Being aware of common crypto scams before you start investing is absolutely vital, as it’s so easy for even the most experienced traders to lose money with these advanced scams if they don’t know what to look for. We’re here to briefly introduce some of the more common crypto scams, so you can go away and learn more about them to protect your investments and portfolio. If you ever think you’ve fallen victim to a crypto scam, or any investment scam, make sure to quickly contact your bank and a team of investment fraud lawyers to try and prevent the payment going through and failing that, recovering the funds.
Phishing
One of the most common cryptocurrency scams is phishing, where scammers use very legitimate looking emails and pose as people from well known cryptocurrency exchanges or wallets. Gone are the days of very obvious looking phishing emails, with it being very hard to distinguish between genuine and fake. Red flags to look out for in these emails are promises of guaranteed returns, inauthentic looking website links, get-rich-quick claims and any indication of asking for private keys or personal information. Never click a link in a cryptocurrency email, we’d always recommend going directly to the 100% genuine website and finding the page yourself if you’re unsure.
Giveaway Scams
Another common type of crypto scam is a giveaway scam, where scammers will pose as well known figures in the world of cryptocurrency and try to encourage people to send digital assets. With the rise in AI technology, it is more difficult than ever to determine what’s actually real and what’s fake. We’d recommend you avoid any claimed giveaways to do with cryptocurrency, as it’s unlikely people who are actually very good at what they do would want to be associated with a crypto giveaway.
Investment Management
Investment management scams involve an “investment manager” getting in touch with you and claiming to be able to help you get rich quickly. Usually it will start with them gradually building trust, which then leads into sharing information and eventually you being scammed. It’s very rare that an “investment manager” would approach you, so we’d absolutely recommend avoiding emails like this and instead, focusing on your own investment strategies to begin with. Whilst crypto recovery is possible, you want to avoid the process if possible.
Pump and Dump Scheme
Lastly, we’ve got the pump and dump scheme. This involves more experienced traders/scammers working together to entice people to invest in a particular coin, usually through social media, and creating hype around it. This is to drive up the price of whatever the asset is, then they will simultaneously cash out leaving the new investors to pick up the pieces. So, it’s best to do your own due diligence and understand the market to make informed investments, rather than jumping on any hype you see on social media. Anything that seems too good to be true often is with crypto investing, so bear this in mind when you see suggestions on social media.
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