Cryptocurrencies were already popular. However, they became household names during the pandemic as the cryptocurrency market defied the rest of the market by recording all-time high prices. However, cryptocurrency scams are pretty common.
When the pandemic gripped the globe, everything came to a standstill. Many lost their livelihood as the entire world entered the lockdown. Many struggled to pay off their bills and bring even food to their table.
The crypto market prevailed as the entire world stood still, badly affecting the stock market. Many became millionaires by just trading off cryptocurrencies. The idea was always appealing to us as the "get-rich-quick" opportunity, which many scammers took advantage of during the lockdown, as a cryptocurrency scam.
Although cryptocurrency is a decentralized digital currency, a currency that the government or the central bank does not back. However, it is still accepted as a mode of payment for goods and services, exchanging them for U.S. dollars and other fiat currencies in the market and even setting up dedicated ATMs.
Cryptocurrency differs from government-backed money; for one, the cryptocurrency's price fluctuates due to the demand and supply. Since the price swings are massive, many may become millionaires overnight or paupers. There is no regulatory authority governing the cryptocurrency, so there is no insurance or protection as they do for stocks, bonds, and mutual funds. Thus, if you happen to lose your money in a crypto scam, the chances of recovery are significantly less.
Cryptocurrency has become quite prevalent in recent times. The FTC or the Federal Trade Commission received complaints regarding crypto investment scams increasing from 570 in October 2019 to March 2020 to roughly 7,000 from October 2020 through March 2021, the losses amassed to a staggering $80 million.
A newer version replaces many previous classic frauds. Let us take a look at these more recent versions of cryptocurrency scams.
Fake Website:
These websites are loaded with fake testimonials and overloaded with crypto jargons promising a significant investment return.
Endorsement by Celebrities:
Scammers impersonate celebrities and billionaires through a fake account and influence the masses by promising huge returns on your crypto investments. Unfortunately, many fall victims to such scams parting away with their crypto investments.
Pump-and-dumps:
A group of individuals spread fake news regarding certain currency backed by a famous mogul. The aim is to artificially inflate that particular currency so much that the price rises, and these groups sell the crypto at a higher price resulting in a crash of that specific crypto. These scammers make quick money at your expense.
Ponzi Schemes:
These scams are never too old to die. The scammer will elaborate on an investment plan promising guaranteed huge returns. Those who fall prey, pay these scammers. These scammers will then pay off the old investors with the money obtained from the new investor. The Federal agencies are hot in trial with a similar famous scam called the BitConnect, amounting to a staggering $2 billion before its operations landing to a standstill.
Romance Scams:
Scammers will lure their intended prey into investing in cryptocurrenciesafter meeting them through a dating site or social media. Scammers will then ensure that the prey enticed is "fattened up" before carving up the turkey. A point comes where the final act of the scammers is to get the legitcryptos of their prey transferred to their account before bidding their prey goodbye.
The FBI's Internet Crime Complaint Center reported 1,800 cases in the first seven months of 2021, amounting to $133 million.
So how does one prepare for such a threat? Well, for starters, there are few tell-tale signs.
Do's:
●Understand that cryptocurrencies are quite volatile. Trend reversal from bullish to bearish can happen within a blink of an eye.
●Resisting the pressure to buy right now. Scammers will always try to exaggerate the current situation and convince you to buy a specific or unknown currency.
●Research any news about the broker or a dealer who deals in cryptocurrency options or futures contracts before signing up with them. You can run a background check with tools available through the U.S. Commodity Futures Trading Commission (CFTC).
●Research cryptocurrency trading platforms or crypto wallet providers before sharing sensitive personal information, sending money, or submitting credit card information.
●Carefully read any terms, conditions, or policies with a digital wallet provider. Compared to banks and credit card institutes, these digital wallet providers won't accept any responsibility for replacing your money in the event of theft.
Don'ts:
●Avoid investing in cryptocurrency if you lack the knowledge of its working.
●Avoid speculating on cryptocurrency with money you might regret losing.
●Avoid transferring any cryptocurrency on someone you met online or with someone you are not acquainted with. Even if you find that person interesting or share the same passion or attain an investment tip from your lover you recently met online.
●Avoid entertaining government agencies and other businesses demanding you to pay the dues over bills or a promise of winning a lottery in cryptos. Central departments do not deal in cryptocurrencies.
●Avoid transferring your funds into an individual retirement account advertised as an "IRS or IRA" approved account. Although some self-directed IRAs allow virtual currency investments, the IRS does not endorse or monitor IRA investments.
●Avoid sharing your "private keys" that enable you to access your digital wallet. Keep these private keys- the long lettered-and-numbered codes allowing access to the cryptocurrency wallet, in a safe and secured place.
Conclusion:
Cryptocurrency is the future for digital traders who want to follow technologically-backed currencies. However, it isn’t a safe haven even though the fast money-making opportunity seems exciting. The high volatile nature acts both as a merit and a disadvantage to the crypto traders. Bitcoin scammers are another threat to the already baffled traders. Fraudulent sites, imposter brokers, fake ICOs, giveaway scams, are some renowned cryptocurrency hoaxes. While these are the frequently occurring ones, there are plenty of new scams that continuously emerge within the digital space. Crypto hackers and scammers have a knack at outsmarting the traders to make them their victim. Therefore, we suggest all traders practice caution to avoid losing money to such frauds.
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