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According to the Federal Trade Commission (FTC), between October 2020 and March 2021, reports of cryptocurrency scams exploded, with nearly 7,000 people reporting losses of more than $ 80 million. These figures reflect a 12-fold increase in the number of reports compared to the same period last year and a nearly 1,000% increase in reported losses.
Given the exponential growth of reported scams, awareness of the types of scams and things you can do to protect yourself is more important than ever.
The crazy pursuit of cryptocurrencies has aroused the interest of many investors, but it has also attracted the attention of scammers. a compromised digital wallet. Social engineering scams such as giveaway scams, romantic scams, phishing, money laundering emails and others mentioned in this article have long been a problem in society, but they are prevalent when it comes. it’s about cryptocurrencies.
In general, cryptocurrency scams fall into two broad categories:
Scams aimed at gaining access to a target’s digital wallet or credentials. This means that scammers try to obtain information that gives them access to a digital wallet or other types of private information, such as security codes. In some cases, this type of scam even seeks access to physical hardware. Scams involving the direct transfer of cryptocurrencies to a scammer as a result of a fraudulent identity theft, fraudulent investment or business opportunity or other malicious means.
In this type of scam, scammers use psychological manipulation of the target to gain control over vital information about user accounts. These types of scams lead people to believe that they are dealing with a trusted entity, such as a government agency, a well-known business, a community member, a co-worker, or even a friend. When you encounter such a situation and you are asked for cryptocurrencies, for whatever reason, it is very possible that you are the target of an attempted scam.
Scammers often use dating sites to get their targets to believe that they are in a real long-term relationship with a scammer. When trust has been gained, conversations often turn to profitable opportunities in the realm of cryptocurrencies and possibly the transfer of either coins or authentication data to the target account. It is estimated that about 20% of the money reported as lost due to romantic scams was in cryptocurrencies.
Scammers try to pose as celebrities, businessmen or crypto influencers. In order to capture the attention of potential targets, many scammers promise to double or offer a larger amount of cryptocurrency sent to them in what is known as a “giveaway scam”.
Well-crafted messages from a social networking account that seem real can often create a sense of validity and trigger a sense of urgency. This mythical opportunity – “once in a lifetime” – can lead people to transfer funds quickly, hoping for an instant return.
For example, between October 1, 2020 and March 31, 2021, more than $ 2 million in cryptocurrencies were reportedly transferred to people claiming to be Elon Musk. According to the FTC, cryptocurrencies accounted for 14% of reported losses to imposters of all types.
In the context of the crypto industry, phishing scams target information about online wallets. Specifically, scammers are interested in the private keys of the crypto wallet, which are nothing more than the keys needed to access the funds in the wallet. Their method of work is almost identical to that of many standard scams. They send an email that leads to a website specifically designed to scam the victim, where there is a form asking for private key information. When hackers obtain this information, they can steal cryptocurrencies stored in those crypto wallets.
Phishing scams are among the most common attacks on consumers. According to the FBI, more than 114,700 people were victims of phishing scams in 2019. Collectively, about $ 57.8 million was lost through this method.
Another popular social engineering method that scammers use is sending blackmail emails. By sending such e-mails, scammers claim to have a record of adult websites or illegal web pages visited by the user and threaten to make them public, unless the data subject shares the private keys of a user. wallet or actually send cryptocurrencies to the scammer. These types of scams are an attempt at extortion and should be reported to a law enforcement institution such as the DIICOT (Directorate for the Investigation of Organized Crime and Terrorism).
“If something sounds too good to be true, then it probably is.” This saying should be taken into account by almost anyone who ventures to invest in general, but it is all the more true when it comes to investing in cryptocurrencies. Unfortunately, there are more and more speculators who, in their pursuit of profit, turn to misleading websites that offer guaranteed returns or other configurations for which investors have to invest large sums of money for even higher guaranteed returns. These false guarantees often lead to a financial disaster when individuals who have invested try to withdraw their money and find that they cannot.
With the rise of new crypto-based investments, such as initial coin offerings (ICOs) and non-fungible tokens (NFTs), there are even more ways for scammers to try to gain access to your money. The context of these investments goes beyond the scope of this article, but what is important to know is that while cryptocurrency investments or business opportunities may sound profitable, this does not always reflect reality.
For example, some scammers create fake websites for ICOs and instruct users to deposit cryptocurrencies in a compromised wallet. In other cases, the ICO itself may be to blame. The founders of a crypto project could distribute chips that are not regulated by applicable laws or mislead investors about their products through false advertising.
Rug pull scams in the DeFi space are the latest type of scam that has hit the cryptocurrency markets. Decentralized financing, or DeFi, aims to decentralize finance by eliminating financial transaction checkpoints.
Lately, DeFi has become a magnet for innovation in the crypto ecosystem. However, the development of DeFi platforms is affected by its own problems. Malicious people have misappropriated investors’ funds using both the popularity of DeFi and technical engineering to steal the money invested. This practice, known as rug pull, has become widespread as DeFi protocols have become popular with crypto investors interested in increasing their profits by tracking yielding crypto tools.
For many people, the crazy pursuit of cryptocurrencies is an adventure worthy of the Wild West. And as the crypto ecosystem continues to gain in size and complexity, it will undoubtedly remain a top scam target. However, by better understanding the usual ways in which scammers try to steal information (and ultimately money) from users, you’ll be able to identify a crypto-scam in a timely manner, preventing the consequences.
For reference, we have added below a list of SCAM sites in the crypto space.
This list, compiled in detail by Crypto Chain University (https://cryptochainuni.com/scam-list/) and assisted by FortuneZ, includes misleading initial coin offers (ICOs) and other fraudulent cryptocurrencies, all information, evidence and investigations coming from various Bitcointalk.org users (https://bitcointalk.org/) who care about the crypto community.
* You can check all the referral links and archives in which users have posted their evidence of these SCAMs on the Bitcointalk forum.
All credits belong to Bitcointalk forum users or anyone who submitted the reports. This list compiled by Crypto Chain University and FortuneZ is posted here to raise awareness of all these scams and to help investors in particular in ICO projects.
Are you aware of a Crypto or Blockchain SCAM project or website? Report it here.
(i) Check the updated list of cryptocurrencies by market capitalization.