Since the day Bitcoin gained undeniable quality, cryptocurrency frauds have shook the financial industry. Over a billion dollars is lost each year in similar scams, according to data trackers, with thousands of victims. Scams involving cryptocurrency are on the rise. As a result, approximately $80 million has been lost to various types of scams.
The most popular sorts of crypto scams include pyramid or Ponzi schemes, phishing, and impostor websites.
What are crypto scams?
According to reports filed with the FTC’s Consumer Sentinel, scammers take advantage of the bitcoin hype to recruit potential victims. Scam reports have increased dramatically since October 2020, with about 7,000 people reporting losses totaling more than $80 million.
Their average loss was revealed to be $1,900. In comparison to the same time last year, there were twelve times as many reports and nearly 1,000 percent more specific disasters.
How Do Crypto Scams Affect Your Business?
Crypto frauds should be avoided if your company deals directly with cryptocurrencies, such as accepting payments or facilitating transactions. Crypto frauds are at an all-time high, as previously stated.
These con artists target not just businesses, but also their customers. Scammers may typically approach a potential victim from any direction, putting in the time and effort necessary to acquire their trust.
Scammers who fell victim to phishing have taken funds from investors and corporations. Scammers can use counterfeit wallets and websites to reroute cash from customers to a business.
While bitcoin has shown to be one of the most profitable ways to invest, it also comes with major hazards. As a result, every company must understand how to avoid these scams.
How To Protect Yourself From Crypto Scams
1. Avoid Pyramid or Ponzi scheme
Ponzi schemes work by rewarding existing investors with funds received from new investors. Ponzi schemes, which date back to the 1800s, are still prevalent today, particularly in the crypto business.
Onecoin, dubbed “Bitcoin’s killer,” will go down in history as the largest crypto Ponzi scheme, robbing investors of $5.8 billion. These scams function effectively until new investors are insufficient to compensate current investors, or the founders are discovered.
How to stay away from it:
Avoid “risk-free” investments that guarantee a high rate of return.
Be wary of crypto initiatives that encourage you to find additional investors in order to benefit more.
Avoid projects with ambiguous descriptions that promise unrealistically high rewards.
2. Avoid Imposter Wallets and Websites
Wallets, whether physical or digital, are necessary instruments for storing our cryptocurrency. Scammers, on the other hand, have used bogus wallet apps and websites to swindle customers.
Some claim to be Bitcoin wallets, while others claim to be cryptocurrency exchanges. They usually work until consumers deposit their cryptocurrency.
How to stay away from it:
Find a well-known and trustworthy exchange or payment gateway, such as NOWPayments or Binance.
Examine the platform’s information and perform due diligence to ensure that it is not a duplicate website. You can get confirmation from the development team as well as user feedback.
Only use authorized wallet providers to download apps and software.
3. Protect yourself from Phishing attacks
Scammers frequently send emails to users purporting to be from so-called crypto exchanges or wallet providers. The predator includes a link to a bogus website in this email.
The main goal is to induce the visitor to visit a bogus page and provide their information (username, password, private key, etc.). The cyber thief can use this sensitive information to steal money from a victim’s account on the original website.
Clicking on untrusted links should be avoided.
Never share your private key with anyone, especially on places where you don’t recall registering.
Anti-virus software can help defend you from phishing attacks.
4. Be on the lookout for Social Media Scams
On social media, be wary of people who ask you to donate money that will be doubled. These messages can sometimes come from duplicate accounts of well-known people and businesses, but that’s part of the game. The freebie scams merely involve bogus corporate accounts or implemented bots for many answers that appreciate the specific generosity of the aforesaid accounts.
It’s vital to note that the crypto area has a high risk of fraud and speculation, as seen by the growing number of scams recorded. As a result, only transact with verified individuals and businesses to avoid falling victim to these frauds. Above all, payments should be conducted through reliable gateways.