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5 Cryptocurrency Scams and How to Deal With Them

By September 8, 2020May 9th, 20234 minute read

Just a few days ago, the cryptocurrency market cap topped at $400 billion. This marks a growth of more than 90 percent since the year began. A reminder of the 2017 rally during which bitcoin price touched $20,000.

The growing crypto market valuation and the ongoing coronavirus pandemic has also given rise to scores of cryptocurrency scams.

Add to that the irreversibility of a cryptocurrency transaction. You should verify each and every possible detail regarding the receiver before initiating a crypto transfer.

Knowing the most common type of cryptocurrency scams and ways to deal with them will come in handy.

Social Media Cryptocurrency Scams

While going through conversations about cryptocurrencies on social media sites, you must have come across reputed firms and influencers doing crypto-asset giveaways.

They ask for a few digital currencies (BTC, ETH, XRP, BNB, WRX, etc) with promises of returning 10 or 20 times the amount that you send.

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You will also find bots and fake profiles replying on a giveaway post soon after they go out. Stay away from such unscrupulous schemes that purely intend to steal your crypto assets.

They are too good to be true. Genuine companies and individuals will never ask for your money on social media.

Pump And Dump Groups

New cryptocurrency traders and investors get scammed by market movements orchestrated by pump and dump groups.

These scammers buy a particular cryptocurrency en masse to push prices up exponentially. When a sufficient number of ignorant investors buy during the rally, they dump their holdings on the market, cashing out with huge profits.

Pump and dump groups typically target cryptocurrencies that don’t have a major market presence, and operate through Telegram and Slack groups.

You should keep on eye on the market activity of the cryptocurrency that you have invested your funds in. Never make buy and sell calls in response to rapid price action.

The crypto market is volatile but on careful observation, some price movements just stand out and appear completely manipulated.

Also, whenever you get added to one of these groups on Telegram/Slack, report them as spam and exit instantly.

Fake Cryptocurrency Apps

Malicious actors work in more ways than one. In a widely prevalent cryptocurrency scam, users end up downloading crypto applications that are not original and mimic real firms.

Hackers who design such apps also make them look legitimate through fake positive reviews and ratings. Users who download such applications (mostly wallet and exchange apps) end up transferring funds to the hackers.

Always download applications from the official website (after checking the ‘https’ extension before the web address, or through links shared by a trusted source).

To download the WazirX only use the below mentioned links:

Android App – WazirX – Buy Sell Bitcoin & Other Cryptocurrencies

iOS App – ‎WazirX

Cryptojacking Malware

Hackers just don’t stop at stealing crypto assets through spurious applications. Sometimes they deploy malware on computers that secretly start mining one or more cryptocurrencies utilizing the device’s RAM/processing power. This is cryptojacking.

These malwares apart from mining also latch onto an available crypto wallet to drain all available funds.

As a cryptocurrency trader/investor, you should exercise extreme caution in your online activity. Double-check the address of the website that you are visiting, and often click on the small lock-shaped icon on the address to ‘view site information’

Also, do this when you visit the WazirX India website for buying bitcoin or any other cryptocurrency. Only upon seeing the ‘Connection is secure’ proceed with all your crypto trades.

Phishing Scams

Quite a lot of times, cryptocurrency scammers impersonate a person or company to extract personal data through phishing.

You may probably receive email messages that mention something that’s wrong with your crypto exchange account and will have a follow-up link to solve the problem.

That link will redirect to a fake website – similar to the original one – that will prompt you to log in. This way, the attacker will steal your credentials, and possibly your cryptocurrencies.

We at WaziX will never ask for your username, password, or any other sensitive account information.

If you receive a potentially scammy communication, reach out to us through our newly launched live chat support feature or email.

Additional Pointers To Keep Your Crypto Account Safe

We do everything we can to keep your crypto funds safe, but here are a few things that we recommend for you: 

  • Create strong passwords for your account(s). This is the most important step. Create strong passwords that include numbers, characters, capital letters, and symbols.
  • Do NOT share your passwords, do not share your OTPs and do not save them in your email accounts.
  • Check the official URL and the lock symbol while accessing the exchange website.
  • Don’t fall for scammers in Telegram groups or any other website. Anyone asking for funds, passwords, or OTP online is probably a scammer.
  • Never share your private keys or account information on mail, chat, or any social media sites.
  • Use 2-factor authentication (2FA)

Using 2-Factor Authentication is probably the most important thing to do. If you haven’t enabled 2FA, your crypto is at risk.

Frequently Asked Questions

Is Cryptocurrency Safe To Invest In?

Cryptocurrency investments are subject to market risks, but if sufficient security measures are not taken, trading accounts can be maliciously accessed. Investments come with risks and uncertainties, and we cannot claim that any digital currency investment is risk-free. Buying and selling cryptocurrencies can be risky even if the trader is knowledgeable about the market and treats their coins carefully.

What Is The Meaning Of Crypto?

A cryptocurrency is a digital currency that is secured by the process of cryptography, making counterfeiting and double-spending almost impossible to happen. Blockchain technology is used to produce cryptocurrencies ( a distributed ledger enforced by a distributed network of computers). Cryptocurrencies are distinct in that a centralized authority does not issue them.

What Is Cryptocurrency?

A cryptocurrency is a digital currency secured by encryption, due to which chances of activities such as counterfeiting and double-spending taking place get close to impossible. Cryptocurrencies get created on blockchain technology ( a distributed ledger enforced by a distributed network of computers). Cryptocurrencies are unique in that they do not get issued by any central authority. The term "cryptocurrency" comes from the encryption techniques used to keep digital currencies and the network safe.

How Safe Are Cryptocurrencies?

Cryptocurrencies can be safe, but your crypto wallets can be hacked if proper security steps are not performed.There are also dangers and uncertainties associated with investments, and we cannot declare any virtual currency investment risk-free. Buying and selling cryptocurrencies does not have to be dangerous if the trader is well-versed in the market and treats his coins with care.

How To Invest In Cryptocurrency In India?

There are two ways of investing in cryptocurrency, mining and via exchanges. Cryptocurrency mining is the process of verifying and adding transactions between users to the blockchain public ledger. Purchasing cryptocurrency in India is a straightforward procedure where investors simply participate by registering with a crypto exchange such as WazirX. After registering for an account, citizens can trade multiple cryptocurrencies, store cryptocurrency in wallets, and more.

What Are The Best Cryptocurrencies To Invest In?

The best cryptocurrencies to invest in would be the ones you study and analyze in detail. Some of the most popular cryptocurrencies include Bitcoin, Ethereum, and many altcoins such as Tron, Ripple, Litecoin, etc.

Is Cryptocurrency Legal In India?

In India, cryptocurrencies are legal; anyone can purchase, sell, and trade cryptocurrencies. They are currently unregulated; India does not have a regulatory framework in place to regulate its functioning. According to the Ministry of Corporate Affairs (MCA), companies must now declare their crypto trading/investments during the financial year, according to the Ministry of Corporate Affairs (MCA). Cryptocurrency transactions have been taxable in India when people receiving such gains are Indian tax residents or where the crypto is considered to be domiciled in India

What Is Virtual Currency?

Virtual currency is a type of uncontrolled digital currency that can only be used online. It is exclusively stored and transacted using designated software, mobile or computer applications, or unique digital wallets, and all transactions are conducted through secure, dedicated networks. Because digital currency is just currency issued by a bank in digital form, virtual currency is not the same as a digital currency. Virtual currency, unlike ordinary money, is based on a trust structure and cannot be issued by a central bank or other banking regulatory organization.

Are Cryptocurrencies A Good Investment?

Cryptocurrency has the potential to make you extremely wealthy, and the potential to cause you to lose your money. Crypto assets, like any other investment, come with many risks and potential rewards. Fundamentally, cryptocurrency is an excellent investment, particularly if you want to gain direct exposure to the demand for digital currency.

Is Mining Cryptocurrency Legal?

Cryptocurrency mining can be time-consuming, expensive, and sporadically profitable. Mining has an appeal for many cryptocurrency enthusiasts as miners are paid directly with crypto tokens for their efforts. The legality of cryptocurrency mining is dependent on where you live. In India, there is no restriction on crypto mining.

Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
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