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Cryptocurrency scams to avoid in 2021 plus cybersecurity tips

an Asian woman in an orange blouse lounges outside with a laptop in her lap and a cellphone in her hand, indicating she might be investing in cryptocurrency and also experienced a cryptocurrency scam

July 30, 2021

Bitcoin, Ethereum, Tether, Polkadot, Dogecoin. Whether you’re investing in one of these cryptocurrencies or not, by 2021 you most certainly are familiar with at least one of these digital payment methods. And considering the total value of all cryptocurrencies is $1 trillion and counting, these electronic payment methods aren’t going away anytime soon — and neither are the cryptocurrency scams associated with them. 

Hey, financial investments can be enough of a risk. Gambling on your cybersecurity doesn’t need to be a part of it. To that end, here’s an overview of how to detect some of the most common cryptocurrency scams to know in 2021 and pointers to proceed with caution when making cryptocurrency transactions. 

10 cryptocurrency scams to know and red flags to watch for

three illustrations highlight some common characteristics of cryptocurrency scams, with the main one being unsolicited asks to be paid in cryptocurrency

 

Despite the secure nature of blockchain technology, which many cryptocurrencies are powered and protected by, cryptocurrency scams do happen. And the results can be harrowing, with accounts commandeered and digital wallets drained.

Worse yet, cryptocurrencies are not entirely government regulated, and most cryptocurrency transactions are not reversible. Translation: Once your hard-mined money is in the hands of a scammer, the chances are slim you’ll get it back. Avoiding cryptocurrency scams from the start is your best defense against a worst-case scenario.

1. Investment or business opportunity scams

Investment or business opportunity scams often begin with an unsolicited offer, typically to become a cryptocurrency investor, that lures you to a fraudulent website to learn more about the opportunity. Once you’re on the site, you’re encouraged to begin investing and make money quickly. The website might even have celebrity endorsements or testimonials that are faked. 

But once you complete your transaction, the offer never comes to fruition and you don’t see your money again. You might equate these types of cryptocurrency scams to multi-level marketing schemes or Ponzi schemes. 

RED FLAGS:

  • The offer seems too good to be true.     
  • “Guarantees” you’ll get rich quick.

2. Imposter or impersonation cryptocurrency scams

an explanation of imposter or impersonation cryptocurrency scams also includes the statistic that 14% of all reported losses to imposter scams are in cryptocurrency

 

An imposter or impersonation scam is when a cybercriminal poses as a trusted source to convince victims to complete a cryptocurrency transaction. This might be under the disguise of government authorities, credit card providers, banks, even a service provider, and they’ll often reach out via email and request you complete payment via cryptocurrency. It could even be a fake celebrity.

Remember, cryptocurrency is not regulated by the government and it’s also not yet widely accepted by businesses. So, you should exercise caution anytime you receive email requests for payments. For safe measure, double-check with the source through a different communication channel and verify a website’s security before completing a transaction. 

RED FLAGS:   

  • A website’s address bar does not begin with HTTPS.
  • The payment request is urgent.

3. Blackmail or extortion cryptocurrency scams

One of the oldest scamming approaches in the book, blackmail or extortion is when you might receive an email that someone has compromising information about you — be it photos, videos, confidential data, etc. — and they request you pay them money or else they’ll release it.

This becomes a cryptocurrency scam when the scammer requests the payment in cryptocurrency, oftentimes because the transactions cannot be reversed. You’re best to delete these messages and report the sender to the authorities. 

RED FLAGS:   

  • Threatening messages.
  • Payment requested in cryptocurrency.

4. Social media cryptocurrency scams

Social media cryptocurrency scams are just what they sound like: Cryptocurrency scams that occur over social media. Oftentimes this is via a false social media post or advertisement requesting payment in cryptocurrency. You might even see other users responding to the post or leaving reviews. In reality, these could be bots. The post or message might even be from a friend whose account has been hacked.

Alternatively, social media influencers might tout a new and potentially fake cryptocurrency and encourage users to sign up or send them payments that they might multiply. This can sometimes result in the influencers merely pocketing the payments. These are considered influencer cryptocurrency scams. Bottom line: Recognize that cryptocurrency isn’t yet a widely used payment method and any ardent requests to only pay with it are likely a scam. 

RED FLAGS:    

  • A social media user is asking you to pay for something using cryptocurrency.
  • The advertisement or post has many enthusiastic reviews.

 5. Giveaway cryptocurrency scams

an explanation of giveaway cryptocurrency scams also includes an anecdote about Elon Musk impersonators stealing more than $2 million in cryptocurrency

 

Somewhat of a cross between impersonation and social media cryptocurrency scams, giveaway scams are when victims are lured to an opportunity to send money to someone promising they’ll multiply the payment. 

For example, this could occur from a fake celebrity social media account posting that if followers send them a certain amount of cryptocurrency, they will send back twice the amount. In fact, followers will be sending money directly to scammers, never to see their investment again.

RED FLAGS:

  • Asks for cryptocurrency payments via social media.  
  • The offer seems too good to be true.

 6. Fake apps

As a digital payment method, different cryptocurrencies also have different apps. And cybercriminals can be skilled at replicating them. Over 10,000 people have downloaded fake cryptocurrency apps. Once users download these fake apps, they might begin sending payments directly to scammers.

Fortunately, there are some red flags you can watch for before downloading cryptocurrency apps to ensure they’re legit — and so are your investments.

RED FLAGS:  

  • Misspellings in the app name or description.     
  • Inauthentic branding. 

7. Loader or load-up cryptocurrency scams

Believe it or not, some cryptocurrency scams are as forward as asking for your account logins. That’s how a loader or load-up cryptocurrency scam works: Scammers might reach out to victims with an ask to borrow their account because they need higher limits. In return, the scammer promises to give them a portion of the proceeds from their investments. 

In fact, scammers load up victims’ accounts and drain them, taking all of the cryptocurrency for themselves. You should never provide your account logins to someone else, even if they appear to be a trusted source.  

RED FLAGS:

  • Unsolicited favors asked.    
  • Your account logins are requested.

8. Romance cryptocurrency scams

an explanation of romance cryptocurrency scams also includes the statistic that 20% of romance scam victims lose money via cryptocurrency

 

Romance scams pull on victims’ heartstrings by way of social engineering tactics. How they work: Cybercriminals play the part of an online love interest and gain a victim’s trust to a degree that they ask them to send money to them. Once the victim does, the cybercriminal pockets the funds and runs.

In the case of a romance cryptocurrency scam, it’s all the same approach but the funds are requested in cryptocurrency and much more difficult to reverse.

RED FLAGS:      

  • A person asks you for money but you’ve never met in person       
  • Urgent requests to complete payment.

9. Phishing cryptocurrency scams

Another old-school cyberattack, phishing scams often occur over email and involve an ask for money. Oftentimes these messages are cybercriminals posing as trusted sources, meaning phishing scams are similar to impersonation scams. 

In the case of phishing cryptocurrency scams, the false ask for payment is in the form of cryptocurrency. And the messages might even be from a cybercriminal posing as a cryptocurrency company that's divulging their initial coin offering (ICO) to appear authentic.

RED FLAGS:     

  • Urgent requests to complete payment.       
  • Asks to click on a link. 

10. Employment cryptocurrency scams

Similar to investment or business opportunity scams, employment cryptocurrency scams often begin with an unsolicited job offer that lures victims to a fraudulent website to learn more about the opportunity. 

How it ends: Victims are often asked to pay for training to become fully onboarded to a company. And they’re asked to pay for that training in cryptocurrency, which is then never returned to them.   

RED FLAGS:

  • Unsolicited job offer.
  • The prospective employer asks for you to complete a payment in cryptocurrency.

Crypto scam success rates and takeaways

three illustrations underscore cryptocurrency scam statistics and that crypto scams are on the rise, especially among younger generations

 

Given they’re not entirely government regulated, cryptocurrencies can feel like the Wild West of the worldwide web at times. And FTC data alludes to it, too, with reports of cryptocurrency scams 12 times higher in 2021 versus 2020. 

For further perspective, just since October 2020, nearly 7,000 people have reported losses of more than $80 million to cryptocurrency scams, amounting to a reported median loss of $1,900. Here are a few more trends the data indicates. 

Young investors are prime targets

By no surprise, it’s younger digital generations that have embraced cryptocurrency quicker than most. As such, they’ve also become more susceptible to cryptocurrency scams. Those ages 20 to 49 are more than five times more likely to lose money to cryptocurrency scams than older age groups. What’s more, people in their 20s and 30s lose the most money to investment scams, more than half of which is in cryptocurrency losses.

Impersonation cryptocurrency scams work

It turns outs that impersonations work when it comes to cryptocurrency scams — especially if you’re Impersonating Elon Musk, once a big proponent of cryptocurrency. Cryptocurrency scam victims have sent more than $2 million to Elon Musk impersonators.

It’s not just celebrity impersonations that work, though. Cybercriminals have also posed as the Social Security Administration, resulting in the Office of the Inspector General issuing a warning. Looking at imposter scams as a whole, 14 percent of reported losses are in cryptocurrency. 

Crypto scams rely on emotions

Romance scams have long been a successful cyberattack. Nowadays, these false pulls on people’s heartstrings involve pulling money out of people’s cryptocurrency wallets more than ever. Twenty percent of romance scam victims lose money through cryptocurrency.

5 cryptocurrency security tips

a checklist outlines five tips to invest safely in cryptocurrency and not become a cryptocurrency scam victim

 

If you know how to spot a cryptocurrency scam, you can stop a cryptocurrency scam. Bank on these pointers to invest with confidence and a Cyber Safe state of mind. 

Research, then invest

As new cryptocurrency types continue to emerge, it’s important to vet cryptocurrency exchanges before investing your time and money in them. This means questioning exchanges you haven’t heard of before and even researching whether they’ve been associated with scams or complaints before.

Also, investigate how transparent exchanges are about their liquidity and initial coin offering (ICO) rules — this is a sign of a reliable company. That might even mean reaching out to the exchange directly and asking. In addition, it’s worth verifying if an exchange uses blockchain technology, which helps secure your transactions.

Know nothing has to be paid in cryptocurrency

One of the biggest red flags of a cryptocurrency scam is requests to be paid in cryptocurrency. Remember, cryptocurrency is not entirely government regulated and it’s not yet widely accepted by businesses, so you should never have to pay in cryptocurrency. If someone, even a trusted online connection, insists you must, that’s a large warning sign that you might be being scammed.

Resist urgent requests

Especially if they’re unsolicited, urgent payment requests are a major red flag of cryptocurrency scams. You’re best to delete these requests right when they hit your inbox or mark them as spam. Trust that if an authority or loved one indeed needs a payment from you urgently, they will find a way to reach you — and it likely won’t be by requesting you complete a cryptocurrency payment.

Be wary of “guarantees” or “promises”

It can be tempting to jump at a get-rich-quick opportunity. But when it comes to cryptocurrency, you’re best to remember that cryptocurrency itself is an investment. Generally, any unsolicited opportunities that come to you with “guarantees” or “promises” for you to make money are a get-scammed-quick opportunity. You’re best to avoid these proposals at all costs.

Report suspicious activity immediately

If you’re suspicious you might be being targeted by a cryptocurrency scam, reporting it can keep cryptocurrency exchanges safe for all users. And there are a few places you can do this:

Financial investments can be enough of a risk as it is. Dealing with cybercriminals doesn’t have to be a part of the equation. In the end, bank on this: If something sounds too good to be true, it probably is. Play it safe and hold your money — cryptocurrency or otherwise — close.

an infographic overviews what are cryptocurrency scams and how to avoid them, plus common crypto scam red flags to watch for

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