There is a lot to learn about the big world of cryptocurrency and one thing that’s for sure is that trading digital currency comes with much uncertainty. And people that are in the business of trading cryptocurrency, are in it to make a lot of money, quickly. When this is the case, there is likely to be a scam on the horizon.
Unfortunately, scams are on the rise with the heightened uncertainty of the coronavirus pandemic, and scammers are leveraging the increase of fear, anxiety, and job loss that has come along with this pandemic, and using it to scam people out of money through cryptocurrency trading.
Here we describe some of the most common cryptocurrency scams, and how to spot and avoid them to keep your money and personal information safe.
The Most Common Cryptocurrency Scams
Investing in cryptocurrencies seems like an easy way to get rich fast – with that brings about opportunists who can take advantage of people willing to invest their money.
Here are some of the latest cryptocurrency scams you should look out for today:
1. Celebrity Twitter Hacks
The latest in cryptocurrency scams is when someone sets up a fake celebrity twitter account, or even worse – hacks into a legitimate one, and posts a fake Tweet offering to send cryptocurrency back to you if you send some to them. The scammer then takes your money and you never see anything in return.
It’s best to be on the lookout for fake accounts and to simply never trust a post coming from any social media pages where there is a potential for the account to be hacked. It is also important to note that even if you are seeing comments from other accounts verifying the post, it is likely that they are just bots and not real people.
The most recent celebrity Twitter accounts to be hacked were Elon Musk of Tesla, Former United States Vice President and current Democratic presidential nominee Joe Biden, and Tim Cooke (CEO of Apple), just to name a few!
2. Investment and Initial Coin Offerings (ICOs)
This type of scam takes advantage of people that want to invest in new cryptocurrencies. There are many reputable and well-known cryptocurrencies available on the market today such as Bitcoin and Ethereum. The value of cryptocurrency is dependent on the supply and demand, so an increase in the demand for a particular type of coin, increases its value.
Scammers will reach out to potential investors and offer them coins in exchange for money and offer extremely high and inflated returns. The reality of the scam is that these fraudsters are pocketing the investors’ money and hide behind the volatility of the cryptocurrency market for an explanation on why the returns aren’t met.
It is difficult to know which ICOs are legitimate or not, so it is best to seek expert advice if you are looking at investing. When it comes to investing in digital currency, however, it is always best to only invest small portions of your portfolio in this sector as it is incredibly volatile.
3. Fake Websites & Mobile Apps
The world of cryptocurrency is all about trading – and the reason there is so much hype around it is because anyone can do it. You don’t have to be a stockbroker on Wall Street, all you need is access to a computer and a trading account. Unfortunately, because it is so easy for anyone to do, it has resulted in a number of fake websites and mobile apps that steal your real money instead of trade your digital money.
The best way to avoid falling for a fake trading website or mobile app is to check for spelling errors and ensure there is a padlock on your URL bar to confirm it is a secure website.
4. Fake Email Scams
This type of scam often sends out emails promoting a new cryptocurrency that they want you to invest in, offering fake ICOs, mimicking the brand of a reputable trading website you have visited before. Because the branding looks familiar you might not think twice about it and before you know it you’ve sent money to a scammer that you will never see again.
To spot a fake email scam, always be on the lookout for spelling errors and pay attention to the brand and logo and make sure it is legitimate before doing anything.
Tips For Trading Cryptocurrency Safely
Trading cryptocurrency is a high-risk, high-reward type of business so it is difficult to avoid taking on any risks when you decide to get involved. However, there are some tips to avoid some of the risk you take on when trading:
- Only invest what you can afford to lose: In many instances, trading cryptocurrency can be comparable to gambling so go into it with the mindset that you might not come out with anything.
- Do your research before investing: Don’t invest blindly, do you research, get inside the mind of a scammer, and consult with experts before investing your money.
- Trade cryptocurrency CFDs: This option means you aren’t buying the coins but instead trading on the actual value of the coin. The value of your CFD contract will then go up and down along with the value of the coin. This way you can avoid investing in any fraudulent cryptocurrencies.
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