In recent times, we have seen how the world has gone “crypto-crazy”. digital currencies like Bitcoin, Monero, Ethereum or Dogecoin They are already everywhere on the Internet and have seen their popularity increase in recent years. Their rising values promise big profits for investors (as long as coin prices don’t crash, of course). In this sense, and as growing as the popularity of digital assets, there are already many scammers who want to take advantage of this “crypto madness”.
In reality, those interested in cryptocurrencies today are at great risk of fraud. This new trend is accompanied by a lawless and unregulated world in which criminals are vigilant and ready to strike. For this reason, ESET, an expert company in cybersecurity, calls on users to take proper precautions when it comes to cryptocurrencies. The normal fraud prevention rules also apply in this universe, and everything seen on the Internet must be carefully analyzed and checked to avoid possible fraud and scams.
Why are crypto scams on the rise?
Scammers are experts at taking advantage of current events and fashion trends to trick their victims. And there is nothing that is more fashionable than cryptocurrencies at the moment. The result? Between October 2020 and May 2021, Americans lost an estimated $80 million (€71 million) in thousands of cryptocurrency-related scams, according to the FTC. In the United Kingdom, the figure is even higher: the police say that the victims lost more than 146 million pounds (172 million euros) in the first nine months of 2021.
But why are scams on the rise in the crypto universe? ESET reveals some of the reasons:
- Lack of regulation – The cryptocurrency market is poorly regulated, if at all, compared to the traditional stock market.
- Media Interest: Huge media interest makes it a common hook for phishing and scams.
- Rapid rise in prices: The rise in prices of cryptocurrencies attracts consumers who dream of getting rich quickly.
- Hoaxes in the RRSS: social networks contribute to amplifying rumours, real or fictitious.
- Mining coins for money: There is also the lure of mining coins for money, which can be used as a hook by phishers.
What are the most common cryptocurrency scams?
ESET also warns that users who securely store their digital assets may be at risk and targeted by cybercriminals. That’s because, on numerous occasions, scammers have managed to extract funds from these companies, sometimes taking hundreds of millions. However, affected companies usually promise to return what was lost to affected customers. Unfortunately, there are no such guarantees for victims of cryptocurrency scams, and if you fall for a scam, you can lose a lot of money.
For this reason, the expert cybersecurity company has compiled the most common threats in the crypto universe:
- Ponzi Scams: This is a type of investment scam where victims are tricked into investing in a non-existent company or “get-rich-quick scheme” that actually does nothing more than line the scammer’s pocket. Cryptocurrencies are ideal for this, as scammers are always inventing new “cutting edge” technologies to attract investors and generate higher virtual profits. Falsifying the data is easy when the currency is virtual anyway.
- Pump and dump: scammers encourage investors to buy shares of little-known cryptocurrency companies, based on false information. Subsequently, the stock price rises and the scammer sells their own shares, making a nice profit and leaving the victim with worthless stock.
- Fake celebrity reviews: Scammers impersonate celebrities or create fake accounts to encourage their followers to invest in bogus schemes like the ones above. In one of the schemes, some $2 million was lost to scammers who even named Elon Musk in a Bitcoin giveaway campaign to make the scam more reliable.
- Fake trades: scammers send emails or post messages on social networks promising access to virtual money stored in cryptocurrency exchanges. The only drawback is that the user usually has to pay a small fee first. The exchange does not exist and your money is lost forever.
- Imposter apps: Cybercriminals fake legitimate cryptocurrency apps and upload them to app stores. If you install one, it could steal your personal and financial data or plant malware on your device. Others may trick users into paying for non-existent services or try to steal logins from their cryptocurrency wallet.
- Fake press releases: sometimes scammers even manage to trick journalists into republishing false information. This happened on two occasions when legitimate media outlets wrote stories about large retailers preparing to accept certain cryptocurrencies. The fake press releases these stories were based on were part of pump and dump schemes designed to make the scammers’ shares in the mentioned coins more valuable.
- Phishing/implantation: Phishing is one of the most popular ways for scammers to operate. Emails, text messages, and social media are spoofed to appear to be from a legitimate and trusted source. Sometimes that “source” — say, a credit card provider, bank, or government official — requests payment for something in cryptocurrency. They will try to rush you into action without thinking.
