What is Cryptocurrency Scam and How to Protect Yourself

Updated: Oct 6, 2021

Scammers are always getting more creative as general public's interest in cryptocurrency market grows. USA Federal Trade Commission released a report in May warning that cryptocurrency fraud and scams are on the rise. Since then, it's running rampant in society, affecting especially people with no or little knowledge about crypto world and how to invest. Cryptocurrency scams are the most popular scamming scheme because it's not possible to get your money back and generally you have no legal protection.


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Here are some tips about how you can protect yourself from being scammed:


  • Anyone who tells you to pay by wire transfer, gift card, or cryptocurrency is a scammer. If you pay, then you lost all your chances to get your money back.

  • Be warned to avoid scammers impersonating celebrities. People lost millions of dollars to crypto scammers who impersonate Elon Musk "with claims of multiplying any cryptocurrency you send."

  • Research the company's name and the cryptocurrency name in conjunction with “review,” “scam,” or “complaint” before you invest.

  • Don’t trust people who say they know a better way to make more money. Even if they offer you free money paid in cash or cryptocurrency, don't fall for it. You'll need to pay more money to save the money you invested.

  • Avoid trading coins on dating apps on false promises of love and dating.

  • If you read a tweet, text, email, or get a message on social media that tells you to send cryptocurrency, it’s a scam. That’s true even if the message came from someone you know, or was posted by a celebrity you follow. Their social media accounts might have been hacked.

  • Keep an eye out for deals or returns that look too good to be true in the crypto space, just as with other online scams.


The CNBC Millionaire Survey shows that nearly half of millennial millionaires have at least 25% of their wealth in cryptocurrencies. Though this has been changing the outlook of wealth management industry, it's riskier for young people who don't have enough knowledge about crypto world and how to invest in safe manner. According to the FTC’s new data spotlight, "people ages 20-49 were more than five times more likely than other age groups to report losing money on those scams." Additionally, it's laid out that consumers in their 20s and 30s have lost more money on investment scams than on any other type of fraud.

That is why these tips to avoid losing money to cryptocurrency scammers are more important than ever. If you have suspicions about your crypto investment or if you think that you are being scammed, first report it to the cryptocurrency exchange company you used to send the money and then immediately get in touch with authorities of your country.


Sources


Frank, Robert. "Millennial millionaires have a large share of their wealth in crypto, CNBC survey says". CNBC. 10 Jun. 2021: https://www.cnbc.com/2021/06/10/millennial-millionaires-have-large-share-of-wealth-in-crypto-cnbc-survey-.html


"FTC Data Shows Huge Spike in Cryptocurrency Investment Scams". FTC. May 17. 2021: https://www.ftc.gov/news-events/press-releases/2021/05/ftc-data-shows-huge-spike-cryptocurrency-investment-scams


Miranda, Cristina."Spotting cryptocurrency investment scams". FTC. May 17. 2021: https://www.consumer.ftc.gov/blog/2021/05/spotting-cryptocurrency-investment-scams



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