Today’s hottest investment opportunity is none other than cryptocurrency. It has become the world’s favorite topic of conversation. Everyone is talking about it, whether they are millennials, celebrities, or 60-year-olds.
It’s dominating front-page headlines of popular publications and is capturing the people’s attention at large. But it’s also attracting something else people aren’t oblivious to scams.
Three Major Crypto Scams to Avoid
Investors, both seasoned and immature, are sprinting to buy cryptocurrency to increase their wealth. Given the hype, they are caving to the temptation and investing their meritorious money without much deliberation.
Moreover, because crypto money is a decentralized trading model, there is only online dependency and transparency. There is no involvement of a third party to regulate the trade. Hence, it is a juicy target for online scammers. They are constantly devising new methods to defraud and cheat you.
Scammers love the mix of decentralized trading and investors who have little idea of how crypto works. They will make too good to be true claims to newcomers like you, and you may trust them, falling prey to their schemes.
If you want to make money with cryptocurrency and not lose it, you need to educate yourself on the topic. You must also become familiar with crypto frauds to recognize and avoid them. Here are major crypto frauds to save yourself from.
Although pig butchering may sound intriguing, it is a cruel practice. It is a type of fraud commonly practiced on online dating sites. Con artists create alluring dating profiles to attract easy prey. They then develop a solid and trustworthy connection with the victim through messages.
Now that the victim has started to trust the con artists, the perpetrator proceeds to feed the victim lies and stories about how they made massive gains in crypto. Then they persuade the victim to give them money to purchase cryptocurrency on the victim’s behalf, promising them significant earnings.
So, what now? The victim transfers the money, the con artists flee, and the victim loses a large quantity of cash. If you’re on a dating site, no matter how much you trust someone, never accept their nonsense and give money to protect yourself from this fraud.
Market manipulation is when fraudsters intentionally influence crypto prices to tilt the numbers in their favor and profit quickly. Market manipulation entails a variety of illegal behaviors, which I am explaining below.
- Churning – Churning is a malicious activity carried out by deceitful brokers. Brokers are rewarded for handling cryptocurrency assets. The con artists engage in aggressive trading in a client’s cryptocurrency account to increase profits. They benefit from churning while the client incurs extra tax liabilities.
- Spoofing – Spoofing is a practice in which scammers place massive trades using internet bots and dummy accounts. They place huge orders and then cancel them soon before they are executed to create the impression that the demand for a specific cryptocurrency is rising or dropping.
- Front Running – Front running is a crypto fraud that encourages trade based on speculations. Here scammers are mostly miners because they have access to pending deals. Using inside knowledge, they make a significant profit before the price of a particular cryptocurrency skyrockets.
Because the cryptocurrency market is highly speculative and unregulated, you must do the following to avoid these scams.
- Trade on renowned exchanges that enforce stringent safety and internal regulations.
- Before buying crypto with a credit card or net banking, extensively research the cryptocurrencies and study their price volatility throughout the previous months and years.
- Market manipulation usually targets short-term trading activity; therefore, trade for the long term if feasible. Or else quickly convert cryptocurrency to fiat currency, thereby preventing crypto theft.
The phishing scam is not limited to digital currency but also incorporates sensitive information. Scammers use email and social media to fool victims into sharing crypto wallet passwords and keys. They will steal your digital money if you allow them easy access.
Never reveal your crypto wallet’s password or key to anybody to avoid falling victim to phishing. Besides, resist clicking on strange links since attackers may lure you into providing crypto credentials in return for significant incentives. Finally, only use links from verified accounts.
Though the power of crypto is unquestionable, its decentralized nature is concerning. There are opportunities to make money, but there is also the risk of being misled.
It will help if you remain up to date on new cryptocurrency scams. You must instantly identify them and report them to the Federal Trade Commission to save yourself and other innocent investors.