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The Different Types of Crypto Scams

In the fast-growing world of cryptocurrencies, opportunities for investment are abundant. However, this growth has also paved the way for a new breed of fraudsters to prey on unsuspecting victims. Crypto scams are rampant, and the need for awareness and protective measures has never been more critical.

So: what is crypto scamming, and how can professional cyber investigators help you avoid them? A crypto scam is a type of fraudulent tactic designed to trick people into losing their investments in cryptocurrencies. These scams come in many forms, from bogus crypto exchanges and giveaways to convoluted ‘fake ICO’ scams.

In this guide, we’ll discuss some of the biggest cryptocurrency scams out there, exploring how they work, how to recognise them and how to avoid falling victim.

Fake Crypto Exchanges

In fake cryptocurrency exchanges, scammers attempt to lure in victims by impersonating legitimate crypto exchange platforms (businesses that allow customers to trade crypto for other currencies). They may offer incredibly competitive exchange rates, exclusive trading opportunities or other tempting offers. 

Once funds are deposited, the scammers either steal the assets outright or manipulate trades to syphon off profits. If the victim attempts to withdraw funds, they are faced with extortionate fees or other obstacles preventing them from accessing their money. 

To protect yourself from this scam, always check the platform’s domain, read user reviews, and verify its legitimacy through trusted crypto industry websites.

Ponzi Schemes

A Ponzi scheme in the crypto world operates like traditional Ponzi or pyramid schemes, where returns are paid to earlier investors using the capital of newer investors. These schemes promise unusually high returns and rely on a constant flow of new investments. Once new funds cease, the scheme collapses, leaving later investors with significant losses. 

To ensure you steer clear of Ponzi schemes, be wary of investments promising guaranteed or unusually high returns, and research the company’s background thoroughly.

Pump and Dump Schemes

Pump and dump schemes involve artificially inflating (pumping) a cryptocurrency’s price through coordinated buying and false hype. Once the price is inflated, the scammers sell (dump) their holdings, causing the price to plummet and leaving other investors at a loss. These are often organised in online groups or chat rooms. 

Avoiding obscure coins with sudden price spikes and staying away from shady online groups can help you avoid falling victim to this scam. 

Crypto Giveaway Scams

Fake crypto giveaways are some of the most widespread forms of Instagram crypto scams and Youtuber crypto scams. They’re also common on sites like Twitter and Facebook. The fraudsters use social media platforms to impersonate well-known figures in the crypto community, promising free cryptocurrency in return for a small deposit. They may even create fake accounts to leave convincing comments from ‘winners’. 

To steer clear of crypto giveaway scams, never take part in any supposed giveaway that requires you to invest in order to enter. Though real cryptocurrency giveaways do exist, they are relatively rare–so to be on the safe side, you may wish to avoid them altogether. 

Fake ICOs

An Initial Coin Offering, or ICO, is a popular method of crowdfunding whereby startup cryptocurrencies attract investors by selling tokens or coins at an attractive price. Fake ICOs, or crypto investment scams, involve a scammer inventing a new crypto project, collecting funds from investors, and then disappearing–taking all of the funds with them. 

If you’re considering investing in an ICO, thoroughly research the project and the team behind it. Watch out for unprofessional websites, poorly-written (or nonexistent) white papers and promises that seem too good to be true.

Fake Wallet Apps

A fake wallet app is a type of malware, or malicious software, that mimics a legitimate crypto wallet (an app that allows you to store, send and receive cryptocurrencies securely). Once downloaded, these fake apps steal your information, including your private key or password, allowing the scammer to withdraw or spend your coins. 

To avoid this type of scam, only download well-known and reputable crypto wallets from official app stores. Verify the app’s developer, check reviews, and ask online communities to ensure it’s trustworthy.

Phishing Scams

Phishing scams trick individuals into revealing sensitive information, such as private keys or login credentials, which scammers can then use to access and steal their cryptocurrency. These fraudsters create websites impersonating real companies and lure victims in through fake emails or texts.

To stay safe online, be cautious with links and attachments in emails and texts, especially from unknown or unexpected sources. If you do follow a link, scrutinise the URL carefully, and don’t enter your details unless you are sure it’s legitimate.

Dating Crypto Scams

Romance scams are almost as old as the internet itself, and are not exclusive to cryptocurrency. However, crypto is quickly becoming the method of choice for swindling victims.

Through a platform such as Facebook or Tinder, crypto scams such as these involve a fraudster contacting an innocent person and building a romantic relationship with them. They then manipulate their victim into sending cryptocurrencies, e.g. by faking an emergency or claiming they need money for plane tickets. 

Always be cautious of sharing personal information with someone you’ve never met in person. If someone you met online asks you to send them money or cryptocurrency, it may be wise to walk away.

How to Report Crypto Scams

If you fall victim to or have been targeted by a crypto scam, it’s essential to report the incident to the local authorities and the relevant regulatory bodies. In the UK, you can report crypto scams to Action Fraud, the UK’s national reporting centre for fraud and cybercrime. If the scam involves a financial product or service, it should also be reported to the Financial Conduct Authority (FCA).

Additionally, if you believe you have sent money to a scammer in the past 24 hours, contact the police immediately by calling 101. Acting quickly can help authorities take necessary action and alert others in the community to potential risks.

Can Scammed Crypto Be Recovered?

The recovery of scammed crypto can be incredibly challenging, as cryptocurrencies are designed to be secure and irreversible. Once sent to an unknown address, it’s often impossible to retrieve the funds. 

However, some companies specialise in crypto scam recovery (UK). In certain cases, they might be able to help track down and recover stolen assets–for example, if you have purchased fake crypto through a bank transfer. It’s essential to approach this with caution and only engage with reputable firms, as there are also fake crypto recovery firms out there, created to squeeze more money out of victims.

Avoid Crypto Scams with Global Investigations

If you’re concerned about a potential scam, Global Investigations can help. With our expertise in cybercrime and fraud investigations, we will help unveil the truth–whether you’re dealing with a crypto scam, a romance scam or something else. 

Our highly skilled private detectives have years of experience in high-tech psychological profiling, surveillance and background checks. We’ll work hard to identify whether you’re being scammed and, where possible, expose the fraudster’s true identity. We always operate with efficiency, flexibility, professionalism and confidentiality.

For more information about our services, contact Global Investigations today. Your peace of mind is our priority.

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