- The cryptocurrency market is highly volatile.
- It has a high chance of fraud and scams.
- Scammers establish trust and then deceive victims.
Different types of fraud and scams are found in the cryptocurrency market. Hence, it is very important to consider this and investors need to be careful before investing in the cryptocurrency market.
Some common crypto scams include social engineering scams, phishing scams, fake apps and cryptocurrency exchange websites, investment scams, giveaway scams, blackmail and extortion scams, romance scams, pump and dump schemes, Ponzi schemes, paying early returns, rug pull schemes and imposter or impersonation scams.
15 Most Common Examples
- Rug Pulls
In this way, developers abandon investors before the completion of projects, leaving investors with worthless currency.
- Phishing Scams
It involves the targeting of online crypto wallets. In these scams, scammers send emails with links to fake websites. These are some of the most frequently used scams by scammers.
- Social Engineering Scams
These involve deceiving people and using psychological tactics to get confidential information related to user accounts. Hackers approach businesses, tech support, colleagues, government agencies, or friends to gain the trust of victims.
- Cloud Mining Scams
Many cloud mining companies are scams or ineffective and users lose money or earn less.
- Business, Government and Job Impersonators
Scammers claim that there is fraud on the user’s account or that their money is at risk. Scammers may impersonate government agencies and claim that there is a legal problem.
- Celebrity Endorsements
Scammers use fabricated images, websites and videos to assert that public figures have endorsed their fraudulent scheme.
- Fraudulent Initial Coin Offerings (ICOs)
Scammers create counterfeit websites for ICOs and ask users to transfer crypto into a compromised wallet.
- SIM-Swap Scam
This is one of the latest cryptocurrency scams in which scammers gain access to a copy of the user’s SIM card that allows them to access all the data on their phone.
- Upgrade Scams
Scammers can take advantage of the fact that cryptocurrency platforms are updated like any other software.
- Blackmail and Extortion Scams
These involve the use of blackmail emails as a common social engineering technique. These should be reported to law enforcement agencies.
- Romance Scams
Fraudsters use dating websites to deceive unsuspecting targets. Once trust is established, a conversation shifts towards lucrative crypto opportunities.
- Pump and Dump Schemes
These are another type of investment scam. These happen most probably on social media.
- Investment Scams
These involve promises of huge gains in exchange for cryptocurrency deposits.
- Fake Apps and Cryptocurrency Exchange Websites
Sometimes fraudsters create fake cryptocurrency trading platforms or crypto wallets to deceive victims. Fake apps are available on Google Play and the Apple App Store.
- Giveaway Scams
In this case, scammers guarantee to match or multiply the amount of crypto sent to them. They use clever messaging to create a sense of urgency and legitimacy.
The cryptocurrency market is highly volatile, which increases the chances of fraud and scams. There are different types of scams, from upgrades and celebrity endorsements to special engineering scams. Investors need to be careful of these scams before investing.