Cryptocurrency is all the rage these days, which means crypto trading has attracted the attention of scammers. Watch out for the frauds on this cryptocurrency scams list if you’re planning on investing your hard-earned cash in crypto this year.
What Were the Top Cryptocurrency Scams in 2021?
When you think of cryptocurrency scams you might not think of romance scams, but romance cryptocurrency scams are certainly out there and something to be aware of.
In November 2021 a Montreal man reportedly lost almost $400,000 in a crypto romance scam. The cryptocurrency scam started with the man meeting a woman via Facebook Dating, as many romance scams start.
The two developed what seemed to be a genuine online relationship, then the woman began to suggest that the man invest in crypto mining operations. She began recommending sites for him to invest through, and gradually tricked him into investing his entire life savings.
Of course, when the man went to withdraw his investments, thinking they had more than doubled, he wasn’t able to. It was then that the woman’s attitude towards him completely changed and he realized he had been scammed.
How To Avoid a Romance Crypto Scam
Never send money to or follow the investment advice of someone you meet online and form a romantic connection with, no matter how genuine you think they are. Scammers prey on people looking for love because they know they are easier to manipulate.
Another of the most common cryptocurrency scams to watch out for is known as a giveaway scam. In this type of fraud, scammers pose as celebrities or influencers and claim to be offering some type of giveaway for a limited time.
What’s the catch? You just have to send them a one-time payment of course. For example, they might claim that if you send them a certain sum of cryptocurrency, they will double it for you and send it right back.
How To Avoid a Giveaway Crypto Scam
Never send any money, cryptocurrency or otherwise, to anyone offering too-good-to-be-true giveaways via social media. Even if you think they are a legitimate crypto influencer or a public figure, there’s almost 0 chance that they are who they say they are.
Phishing scams are one of the most common types of online scams, in which the cybercriminals “fish” for sensitive data, often by sending phony emails, DMs, texts, or instant messages that appear to be from a legitimate company.
In the case of cryptocurrency phishing scams, the scammers pretend to represent your crypto wallet and try to get you to give them your login information, so they can then steal your funds.
How To Avoid a Phishing Crypto Scam
Never send your crypto wallet login data, or any other sensitive personal information, to anyone online. Also, double and triple-check all emails and other messages claiming to be from crypto wallets or other crypto platforms to make sure they’re legit.
Blackmail and Extortion Scams
In blackmail and extortion scams, the criminals message you and claim to have a video recording of you in a compromising situation. They then ask for payments in cryptocurrency in order to delete the video of you, or else they will send it to your friends, family, and coworkers.
How To Avoid a Blackmail and Extortion Crypto Scam
Don’t believe any messages that say they have a video of you. They are just playing to your emotions and hoping you panic and send them cryptocurrency without thinking about it.
Scammers often set up websites that look like clones of real crypto platforms to trick unsuspecting would-be investors into providing their credit card or bank account info.
How To Avoid an Imposter Website Crypto Scam
Always check the URL to make sure there is a little lock symbol next to it, which means the site is secure (imposter websites don’t have this).
Also, make sure that the URL is the correct, official URL for the site you think you’re visiting — scammers will usually change/add letters and numbers or use a different URL altogether.
DeFi Rug Pulls
DeFi, or decentralized finance, is the sector of businesses working to change the way finance works worldwide. DeFi is very connected to the world of blockchain technology and cryptocurrency, and many DeFi startups offer their own crypto tokens that you can invest in.
However, there are also con artists out there who claim to be working on an innovative new DeFi project, generate a bunch of hype for it, get a bunch of investors, then “pull out the rug” and disappear with all the money.
How To Avoid a DeFi Rug Pull Crypto Scam
Do thorough research on any DeFi project you are interested in investing in, especially when it comes to the team behind it. It should be easy to track their founders and other team members down on LinkedIn and see what other projects they’ve been involved in to make sure they’re legit.
Also, Googling peoples’ names will pull up any prior reports of scamming or cybercrime they were involved in. You can also Google the project to see what other people in the DeFi investing space are saying about it and help you decide if you want to risk making the investment.
How a Chargeback Can Help You Recover from a Cryptocurrency Scam
If you’ve fallen victim to a cryptocurrency scam, one of the best bets for getting your money back is through a chargeback.
A chargeback is a process you can do via your bank or credit card company in order to reverse the charges on your credit card for which you lost money to scammers.
In order for a chargeback to be successful, you must follow the specific process outlined by your bank or card issuer. In general, this means explaining your situation to them in writing and providing all evidence you have of the scam, such as screenshots of communications with the scammers.
Your financial institution will evaluate your case and all the evidence to determine whether a chargeback is warranted. If they approve your request, they put the money you were scammed out of back on your card and it’s like nothing ever happened.
In order to improve your chances of getting your money back through a chargeback, you may want to hire a fund recovery firm to help you out. Fund recovery specialists deal with hundreds of cases just like yours every year and have a proven track record of recovering funds via chargebacks.