Cryptocurrency has come a long way considering that there are already 1,414 digital coins as of today according to Cryptocurrency Market Capitalization. To date, the overall market capitalization of the existing cryptocurrencies amounts to $702 billion as opposed to early 2017’s market capitalization of $25 billion. Bitcoin, still dominating at 33.3%, is followed by Ethereum, Ripple, Bitcoin Cash, and Cardano.
As the rise of cryptocurrency exchange and investments double or triple in a span of a year, scams and fraudulent practices have also surfaced. To name some of the known crypto fraud, there’s Plexcoin, founded by Dominic Lacroix who allegedly sold Initial Coin Offering (ICO) worth $15 million. ICOs REcoin and DRC World by Maskim Zaslavskiy got investors by selling unregistered securities and digital coins that don’t really exist.
Why do people fall into crytotraps? Due to promises of gigantic returns, people are continually tempted to invest in scam cryptocurrencies.
To avoid falling into crypto fraudulent schemes by cyber criminals, you need to keep an eye on red flags or warning signs before putting your money at risk. Unless the website is legitimate, do not trade coins or make any transactions.
Spoof and Poof
Chainalysis has reported a loss of $225 million from spoof-and-poof scam. This method uses ICO as a medium to scam investors. It is simply a ‘copycat’ scheme. Apparently, a legitimate ICO starts welcoming investments while cybercriminals pose as fakes to steal money from the investors. These are commonly done through duplicating social media profiles. There are also fake websites copying the authentic ICO company. Sometimes, the phony party intercepts transactions in a trading website.
Fraudsters will convince many aspiring cryptocurrency investors to invest their virtual coins on their business. In return, they promise to multiply their money more than three times. They will tempt you with great offers. The more complicate the structure of a transaction is, the more shady it looks.
You keep digital currencies in digital wallets just as you keep paper bills in banks. A scam involving fake wallets steals what and how much virtual coins you have. Using this kind of scam, mybtgwallet.com successfully stole $3 million from Bitcoin and some hundred thousands of dollars in Bitcoin Gold. Several mobile applications and wallet software are actually stealing wallets for your cryptocurrencies as well. So be careful in trusting crypto platforms.
Another scam involves an ICO receiving fiat currency in exchange for a new cryptocurrency. However, it always turns out that such ICO is non-existent, illegal, or unregistered. The best example of this scam is the aforementioned Plexcoin fraud.
There are recently developed strains of malware that steal bitcoins. According to Dell SecureWorks computer security firm, they managed to track down 146 bitcoin-stealing malware. These malware strains have the capability to send bitcoins to the attacker. Some will steal log-in information while others act as digital wallet seekers to access your devices.
As there are a lot of cryptocurrency scams, it’s best that you always follow security measures to keep your digital coins safe.