What you need to know about cryptocurrency scams
One of the hottest investments on the market, cryptocurrency has been enjoying the spotlight for quite a while. And scammers are eager to cash in on the excitement. Cryptocurrency scams are particularly awful since any government does not regulate digital currency. And once it has transferred hands, it usually cannot be reclaimed. Here’s what you need to know about cryptocurrency scams and how to avoid them.
How the scams play out
There are several ways scammers are using cryptocurrency to con people out of their money.
- Blackmail. Emails are sent to targets, falsely claiming to have compromising photos, videos, or embarrassing info about them. And then the contacts threaten to go public unless the victim pays up — in cryptocurrency.
- Social media. A target receives a social media message appearing to be from a friend, asking for cryptocurrency to help them out of a bind.
- Mining. Bogus websites lure targets into what appear to be opportunities for mining or investing in cryptocurrency.
- Giveaways. These “giveaways” claim to be sponsored by celebrities or big-name cryptocurrency investors. And they promise exponential returns for small crypto investments or for simply sharing personal info.
- Romance. Scammers convince victims they have met a legitimate love interest. But this love interest soon starts talking about fabulous cryptocurrency opportunities with incredible returns. The victim acts upon this advice and, sadly, loses their money.
In each of these scams, the victim has no way of recovering the cryptocurrency they shared if an “investment” has been made. Scammers also use common spoofing technology to make it appear as if they represent a legitimate business or website. As always, when in doubt, opt out.
How to spot a cryptocurrency scam
Look out for these red flags to help avoid cryptocurrency scams:
- Promises of big payouts with guaranteed returns on small cryptocurrency investments.
- A celebrity or famed cryptocurrency investor is sponsoring a cryptocurrency giveaway.
- A friend contacts you on social media, claiming they’re in a bind and need quick help by cryptocurrency.
- Promises of free money in cryptocurrency in exchange for sharing some personal information.
- A caller, new love interest, or organization insists on payment by cryptocurrency.
Be sure to follow common safety measures when online and never share personal information or money with an unverified contact. In addition, if you are unsure if it is a friend or an authentic business, reach out to them to learn the real deal. Finally, if you’re looking to invest in cryptocurrency, never click on an ad or email; look up secure investment sites like Robinhood and Coinbase on your own.
What to do if you are a target
If you believe you’ve been targeted by any of the above cryptocurrency scams or a similar scheme, immediately report the scam to the FTC. And, if they pulled off the scam on social media, let the platform owners know so they can take appropriate measures. Finally, let your friends and family know about the circulating scam.
Cryptocurrency offers unique opportunities for beginner and experienced investors alike, but scammers are exploiting digital currency for their own schemes. Proceed with caution to keep your money and your information safe.
Now you know what you need to know about cryptocurrency scams. So, make sure you do not fall into any of these scams. And, make sure you warn your family and friends. Also, if you enjoyed this post, make sure to check out the other posts on the MoneySmart Tips blog.
