If you thought crypto was scam-proof, you were wrong. Cryptocurrency’s unparalleled growth over the years has created new opportunities for scammers to steal money. According to Chainalysis, scammers stole more than $14 billion of cryptocurrencies in 2021.
Recently, in December 2022, Nicholas Truglia was sentenced to 18 months of jail time for allegedly taking part in stealing $22 million crypto from Michael Terpin (a blockchain adviser) in 2018.
Truglia hacked Terpin’s mobile device and converted the Triggers token into Bitcoin. He is also facing civil penalties of almost $80 million for being involved in this crime. Here’s how you can identify crypto scams and avoid them.
Types of Crypto Scams
You will find fake versions of legit crypto wallets or trading platforms to trick new investors with limited knowledge. These websites have similar domain names and look almost legitimate, making it difficult to tell the difference. These fake websites can be in the form of phishing pages or commit straightforward theft.
These scams generally target online wallets’ information. Hackers target private keys to gain access to crypto within the wallet. Beware of emails that contain malicious or suspicious links requiring private key information.
Fake Apps and Celebrity Endorsements
Fake apps downloadable through Google Play or Apple Store can easily steal funds from your crypto wallet. In comparison, fake celebrity endorsements excite and build trust through influencers to gain the public’s attention.
Other forms of scams include:
- Blackmail and extortion
- Cloud mining scams
- Pump and dump schemes
Identifying Crypto Scams
Here are a few warning signs you shouldn’t miss:
- Non-existent or poorly explained whitepaper
- Promises of guaranteed returns
- Unidentified team members
- Excessive marketing
- Free money
How to Protect Yourself from Crypto Scams?
Crypto frauds are convincing and complex to understand. However, here’s how you can protect yourself from them:
- Don’t share your private keys with anyone.
- Keep checking your wallet application. If you find something suspicious, delete the application ASAP.
- Don’t invest in anything without proper research.
- Scammers use social media marketing to promote fraudulent schemes. Be wary of them.
- Don’t fall for cold calls coming out-of-the-blue asking for crypto investment.