Cryptocurrencies, also known as digital currencies, are not backed up by the government or the central bank. Instead, they are secured by a technology called cryptography. A blockchain system provides the validity of cryptocurrencies with an open and distributed ledger for recording transactions.
You may all be wondering about how cryptocurrency transactions are safeguarded. Well, they are done by using a method called encryption. With the help of encryption, the crypto transactions are made irreversible and safe.
Crypto users must protect themselves from the Crypto scams and victimizers. A lot of cryptos scams occur each day. Therefore, traders and investors must focus on safety when they get involved in crypto assets and virtual currencies. They must maintain certain precautionary measures so that the risks of crypto scams is low.
A Crypto Scam’s Working:
In a crypto scam, the work takes place in the following manner:
- Initially, the fraudsters call the victims.
- They then pitch about how one can get wealthy faster by contributing money towards cryptocurrency trading.
- The tricksters make these people agree to register with their cryptocurrency investment website. Moreover, these cheaters also ask the people to give personal information to start a trading account.
- After people give the initial deposit, the con artist calls them and requests another investment to make more profit.
- Afterwards, the cheater disappears once they get money from the victim.
Red flags to spot a crypto scam:
Investments in cryptocurrencies are not protected like savings or current accounts opened with a bank. Hence it is necessary to spot the red flags of crypto scams when your money is at stake. Listed below are the red flags that can help identify crypto scam at the earliest.
- Unrealistic claims:
If a website offers crypto trading and seems too good to be true, it is possibly a scam. Beware of any offer that makes excellent promises with no ability to back them up. For example, if an advertisement mentions that you can make ten times the standard return on an investment in a short period, it is a red flag.
- Not being listed on major exchanges:
Anyone who wants to invest in cryptocurrency must check if it is listed on major exchanges, such as Coinbase or Gemini. If not, the individual should consider investing in renowned and trustworthy coins through the top businesses. Cryptocurrencies not on important deals, created by unknown developers, are often scams.
- Lack of detail in ICO whitepaper:
If an initial coin offering lacks adequate details, such as clear-cut information about the project, team, and crypto, it may not be a good investment option.
- Lack of an ICO Whitepaper:
An initial coin offering without a white paper signals that the project is not well-thought-out, the team is inexperienced, or it is a scam.
- Sudden spurt in prices:
It can be a red flag if they suddenly show a significant price increase when the coins have no track record.
- Validation requests through coins:
The fraudsters promise cryptocurrency giveaways where they will ask the investors to send them a few coins to complete address validation or to avail of an offer.
- Suspicious activities on social media handles:
The fraudsters hack the social media handles of celebrities, well-known personalities, politicians, etc., to attract investments.
- Aggressive youtube or Telegram accounts:
Cheaters use this tactic to get investors into cryptocurrency investment by aggressively promoting a new coin on Youtube and Telegram. They promise the victims and build the hope of great wealth.
- Guaranteed high investment returns:
The tricksters use promising high returns on investments with little or no risks. It is a clear sign of a crypto scam.
- Skyrocketing account values:
Predictions of investment accounts that rapidly increase in value while providing significant returns are often fake.
- Lack of a roadmap:
Investment in crypto projects with no goal or plan of action or a clearly defined roadmap is a sign of a scam.
- High-pressure sales tactics:
The victims will keep getting calls from the company telling them to act now, or there will be no opportunity left for them.
- Disappearing act:
The victims cannot reach anyone when they’ve requested to withdraw money.
- Paying more to get less:
The cheaters tell victims that the victims have to pay more money before they can make any withdrawals.
- Trojan Horse:
Here, people download an app to their computers. But, unfortunately, that app gives the con artists access to the victims’ computers.
- No trading experience needed:
The deceivers tell the people that there is no need for knowledge or experience in crypto trading. Instead, it is all done automatically for them. Trusting someone with your money when you have no common understanding of trading can put you in a vulnerable position.
Things you do if you are scammed:
If you are a victim of any of these cryptocurrency scams, be rest assured. Here are specific steps that can help you get your money back from a cryptocurrency scam:
- Please do not forget to search for the transaction ID code used by the tricksters to loot away your money thoroughly. These ID codes will be of excellent use to you and your authorities. Those codes are used for finding out and tracking the money flow.
- Always make it a point to go through your credit report to see if the cheater has opened fake accounts in your name. You can use the information linked to the fake accounts to track the cheater and recover your crypto funds.
- Document the situation related to the scam correctly and accurately. Whether emails or any other medium, keep these proofs for fund recovery. It will be strong proof against the con artists of a cryptocurrency scam.
- Do not forget to report the crypto scam to the law enforcement authorities in your region. When you register fraud, the government will track the criminals and get the funds back for you.
Crypto traders should know about the red flags that indicate cryptocurrency scams so they can secure their investment in crypto and save their money. Before investing in crypto, people must be aware of its risks. Furthermore, people must strictly follow preventive measures to protect the cryptos from these scams.