Everyone who invests in the cryptocurrency market worries about becoming a victim of common crypto scams. Fraud threats have grown in tandem with the expansion of the virtual currency industry. NewsDailyTech has synthesized a variety of new money schemes that you should be aware of.
Check more - 11 Crypto Terms for Beginners - What is a virtual currency exchange
Multi level fraud using digital currencies
The Ponzi scheme is another name for the multi-level fraud using virtual currency scams. This scheme is widely used and represents a significant threat to the global economy. It was named after the Italian con artist Charles Ponzi.
To pull off this con, the perpetrators promise the victim very high rates of return on their investment. By the infusion of capital from outside investors rather than earnings.
When first starting out, many try to entice investors with a promising company concept and promises of huge profits. Scammers use public communication channels, such as advertisements and social media, to spread their deception (typically Facebook). The target audience consists of potential investors who have shown interest.
After successfully luring investors. The con artist will use the new victims’ funds to begin repaying the old victims with interest. As earnings rise, this will make early investors happy and encourage them to make further investments.
Ponzi schemes may provide the impression of success for months or even years. At least until a much larger sum of money is put into the model. If the sum put in is substantial enough. The victim will lose all of their investment when the con artist just disappears with the money.
Fraudulent activity on a binary options trading website
To pull off this con, the con artist “draws” fake ideas and then solicits funding for them. By use of the binary options trading platform. Swindlers will set up “investment exchanges” to take your money. Nevertheless, they are not a legitimate company and are not situated in Vietnam. Concurrently, details like the company’s number number, tax ID, location, founder, etc. are “hidden” with equal care.
The scammers took things to the next level by having a dedicated crew go through all the orders they received. Or create a number of social network groups where members may talk about their financial strategies. In order to get those who are not financially savvy to join, it is important to regularly share images of obtaining enormous gains, buying homes, and purchasing vehicles.
The aforementioned strategy is comparable to that of playing casino games or betting on sports on the internet. There will only be a limited time for participants to make their choices. More than 95% of the wager is on them winning, so they stand to make a tidy profit. If they come up short, they’ll forfeit every wager they’ve ever made. Swindlers prey on people’s aversion to losing by appealing to this attitude. Some sufferers of gambling addiction also have a strong desire to make a lot of money. Withdraw your principal and accrued interest whenever you choose. Please tell your other investors to check out this floor.
After getting many people to sign up and pay for the trade. Cybercriminals will utilize sophisticated means to manipulate the purchasing process. Taking over the user’s own account and changing their settings. Intent on crashing the stock exchange and making off with the money of many unsuspecting investors.
Project investment scam
Financial fraud known as an ICO scam occurs when potential investors are enticed to put money into a business that will not succeed (ICO – Initial Coin Offering). Scammers use ico to launch a phony website. Speculators should be made aware that the cryptocurrency industry is releasing a new product. Scammers often encourage new members by promising large payouts to those who bring in enough others to their scheme.
Whenever a new backer signs up for an ICO. Tokens for the project may be purchased by investors for bitcoin or another currency. The cryptocurrency project’s ecosystem will subsequently make use of this token in all monetary exchanges.
ICO fraudsters, however, will never launch a functional cryptocurrency. Maybe if the project wasn’t carried out properly. Ponzi schemes are used to pay back early investors as well as new ones.
Extensive selection of online advertising mediums. There has to be more investors, thus cryptocurrency events and social media are being used to do just that. A similar tactic is to create phony websites that make a legitimate bitcoin project appear more appealing and trustworthy.
Identity theft for the purpose of property fraud
The use of phishing emails is widespread as a method of bitcoin theft. As a result, con artists send out emails and text messages purporting to be from legitimate websites in an effort to steal consumers’ credentials. Information that identifies a specific individual, including a login, password, credit card number, bank account number, and similar data.
Then, they send an email or text message with a catchy subject line and body content. The email may be designed to seem like it came from a legitimate company or organization. And it calls for openness on the part of the users. After the user has entered his banking details. Scammers may utilize sensitive information to commit financial fraud or get access to user accounts.
Fraud involving the distribution of “virtual currency”
In the bitcoin industry, the “airdrop” fraud is prevalent. It’s the con artist’s way of putting their marketing plan into action. They want to employ airdrops to distribute their coin directly to customers.
Users will get an unchanging quantity of a new coin through an airdrop. Only if certain conditions have been met regarding participation and the sharing of project data. Scammers, however, will use this same tool to attempt to fool people into giving them what they want. Then you should rob them of their banking details. If you want investors to take part in your airdrop campaign, you might, for instance, encourage them to donate bitcoin.
Ways to protect your money from crypto scams
The following are some elementary precautions that may be taken to prevent fraud while investing in virtual currencies:
Do in-depth study on digital currency
Investing in a virtual cash flow requires a thorough understanding of its nature, structure, and possibilities. In addition, you need to familiarize yourself with the project’s development team and community. Consider the project’s long-term vision before putting money into it.
Don’t put too much restriction on your investments.
Avoiding investment altogether is one method to cut down on potential losses. Always give yourself a maximum amount that you’re willing to risk. It’s not a good idea to put all of your coins (or money) on one blockchain. Diversifying your holdings among a number of coins and projects is a good way to lower your overall exposure.
Don’t fall for quick-money schemes.
Don’t believe what you see in the ads. Emails or texts promising instant wealth via participation in virtual currency ventures. There will be terrible folks out there, and they’ll use all sorts of ways to steal your money.
Explore the Trade in Detail
A cryptocurrency exchange is an online marketplace where different digital currencies may be bought, sold, and traded effortlessly. There is no guarantee that an exchange can be relied upon. While deciding between several exchanges, it is important to do some background checking to make sure they are legitimate. And do it in a transparently professional manner.
Don’t trust anybody else with the reins to your account
You should avoid sharing any information that might be used to identify your account with other people. Never give anybody else access to your account. Even if they claim to be knowledgeable and capable of boosting your profits.
Always Be Educating Yourself
A lot of money is being made in the cryptocurrency market right now. This implies that you should always be learning new things. It’s a good idea to read the news and join online discussion groups. However, cryptocurrency-focused websites will always have the most up-to-date details on the newest crypto items and initiatives.
Limit business on suspicious sites
Stop dealing with people directly with virtual money. Both the exchanges’ operations and physical locations may be hidden from the public. It is wise to choose exchanges that have been approved for usage by relevant financial authorities. Whatever the case may be, the government can ensure the safety of your financial dealings.
Investors are no longer surprised by financial fraud committed through investing in virtual currency. Experts may be “tricked” just like everyone else if the conduct is too nuance. This is why it’s important to study the market thoroughly before putting money into it. If you don’t feel confident handling money on your own, it’s best to seek the help of professionals or trusted family members. NewsDailyTech has written this piece in the sincere hope that it would help you keep more of your hard-earned cash.