3 Types of Cryptoscams and How to Avoid Them
Cryptocurrency has the potential to change the way we think about money. It is not connected to physical money, such as bills or coins, but is entirely digital. Since the pandemic, cryptocurrency has made a comeback and many consumers want to jump on the trend, whether it is to own and use cryptocurrency or trade it.
However, along with its popularity, cryptocurrency enthusiasts are increasingly the target of scams that are designed to rob them. These frauds can take several forms, including crypto forex trading scams, fake ICOs, and fraudulent crypto wallets and apps that can inject malware into devices. Those who fall prey to crypto scams need support and guidance from professionals who will help them prepare a claim and investigate the fraud.
Broker Complaint Registry is the right place to turn when you want to investigate alleged crypto scams or if you have been cheated by a cryptocurrency service or broker. We consult with clients and refer them to experts who can pursue their case in detail and work to investigate the crypto scam and in some cases succeed in recovering funds. Talk to us today, because crypto scams can work quickly to cover their tracks.
What Is Cryptocurrency?
Cryptocurrency is a digital currency that has no physical equivalent and is not regulated by any central bank. All transactions are managed on the blockchain, which uses ledger technology.
Although transactions are recorded, they are anonymous, and this provides advantages and disadvantages. People feel that their anonymous transactions are private and secure, and yet the anonymity can give cover to cybercriminals to make money laundering easier.
Why Have Crypto Scams Increased?
Crypto scams have increased in tandem with the popularity of cryptocurrencies. Popular trends, unfortunately, often attract scams that mimic the real thing. Additionally, growing economic instability is another factor that fuels scams. Fraudsters are looking for consumers who want to make money fast and are willing to take risks to do so.
In addition, many people are more comfortable with making transactions and trading online. It wasn’t long ago that many consumers were nervous about dealing with financial matters online. However, the reality now is that we do everything on the internet, including socializing, working, and earning degrees. The same is true of investing and managing money.
What Are the Types of Crypto scams?
One way to protect against crypto scams is to educate yourself about how these frauds work, who they target, and certain features they have in common. The following are general categories of the most widespread crypto scams.
- Cryptocurrency Trading Scams
- Fake ICOs
- Scam Crypto Wallets or apps
Cryptocurrency trading scams
Cryptocurrency trading scams are similar to forex trading scams. In many cases, nothing is being traded, and the broker keeps the money. However, like forex scams crypto trading scams will go to great lengths to convince their victims that their money is being traded and that they are likely to receive returns. In other cases, there is trading going on, but the broker will refuse to allow the victim to withdraw the money.
One of the most popular forms of crypto broker frauds and forex trading scams is Ponzi schemes. This occurs when the money people invest is used to pay those who withdraw money. As the money is shifted through the system, the fake broker makes money from high commissions and fees. Sometimes the broker will take of the money and disappear so they don’t have to make any payouts at all.
Other crypto brokers seem legitimate, but like forex scams, they will not allow their clients to take their gains. A client may think that they are making money on trades, write positive reviews, and bring their friends on, only to find that the broker will not allow them to withdraw their money, at least not without paying a huge fee.
Another type of crypto fraud is a crypto forex trading scam. This occurs when consumers trade forex or other assets but pay and are paid in cryptocurrencies. This allows the broker to remain anonymous and makes it easier for them to launder money.
Fake ICO Scams
Another major problem is ICO scams. ICO stands for Initial Coin Offerings. With thousands of cryptocurrencies on the market, many new coins are making their debut. However, only a portion of these is legitimate.
You may have seen a new coin advertised on social media or have been messaged by someone promising that getting in on a new coin deal before it hits exchanges can mean huge profits.
Not surprisingly, these ICO scam artists will disappear as soon as you send your money, usually by cryptocurrency. They may make some excuses about technical problems or needing more money, but the anonymity of cryptocurrency allows ICO scams to take the money without showing where it went.
Fake Crypto Wallets and Apps
The third type of crypto scam is fake wallets and apps. When you buy and use cryptocurrency, a wallet or an app can help you keep track of your coins. These apps are sold everywhere, including Google Play or Apple’s App Store.
However, just because these apps are available on main platforms, that doesn’t mean that they aren’t fraudulent. Unfortunately, it is well known that Google Play and the App Store have lax screening concerning the apps they make available.
These fake wallets and apps either do not work or contain malware or spyware that can steal data from the users. Some will get the codes for the bitcoin so they can steal cryptocurrency from users. The result can be a simple rip-off, stealing bitcoin to full identity theft.
Have You Been the Target of a Crypto Scam? Broker Complaint Registry Will Help
Contact Broker Complaint Registry experts if you need an intelligence report on a broker or a crypto service. We deal with a variety of issues, including data theft, broker scams, and crypto complaints. Our team will refer you to experts who have vast experience dealing with regulators, banks, and law enforcement. We will provide advice and give you valuable guidance to help you resolve the issue.