- Crypto frauds are increasing in number.
- There are a lot of scams that trick people into losing crypto in the name of jobs or giveaways.
The amount of financial fraud that consumers had to deal with was virtually limitless until cryptocurrency entered the mainstream. The Federal Trade Commission reported that 46,000 people lost around $1 Billion in crypto fraud.
What Is Crypto Fraud?
Crypto fraud is like any other financial scam, except the scammers are after your crypto assets instead of your money. Crypto fraudsters use many of the same tactics as other financial crimes, such as pump scams that trick investors into buying assets with false claims of value, or outright attempts to steal digital assets.
Types of Crypto Fraud
Several types of crypto scams are committed, but we will talk about the five most common types of crypto scams.
The Federal Trade Commission said some scammers claim to have embarrassing personal information, such as your photos or videos, to lure you into a trap. They threaten to release your private information but promise not to release it if you fulfill their demand. This is solved by sending them a crypto transfer immediately.
Fraudsters create fake job profiles and listings and send unrealistic job offers to people to attract them into their scheme. The “jobs” they’re looking for are frequently in the crypto field, such as crypto mining and recruiting other crypto investors. In any case, these occupations all have one thing in common: you must pay in cryptocurrency to begin. From then on, the scam might take many different forms. Fraudsters may convince you to make additional payments, or they may deposit money into your bank account and ask you to transfer their cash, only to have their first transaction fail.
SIM scams are among the more recent crypto frauds. They occur when a scammer obtains a duplicate of your SIM card and has access to all your phone details and data. That information can be used to receive and use the two-step authentication codes required to gain access to crypto wallets and other accounts without the victim’s knowledge. The victim’s crypto accounts can be hacked and removed without the victim even being contacted.
Software Update Scams
Software is constantly updated, and cryptocurrencies are just a form of software. Since many are used to upgrading in the digital age, fraudsters can simply trick crypto owners into giving up their private keys as part of an “upgrade”.
Legal migration can undo upgrade scams, such as the recent Ethereum merger, where both the Ethereum Foundation and Robinhood took care enough to issue a warning that users should be prepared for upgrade scams.
Giveaway scams offer free money or other types of benefits if you agree to what they want you to do. Many scammers, such as celebrities or influencers, attract new victims who don’t know any better and find it hard to tell what’s real.
For example, crypto scammers constantly try to impersonate Elon Musk on social media and in videos to get people to send digital assets.
The worst news about crypto fraud is that once you are trapped in it, it’s almost impossible to get your money back. That’s why your best sign is to spot the crypto fraud early so you can avoid it. If you end up sending your crypto to someone else, giving away your private keys, or getting scammed with a fake job offer that requires an upfront payment, the lessons learned can turn into huge financial costs.