Crypto Scams & Hacks: How to Identify & Avoid Fraud

Cryptocurrency has altered the way we think about money, investment, and financial liberty. But it’s also becoming a much more dangerous field being targeted by scams and hack attacks in line with this the way it changes, rapid and innovative, and become a magnet for scams and hacks. Scams and hacks are not only affecting people who are new to cryptocurrency but also scammers are finding ways to defraud even the most experienced investors. From the onset, cryptocurrency has formed a mirage of its kind of world. The investors and the users face growing concerns about safety issues in the intricate digital world. These fraudulent schemes that work without borders also feed on the same problems. One element, which is maintaining the quality of your safety in the digital world, is to understand how they operate and then use it to your own benefit. Whether you’re new to crypto or a seasoned investor, understanding how these fraudulent schemes work and how to protect yourself is crucial to your safety in the digital world.

What Are Crypto Scams and Hacks?

Crypto scams and hacks are referred to as illicit activities that aim to steal your cryptocurrency or personal information. These crimes generally take advantage of regulatory loopholes in the crypto market and some people are often defrauded in this way, especially beginners who seem naive and the ones who believe too much in the promises. They can do those frauds compelled through phishing attacks, false exchanges, Ponzi schemes, or malware among others resulting in new methods that deceive users.

On the other hand, blockchain technology itself is more than secure. Nonetheless, there are many means to invade the online world, using them if you are not allowed.

Common Types of Crypto Scams

1. Phishing Scams

Phishing is one of the most well-known ways used by the sly ones to steal your money. It’s impossible that the scamming practice hasn’t gone away completely since the Internet came into existence, and despite not being as widespread, it remains a very popular tool among con artists particularly in the world of cryptocurrency. The scorers venture into this business by the following way which they are the prepared statement:

• Emails – Phishing scams could be the cause of such emails, which appear to be from a trustworthy exchange or wallet provider and have you be asked to log in or reset your password.
• Fake websites – Deep web websites can steal your login credentials, but they look as if they are real platforms.
• SMS messages – The error messages that claim there is a problem with your account on social media or are sent to you via SMS messages and then ask you to verify your identity as a scam.

To avoid phishing scams:

• Before logging into any web service, make sure the location bar provides the correct spelling of the website name and the connection is secured. (HTTPS is present).
• Do not open any links that you receive in spam emails, and do not share your private keys or access tokens with anybody, even if they pretend to be from a trustworthy company.

2. Ponzi and Pyramid Schemes

The Ponzi and pyramid schemes are investment schemes that are made to steal instead of being promising as they do make a person believe to be true and offer little risk, and little returns. The approach here would be to get the money from those who come in afterward as cash out for those who joined before. Hence when there are no more new people, it ends and those in it lose everything they have. The signs of a Ponzi or pyramid scheme are in common:

• Unrealistic promises of high returns with no risk.
• The investment is more focused on promotional information than on the way the investments themselves work.
• The process of the withdrawal of funds is complicated.
• A strong emphasis on recruiting rather than conscientious investment

To avoid these scams:

• When you are promised a guaranteed profit, check how good the return on it would be real skepticism be given to this person.
• Possibly, thorough research of the project or platform is a must-in this regard, see reviews, whitepapers, and information about the project’s actual processes alive.
• There should be avoidance of platforms focusing on recruiting and neglecting the provision of clear and understandable investment opportunities.

3. Fake Crypto Exchanges and Wallets

Perhaps the most widespread way that scammers make money is by creating fake crypto exchanges or wallet services. You might see these websites or apps that seem very legitimate and offer incredible deals or very low transaction fees, but in fact, they are made with the main purpose of deceiving people. Once you deposit your cryptocurrency, you won’t be able to withdraw it, and the platform disappears along with your funds. Signs of fake exchanges or wallets include:

• A website is designed in a very unprofessional way and it is missing any service support from customers.
• No oversight and transparency from a regulatory body about the company that operates this platform.
• Unbelievable bargains, such as incredibly low fees, and the deployment of big incentives to quickly deposit funds among others.

To avoid these scams:

• Resort to those well-established trading platforms that are known and respected such as Binance, Coinbase, and Kraken. The security and customer service of these platforms have always been maintained.
• Use the wallets of reliable companies such as MetaMask, Ledger, or Trezor.
• Evaluate the authenticity of a new platform by looking at reviews, reading news, and verifying that it holds a valid license.

4. Rug Pulls

A “rug pull” is a scam where developers of a cryptocurrency project (usually a new token or DeFi protocol) abandon the project and steal the funds invested by users. Commonly, these projects will unveil their kick-off moment promising enormous returns
or unique built-in aspects, but after a high number of investments till the creators bury, investors are some ownership of crappy tokens. Rug pulls or token scams are often seen in decentralized finance (DeFi) platforms or Initial Coin Offerings (ICOs),
but they can also take place in Non-Fungible Tokens (NFTs) projects. Signs of a rug pull:

• The non-disclosure of the team or developers being the project.
• the importance of the high volatility of price to the point where the token price suddenly and dramatically increases.
• The project does not have a functional product or source code to prove it.
• Getting stuck with your tokens when wanting to sell or get out is also very challenging.

To avoid rug pulls:

• Explore the background of the dev team behind a project-aim at collaborating with people in the crypto space who already have good credibility.
• Be extra careful with projects marketed by hype, especially those that do not have a clear and working product.
• You have to learn to live with your losses and you will still benefit from your gains in a real business.

5. Pump and Dump Schemes

Pump and dump schemes are the manipulation of the price of a cryptocurrency which is accomplished through a coordinated effort of the people involved in it, to artificially pump up the price of the token before selling it off (the “dump”). This causes the price to crash and the investors lose their assets. At times, the scams can be found in relatively small coins or tokens with low trading volumes that are easy to manipulate. Red flags for pump and dump schemes:

• Price or Trading Volume jump followed by no news.
• Social media influencers or groups pumping a coin, usually with the typical scam message, “Hurry up and buy this or else you will miss out.”
• The initial increase in price is dramatic, but soon afterward, the price drops unexpectedly.

To avoid pump and dump scams:

• Opt for the hegemon of the crypto market, like Bitcoin and Ethereum, where the price is steady.
• Avoid blindly investing in coins or tokens just because influencers talk about them on social media. Take a considerate approach to anyone encouraging you to buy a cryptocurrency at that very moment.
• Avoid blindly investing in coins or tokens just because influencers talk about them on social media.
• Take a considerate approach to anyone encouraging you to buy a cryptocurrency at that very moment.

6. Malware and Ransomware Attacks

Cybersecurity attackers employ the program to take over your private keys, login, or cryptocurrency wallet information. Phishing emails or infected software downloads are often the targets of such attacks. Once they get control of your wallet, it’s either your crypto is missing or they have it for ransom thus they can steal it. To protect yourself from malware:

• Staying away from any position is the best way to avoid malware. Firstly, you should Never Download Software from untrusted sources, definitely never open any attachments if you are not 100% certain of their origin.
• Make sure your devices are Always Updated to the latest security patches.
• Fortuitously, you can use a Hardware Wallet such as Ledger or Trezor and keep your money on them as they are not prone to malware.

How to Avoid Crypto Scams and Hacks

Having known the possible types of crypto scams and hacks at the moment, it is better to be aware of the common points so that you will always stay away from them in the crypto space, here are some best practices to ensure you stay safe in the crypto space:

1. Use Two-Factor Authentication (2FA)

2FA or the two-factor authentication security measure should be activated in all crypto exchanges, wallets, and other accounts. This creates an extra layer of security in that you have to confirm your identity through another means, e.g., sending a one-time code through a mobile phone or using an app.

2. Avoid Sharing Your Private Keys

Be sure to keep your private keys and the recovery phrases for your eyes only. This key is necessary for managing your crypto wallet and the person who has it has full control over your money. Do not ever trust anything that claims to be the official platform and that is asking for your private keys.

3. Research Before Investing

Before investing in a crypto project, find out the background of the project. Read the ICO’s whitepaper, and look at the team, roadmap, and community feedback. If you feel intense vibes of suspicion, follow them.

4. Use Trusted Platforms

You must always stick to the old and reliable exchanges, wallets, and platforms out there, that is backed by a history of positive transactions. The alternatives such as trendy new ones might be fast selling due to their good unique features; however, they are also potentially very risky. Moreover, new platforms are comparatively rated with worse security compared to older platforms, customer support is not that favorable yet, and the comments may be less positive than the other platforms.

5. Keep Your Software Up to Date

It is important to always check if your wallet software, operating system, and anti-virus programs are updated. Many virus programs take advantage of the known vulnerabilities of the software that are in the version out of date, so it is very important to update your software regularly to stay safe.

6. Be Skeptical of Unsolicited Offers

If a message is sent to you that pretends that you get bonuses, or that you have the option to invest, answer this kind of message carefully. A usual practice that fraudsters perform to catch you on their web is to indicate a false sense of immediate need for you to take action instantly. If you can’t decide immediately, you may ask them to give you some time to examine and think because this can be good for your investigation.

Stay One Step Ahead-Protect Your Crypto!

While the crypto space offers exciting opportunities, it also presents numerous risks. By staying informed, practicing good security habits, and knowing the signs of a scam or hack, you can protect yourself and your investments. Always remember that if something seems too good to be true, it probably is. Take your time, do your research, and never let your desire for quick profits cloud your judgment. Stay safe, stay smart, and keep your crypto investments secure!