No matter how vibrant the crypto market might be, cryptocurrency scams can still affect those who are uninformed. Thieves and hackers are constantly searching to steal money. A DeFi Security report revealed that virtual currency thieves and scammers stole $452 million in Q1 2023. While this figure was much lower than Q1 2022 ($1.3 billion stolen), the stolen fund rate of recovery in 2023 was notably less due to the sophistication of thieves. As of early May 2023 – just about 28.7% of stolen funds have been recovered.
Criminals often target the crypto world due to a belief that most users in the space are largely unfamiliar with how to keep assets safe. In addition, crypto payments do not also come with government assurance or legal protections, which often attracts frauds.
Fortunately, with the proper knowledge, you can take steps to keep your assets safe from criminals and thieves and know what to watch for to avoid potential scams. Here are some of 2023’s most common crypto scams and how to protect yourself from becoming a victim.
Blackmail & Extortion
These scams are particularly scary because a criminal will demand virtual currency as payment in exchange for not revealing purported sensitive videos, photos, or information. Fortunately, while this scam is common, the thieves behind the scheme lie and do not have the information they claim. Nevertheless, be sure to report this type of scam to local law enforcement, and do not contact the thieves in any way.
Investment Scams
With this cryptocurrency scam, fraudsters will demand payment amid promises of an investment scheme with a massive return on investment. Sometimes they create fake celebrity endorsements or testimonials to make the scheme seem legit. However, a criminal will simply steal any funds they get and never invest the crypto. So to keep yourself safe, avoid anyone who promises exceptional returns on investment (especially in the volatile crypto market).
Rug Pulls
Criminals pulling a rug-pull scam will artificially boost a new project or NFT and then steal the money invested before totally vanishing. For example, scammers managed to steal about $3 million in a rug pull with the ‘Squid token’ that seemingly tried to capitalize on the popular Squid Game show in late 2021. Potential rug pulls can be hard to spot, so you should research a particular project to see how transparent the founders are, check if the code has been audited, and monitor the online presence to see how invested the team is.
Phishing Scams
Phishing scams are common within the crypto world. In this scenario, a thief will pretend to pose as a different individual or company and attempt to trick users into sending money or sharing private wallet keys to steal funds. Always carefully check the web addresses of any crypto-related sites and ensure you’re only following the official accounts of crypto-related figures to minimize the risk of an attempted phishing scam.
Romance Scam
In an attempt to steal crypto, some criminals build fake profiles on dating sites and then build a relationship with their victims via texting or online messaging. They then offer to help their victim invest or buy crypto and then disappear with any money they receive. To minimize the risk of being caught up in a romance cryptocurrency scam, be careful about what you post online and never send funds to someone you have only spoken to online.
Avoid Becoming A Victim Of Cryptocurrency Scams
Keep your crypto assets safe by watching for telltale signs of potential crypto scams. It’s also vital to keep your digital coins in a safe and secure crypto wallet where you control the private keys, so you are the sole custodian of your assets.
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