Cryptocurrency scams struck a home run with their 2023 records. A recent disclosure shows that scammers picked up approximately $14 billion from the cryptocurrency market last year. It is a doubled amount from 2020’s record, where cryptocurrency frauds bagged $7.8 billion.
The Blockchain experts explain how the flourishing interest in the crypto market has drawn ‘specialists for scammers’ after witnessing this genre’s pool of opportunities for their illicit money-making. They further added that the progressive outlook of the crypto world would keep on absorbing high-tech scammers. Therefore, we can consider scammer’s upgrade from crypto scams, token scams, and ICO scams. It demonstrates the scammer’s ability to move along with the technology or plot their schemes accordingly.
Crucial Aspects To Consider Before Trading In Crypto
Professionals and market specialists mention that it is a wise move to curb your cryptocurrency investments by up to 5% in your portfolio. Since cryptocurrencies are the most volatile market, it shifts at the speed of lightning. Although the frequent fluctuations seem like an intriguing aspect, traders must invest only as much as they can take for a loss. Don’t try to unnecessarily push yourself regardless of how reliable or profitable you think the coin aspires to be. Your investments shouldn’t disrupt your financial standing or make you helpless when it comes to an emergency. Always invest after computing your emergency funds, expenses, and savings.
Additionally, Cryptocurrency scams are now opening up to the digital universe and are evolving into distinct variants. If you’re trading in cryptos or are willing to incorporate them into your portfolio, we’ve listed popular crypto scams that can help you spot them.
Popular Crypto Scams
The FTC (Federal Trade Commission) published reports showing that roughly 7,000 folks in the US lost beyond $80 million to crypto fraud from Oct 2020 to March 2023. It marks a significant leap from last year’s record of more than 570 crypto scams, with over $7.5 million lost in an equivalent period. With these scams constantly hitting the upward trend, it’s time you turn your attention to these scams and their working patterns;
1. Calling For Payments In Cryptos
Cryptocurrencies aren’t universally accepted as a form of currency, at least by the central authorities. Hence, it does not add up if a person you met on social media, a dating site, or anyone asks for a payment in cryptos. Experts also state that since cryptocurrencies and altcoins belong to the group of emerging financial products, the economy and the financial institutions feel threatened by its prosperity. So the chances that a reliable institute would adopt cryptocurrency as a centralized currency is scarce. On the other hand, any establishment urging payments in Bitcoin or other popular digital currencies might be looking for an opportunity to hold and enhance their crypto investments.
2. Use of Fake IDs
Unlike banks and other financial institutions, the blockchain system does not follow the same KYC guidelines. The decentralized space has no security measures that could refrain fake IDs or users from registering on to the platform. There is no way to identify a phony user; one can only practice awareness to avoid the bad guys. The blockchain is constantly working to build an enhanced security system on the positive side. Besides, the public ledger is also unmodifiable, making it universally accessible and challenging to tamper with. However, it won’t change the fact that cryptocurrencies have become home to illicit money laundering due to their decentralized nature. Likewise, hacking into the system isn’t impossible for unlawful cyber geeks.
3. Crypto with Digital Collectibles and Games
We know how rewarding the blockchain and NFT universe has turned towards the artist and tech enthusiast. Through blockchain, anyone with the skill can build a game or a fiction-based world. For example, scammers who used the recent Netflix buzz show “Squid game” to create their own token had it the easy way. The show was going viral, and to create a trending token meant diverting all the market there. The token instantly picked pace and value in the market until it crashed and its developers vanished.
While that’s one game token that started a storm, there are plenty of similar ways for scammers to build wealth. For example, they could come up with new coins and effortlessly manipulate a large audience at their discretion.
4. ICO Scams
ICOs (Initial Coin Offerings) is a relatively new concept in the digital world, gaining the same response that cryptocurrencies attained. It enables access to newcomers who are interested in minting new crypto coins. However, the risk here is that not every new digital currency is minted with a genuine intention. Therefore, any ICO that assures returns and growth is one you should escape at all costs. ICO scams are rising at an insane rate, so you should study a coin before investing in it. Additionally, don’t be persuaded by massive promotional campaigns and ads. They could be cropped and created to cheat you.
It is a renowned and widely practiced crypto scheme. Here, the scammers contribute towards spreading incorrect rumors within the market that could set off a frenzy, simultaneously leading to a price hike – the ideal time for them to sell off their investments and make huge profits. Ultimately, traders are the ones to take the bullet once the market collides.
Cryptocurrency Scams don’t end with these variations; they keep developing with changing times. Other famous crypto frauds include romance scams, fake websites, phishing, pump-and-dump schemes, rug pulls, etc. Each trader should take valuable time to study the market and the scams harvesting within it. There is no shortcut to it. Gaining knowledge, staying wary, and taking the right actions are ideal practices that one could execute for the safety and sanctity of their funds.
Reporting the scammer could be that baby step making all the difference. Moreover, with the fast-pacing world, catching up with solutions that can get your money back is possible. You can learn more about fund recovery solutions and how it works here.