How to Identify and Avoid Crypto Scams

Avoid crypto scams

Estimated reading time: 5 minutes

Scams are an inconvenience you will deal with in the crypto world. You will find many scammers who will use all their tricks so that you can fall into their trap and they can steal your money. It is helpful to know how and when scammers might attack you so you can defend your assets.

In addition, you must be aware of what you can do if you suspect that any crypto transaction may be a scam, especially when there are so many different types of crypto scams. So here is an essential guide to help you identify and combat these deceptions and traps.

Types of Cryptocurrency Scams

Cryptocurrency scams are divided into two main categories:

  • Initiatives aimed at gaining access to an objective. Scammers try to get information that can give them access to a virtual wallet or any other private data, such as digital security codes or authentication credentials. In rare cases, this may include access to a hardware wallet.
  • Transfer cryptocurrency directly to the scammer. In this case, the scammers seek to get users to send them money directly through impersonation, suspicious financial opportunities, false investments, or other fraudulent means.

SEE ALSO: Internet Scams to Avoid | How to Tell If It’s a Scam

How to Spot Cryptocurrency Scams

Cryptocurrency scams are easy to spot when you know what to look for. Real cryptocurrencies usually have an available disclosure with very well-explained information about the blockchain and associated tokens. You can go to specialized websites to get expert help with cryptos, familiarize yourself with transactions, and avoid scammers more easily.

Here are several ways to detect a cryptocurrency scam.

Examine Marketing

Cryptocurrencies have tokens created to help the blockchain function. You might see cryptocurrency updates on blockchain developments or new security regulations taken. But you must be very careful with communications more interested in money than technological advances in your cryptocurrency.

There are legitimate companies that use blockchain technology to offer services. These may have tokens within their blockchains to cover the transaction costs. But in these cases, advertising and marketing strategies should look more credible and official.

These companies will also have all their information available on their respective websites. They will not ask users to buy their crypto but will advertise their services based on blockchain technology. Companies that fail to provide information or do not have credentials or endorsements are often scams.

Keep an Eye On Credentials

White papers always include the developers behind the cryptocurrency. An open-source crypto project may not name the developers, but this is common for open-source projects. 

You can see codings, reviews, and comments in genuine crypto affairs. Some projects often use forums and apps like Discord or Skype for their discussions. If you can’t get any of these references and the white paper is full of errors, it is most likely a scam.

Avoid ‘Free’ Items

Various cryptocurrency scams offer users free coins or promise to ‘drop coins’ into their wallets. These strategies often take those looking for a quick and easy crypto income without considering the risks behind these operations. Remember, nothing in life is free, especially money and crypto.

SEE ALSO: The Number One Computer-Related Complaint

Tips To Avoid Cryptocurrency Scams

  • Ignore at all costs requests to give your private wallet passwords. These passwords manage your access to the cryptocurrency and your wallet. No one but you need this data to make a legitimate cryptocurrency transaction.
  • Ignore offers that offer you to earn a lot of money.
  • Ignore investment managers who contact you and promise to grow your investment quickly. Ignore celebrities’ messages, as a celebrity will not contact you to trade cryptocurrencies.
  • Do not fall for claims about supposed private material about you that they will publish on social networks unless you send cryptocurrencies.
  • Ignore job requests to work as a cash-to-crypto converter or vice versa.
  • Meet your romantic interests personally before offering them money when using an online dating website.
  • Ignore text messages and emails from companies, known or unknown, saying that your account is blocked or that they are very concerned about it for no reason.
  • If you ever receive an email, text, or social media message from a government, law enforcement agency, or utility company telling you that your accounts or financial assets are blocked and that you should send cryptocurrency or capital to fix the problem. The first thing you should do is ignore the message and contact the company in question.
  • Do not receive any kind of ‘free money.’

If you notice any of the above signs, you should not click on any links, dial any phone numbers, or send money. 

How To Report Cryptocurrency Scams

We can turn to several organizations that can provide support if you are a victim of a cryptocurrency scam or have suspicions of one. You can use some of the complaint forms that organizations submit to seek help. Here are some organizations you can turn to if you are a scam victim.

  • FTC. For fraud report
  • Commodity Futures Trading Commission. For complaints and advice about cryptocurrencies.
  • FBI Internet Crime Complaint Center. For complaints and recommendations.
  • Securities and Exchange Commission. For fraud reporting.
    Also, if you are uncomfortable with the above organizations, you can contact the crypto agency you use. These sites often have fraud prevention or other measures to safeguard your crypto investments and capital.