The rise of cryptocurrency in recent years has inevitably led to the emergence of crypto related scams. In the first half of 2022 alone, Australians have lost over $205 million to various crypto scams that target people through text messages, email, phone calls, and social media accounts, representing a whopping 116% increase over the same period in 2021. With so much money involved with cryptocurrency and the lengths that scammers will go to get said money, let's dive deeper into the scams that are out there so you know how to protect yourselves.
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List of crypto scams
Given the relative newness of crypto, first-time investors are a prime target for all the scammers out there. Here's a list of scams that are circulating around.
Fake social media accounts
Scammers using fake social media accounts or impersonating a famous person to trick people isn't anything new. What is new is how scammers use fake cryptocurrency giveaways on social media to trick people into giving away their crypto or money.
A good example was when scammers impersonated Elon Musk on Twitter and were offering fake giveaways:
Sometimes scammers manage to get control of a well known person's social media account and will take advantage of the account's followers by running scams while pretending to be the well known person. A well known instance involved Elon Musk's Twitter account (again) being accessed by a scammer, who then proceeded to tweet about a fake Bitcoin giveaway:
Fake text messages and phone calls
Like most common scams, cryptocurrency scammers will often target people through texts and phone calls. These fake texts and phone calls often involve the scammer trying to convince you to invest in a crypto that's about to blow up, or trying to get you to download a fake crypto app that's not been authenticated by the Google Store or Apple App Store.
Often scammers will suggest starting with the transfers of a small amount of cryptocurrency by directing them to a legitimate site first. This wins the targeted individual's trust and then the scammer will convince them to move more of their crypto over to a convincing fake website controlled by the scammer. Once this happens, the scammer can ultimately continue to take money from the targeted individual's crypto account. In some cases, individuals have lost entire life savings due to these so-called crypto schemes.
Here's an example of a scammer contacting someone through Whatsapp and trying to convince them they should invest in crypto:
Here's another example of a WhatsApp message where a scammer is asking the targeting individual to download a fake crypto app that's not been authenticated by the Google Store or Apple App Store:
Scammers sliding into your social media DMs
Crypto scammers are very active on social media platforms and are constantly reaching out to people through social engineering. Scammers contact people through this method by offering them an "opportunity" to invest in some fake crypto scheme that's "profitable".
Like the fake text messages and phone calls, scammers will often suggest starting by transferring a small amount of cryptocurrency or money by directing them to a legitimate site before asking for higher amounts once they've earned the targeted individual's trust.
Here's an example of a crypto scammer targeting a social media platform (LinkedIn in this case) and trying to convince an individual to invest in a fake cryptocurrency scheme:
Here's a second example where a scammer has slid into an individual's Instagram DMs and started an innocent conversation about crypto. While it may appear like the individual is chatting to their friend, the friend's account has been hacked by a scammer and is using the account for social engineering.
Much like the fake text messages and bogus crypto platform links, scammers will target individuals through phishing emails trying to convince them to invest in a fake crypto or become involved in an investment scheme that's too good to be true.
How to tell if a cryptocurrency platform is fraudulent
Crypto scams involving cryptocurrency platforms that are being promoted by the scammer are generally quite authentic looking and can be difficult to identify. On some social media platforms such as Twitter, there are occasional cryptocurrency ads that link to fake trading sites and it can be quite tricky to tell whether these ads are legitimate or fake.
Thankfully, there are generally some signs and indications when a cryptocurrency platform is fake:
Often fake crypto trading bots and Ponzi schemes promise overly high rates of return that are simply too good to be true.
Information about the platform’s team is hard to find. Usually the team’s LinkedIn, email or individual Twitter accounts are impossible to find.
There's no ICO whitepaper - which is a document that contains all important information about the project - to be found anywhere. Companies that don't have one need to be avoided at all costs.
Common spelling errors or grammatical mistakes.
No information or documentation is given on how the trading bot works.
How to verify a genuine cryptocurrency platform
Due to the lack of regulation when it comes to cryptocurrency, it can be difficult to verify whether a crypto project is fake or legitimate. When verifying a genuine cryptocurrency platform, keep an eye out for the following things:
Information about the platform’s team is available, and the individuals behind the platform have social media accounts.
Make sure the platform's ICO whitepaper is available. Companies that don't have one need to be avoided at all costs.
No spelling or grammatical mistakes.
Genuine honest information on the potential return of the scheme.
Information on how the trading bot works.
Make sure you thoroughly research the individual team members of a crypto platform and ask the team many questions regarding said platform. If you're still not sure, it's best to not get involved just in case.
What to do to stay safe and online safety
Your financial safety is the number one priority when it comes to investment schemes. To ensure that you're interacting with a legitimate company or platform, head over to the MoneySmart website for a list of unlicensed companies that have made unsolicited calls and emails promoting financial services or products and are to be avoided at all costs.
ACCC Deputy Chair Delia Rickard recommends that whenever you receive an unexpected text message, email, or phone call from a random person you don't know offering you an opportunity to invest in something, it is likely a scam and you should immediately hang up or delete the message.
One important thing you can do to protect yourself is install a browser extension that can spot scams and misinformation. Here's a list of handy extensions that can help protect you when you're online:
uBlock Origin - A free and open-source extension that blocks ads, trackers, and malware sites.
PhishDetector - An extension that detects phishing attacks on online banking websites.
Qikfox - An extension that enhances privacy by blocking any cookies, trackers, or any sophisticated data mining methods on websites.
HTTPS-Everywhere - An extension that encrypts personal communications with major websites, making browsing more secure.
1Password - An extension that will create, store and enter strong passwords for your accounts into a password vault.
Click & Clean - An extension that helps clean up your private browsing data, scans for malware and clears cookies and cache data.
If you have any questions or need extra support, we're here to help you anytime in any language. Simply start a chat with us via the home screen of the Sonder app.
Information sourced from: ABC, ACCE, MoneySmart, and VICE Australia.
Image credit: André François McKenzie at Unsplash
All content is created and published for informational purposes only. It is not intended to be a substitute for professional advice.