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At one or the other point in our lives, we’ve all received emails and text messages that claimed we had won millions of dollars for participating in a competition we weren’t even aware of. Typically, we all have a good laugh and move on since we can instantly recognize that the email or message in question is a hoax.
But when it comes to cryptocurrency, do you think you can do the same? How easily can you spot a crypto scam from a legit project? Here’s everything you need to know.
Crypto scams are on the rise
With each passing day, cryptocurrency is growing to greater heights. As cryptos continue to gain the attention of individuals and institutional investors all around the world, they’ve also become a target for scammers who are looking to make some easy profits by exploiting individuals who’d do anything to get rich quickly.
Scammers often make credible promises and integrate into the crypto space by using the anonymity of the internet to their advantage. More often than not, these promises sound too good to be true, and individuals quickly fall for them. This happens because a large group of people are still unfamiliar with cryptocurrency – it’s difficult for most of them to tell what’s legit and what’s a fraud. To add to this, it’s believed by many that cryptocurrencies are technical stuff that all may not easily understand.
This is why, before you start using cryptocurrency or invest in it, it’s critical to understand how cryptocurrency works and how it differs from cash and other payment methods. If you don’t want to fall into traps and lose your entire savings, you should also learn to identify cryptocurrency scams and recognize crypto accounts that may be compromised.
Here are some popular crypto scams and how you can spot them.
Imposter scams frequently imitate government officials, corporations, or well-known individuals. Currently, cryptocurrencies are responsible for just roughly 14% of reported losses. The vast majority of these frauds (almost 86%) are perpetrated using fiat cash. However, as the crypto industry continues to grow at a breakneck pace, this ratio is expected to change. If current trends continue, the percentage of digital currency losses will undoubtedly increase in the next few years.
In fact, according to FTC data, allegations of crypto frauds have been continuously growing since 2020, with over 7000 consumers claiming losses totalling more than $80 million.
Impersonator scams are often paired with giveaway scams in which the imposters offer to double or match the crypto paid to them. Several users have also reported sending cryptos to a scammer’s wallet, mistaking it for that of a celebrity or influencer. For example, users have reported transferring more than $2 million in cryptocurrencies to Elon Musk impersonators over the last six months.
Scammers may also impersonate WazirX support, management, or employees on social media platforms and Telegram groups, posting fraudulent links. Fake accounts like these may be found all over the internet. Please do not believe offers from Twitter or Facebook, especially if the outcome seems impossible to achieve.
The best way to spot an impostor account is to evaluate the returns you’re going to get. If a crypto offer sounds too good to be true, that’s the only red flag you need. It sounds too good to be true because it isn’t true.
Bogus websites are another common trick that scammers resort to. Numerous individuals have been duped in visiting websites that appear to provide opportunities to invest in or mining cryptocurrency but are actually fake. These websites are often well-designed and may evoke a sense of legitimacy, allowing individuals to transfer their cryptos swiftly and without hesitation.
Typically, such websites have various investment tiers, higher the investment, higher the return. Fake testimonials and cryptocurrency jargon are used to make websites look trustworthy, but users need to understand that such big claims of unbelievable guaranteed returns are simply false. These websites may even provide the impression that your money is increasing. But when you try to withdraw your alleged profits, you’ll be told to transfer even more crypto – and you’ll eventually end up getting nothing in return.
There are several signs that can tell you whether the website you’re dealing with is legit or not. If there isn’t a lock icon in the URL bar, for example, it’s an indicator that the site isn’t safe. Another thing to watch out for is if you’re being diverted from one site to another while making payments. The redirect link may appear to be a legitimate site; however, a close examination of the URL will reveal that the phoney URL contains the number zero rather than the letter “o.” As a result, make sure that you enter the exact URL into your browser and double-check it.
Romance scams are a type of scam that exploits online dating to draw people into cryptocurrency investment scams. Scammers generally come into contact with the victim through dating apps and social media. They then pose as a prospective love interest for the victim in order to earn their trust and persuade them that their relationship is genuine. After earning the victim’s complete trust, the scammers pose as crypto experts and persuade the victim to invest in cryptocurrency by sending it to them. The scammer even enables the victim to withdraw a modest profit from the purported account once the victim contributes.
Following a successful withdrawal, the scammer tells the victim to spend higher sums of money and urges the victim to “act quickly.” Problems start to arise when the victim is ready to withdraw funds once again. The scammer explains a variety of reasons why the money can’t be withdrawn, and the virtual relationship finally ends when the victim stops transferring funds.
According to the FTC, several people have mentioned that they mistook themselves for being in a long-distance relationship until their love interest began discussing a hot crypto opportunity, which they got involved in. Since October 2020, around 20% of the money lost in romance scams has been transferred in cryptocurrency, with many of these complaints coming from individuals who thought they were investing.
Here’s what you should do to prevent falling victim to a romance scam. Never send money, trade, or invest based on the advice of someone you’ve only met on the internet, and never talk about your financial situation with strangers. Make sure that you don’t fall into the trap of individuals that claim to have exclusive investment possibilities and push you to act as quickly as possible. You can guarantee it’s a scam if a caller, love interest, organization, or anybody else demands you to send cryptocurrencies into their wallets. Also, avoid giving out sensitive or personal information to strangers over the internet.
Phishing scams, giveaway scams, romance scams, rug pulls, pump and dumps – call it whatever you want; crypto scams are everywhere. If you’re not careful, you can end up losing everything you’ve worked for.
Before getting started with cryptocurrency investments, make sure that you’re extra cautious and if something doesn’t feel right or add up, trust your instincts. WazirX never asks users to send money into crypto wallets.
To view the WazirX exchange, click here.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.