Before investing in cryptocurrencies or crypto-related products, be aware that these investments carry high risks and can sometimes be fronts for scams.
Common Crypto Scams
Common scams to watch out for are:
- Fake Digital Wallets: Scammers create wallets to steal your private key, giving them full access to your cryptocurrency.
- Pump-and-Dumps: Groups hype a thinly-traded cryptocurrency online, inflate the price, then sell, leaving others with worthless coins.
- Multi-Level Marketing Platforms: Investors are promised high returns and encouraged to recruit others. Often ends with the company keeping all invested funds.
- Phishing Scams: Include spam emails, bogus websites, and messages designed to trick you into providing your private keys, passwords, and sensitive information.
- Fake ICOs (Initial Coin Offerings) are when scammers create bogus ICOs that mimic legitimate fundraising campaigns for new cryptocurrencies. They get victims with the promise of new tech or great returns.
- Malware and hacking are used to steal from users’ crypto asset wallets or exchange accounts. This can include malware-infected software, phishing links, or hacking into poorly secured exchanges or wallets.
Before Investing
- Don’t put in more money than you can afford to lose. Crypto assets are not protected by deposit insurance or error resolution rights.
- Beware of virtual pyramid and Ponzi schemes. Watch out for scammers or get-rich-quick schemes.
- Remain vigilant. Change passwords often and store them safely. Consider “cold storage” such as a hardware wallet for your assets, and always make sure you’re on a secure internet connection.
- Do your own research and stick to the fundamentals. Beware of assets tied solely to speculation.