couple of unethical trading activities that fall under the category of market manipulation
Churning: Churning is when nefarious brokers try to exploit commission-based payment structures by excessive trading. But this is done by hacked accounts they acquire from unaware individuals, so when the penalty hits they don’t take any damage since they already withdrew their earnings and left.
Front-Running: Front-running is when someone tries to manipulate the market by exploiting knowledge of pending transactions. This information is usually collected through unethical means and then exploited for personal gains.
Spoofing: Spoofing is the process of creating an illusion of momentum with a high number of orders, and these orders are canceled before they are completed. This hurts an organization in two ways: the company servers are overwhelmed when processing a large number of orders, and when they’re canceled the company faces a neat loss.
Crypto markets are relatively new and are still in an infantile state, so they’re more vulnerable to market manipulation tactics. To stay safe, Only trade within reputable crypto exchanges that offer you protection and safety measurements against the aforementioned methods.
Pump-and-dump is when an individual or a group of people intentionally inflate the price of an asset so they can sell the same asset at a higher price for more profit.
Crypto schemers regularly spread false information regarding these schemes to inflate the value of certain crypto or assets as much as they can. They already have a decent amount of the same asset in their holdings.
They continuously keep feeding people fake information to hype people up for investing their assets as well.
Once they manage to drive the price high enough, they sell it off and vanish. Doing so plummets the value of the asset right away, sinking the investors financially.
Think of a Kickstarter campaign, but instead of delivering the product, the person who started the campaign runs away with the money instead. That’s how a rug pull works.
Often, a bad actor will release a brand new cryptocurrency in the market and create hype around it on social media. They aim to funnel as much investment as they can into their currency.
Once they think they have made enough money, they proceed to scratch the entire project and run away with the investor funds.
The most common victims of scams like these are early adopters, who are constantly manipulated with exciting offers and upcoming roadmaps for the currency. Almost all of the time, these visions and ideas are made up just to scam people out of their money.
Traditional Hacking and Theft
Though the trends and techs of crypto markets are far different from regular markets, but traditional hacking and theft is still an option here to scam someone.