Cryptocurrencies have been around since Bitcoin was introduced in 2008. Since that time, cryptocurrency has been talked about now and again, but starting in 2020, digital currencies soared in popularity and now have dominated the headlines. Along with this trend is the escalation of crypto scams, to the point where the SEC has called these frauds the “flavor of the year.”
All types of financial fraud are rising with the increased use of the internet, but crypto scams stand out as a particular threat. One of the reasons is the widespread belief that cryptocurrency can’t be recovered. However, professionals have strategies to assist clients in retrieving their funds from crypto transactions. Broker Complaint Registry plays a central role in the fund recovery space.
Broker Complaint Registry has the right tools and experience to improve your chances of fund recovery. Our experts consult with clients, create intelligence reports and outline strategies that have a proven track record of success. We have a close working relationships with banks and regulators and can help our clients retrieve their funds from crypto scams, forex scams and other forms of financial fraud. Talk to BCR experts about how to proceed with fund recovery.
The Problem of CryptoScams
Although there is nothing sweet about fraud, Peter Diskin, assistant regional director at the SEC’s Atlanta office has called crypto scams the “Flavor of the year,” in an interview with Marketwatch. There is a good reason for this observation. Crypto complaints to the SEC between 2020 and 2021 were at 7,000, which is 12 times the amount of the previous year. The average amount of money lost in these crypto scams has also risen to $1,900.
Diskin expressed the urgency of cracking down on crypto scams, not only because they are more numerous than in the past, but because of the special challenges they provide for fund recovery. Increasingly, money is being diverted from consumers’ U.S. bank accounts to crypto scammers around the world.
In addition, the blockchain is anonymous and requires a more complex process of matching transactions to individual users. Fund recovery is possible with cryptocurrency, but it is not as straightforward as a credit card chargeback, for example.
Types of Crypto Scams to Watch Out For
The increase in crypto scams is correlated with the beginning of COVID-19. As people were home and spending more time online, they were looking for new ways to make money, particularly for those who were laid off from their regular jobs due to the pandemic. This was a major driving force for the popularity of cryptocurrency and with it, crypto scams.
There are many types of crypto scams that target consumers, but among the most common varieties of crypto fraud include:
- Fake Initial Coin Offerings (ICOs)
- Fraudulent Bitcoin Mining Services
- Celebrity Social Media Scams
There are thousands of cryptocurrencies on the market, but most initial coin offerings or ICOs are frauds. According to Investopedia, 80% of ICOs are scams. This is a staggering amount, but there are many ways to avoid these frauds. Researching ICOs carefully and using only regulated ICO platforms are the key to avoid losing money in sham investments.
Bitcoin mining is a potentially exciting opportunity. Since complicated mathematical operations and huge amounts of energy are required, bitcoin mining is often done by proxy with groups known as “pools” contributing and investing in this project. However, many bitcoin mining sites and apps turn out to be fake. They simply do not work and those who sell them disappear.
Celebrity endorsements are a valuable marketing tool, but with crypto scams, many of these are fake. In 2020, a teenager hacked many celebrity Twitter accounts and offered fake bitcoin trading deals. Worse yet, some actual celebrities have been caught pushing bitcoin deals without disclosing the fact they are being compensated, which goes against SEC regulations.
5 Tips for Avoiding Crypto Scams
There is no need to avoid cryptocurrencies entirely. You can hold, trade, and purchase products with crypto currencies if you follow these tips to stay safe.
- Use only regulated financial services
- Research services thoroughly
- Pay through methods other than cryptocurrency
- Use only secured website
- Never give away your crypto codes or keys
The best way to avoid losing money to crypto scams is to work only with licensed financial services. It is easy to neglect this step and take a chance with a crypto deal, but more often than not, this can lead to financial losses. The sad truth is that few financial services behave well without significant oversight and regulators provide this oversight. Whether you are looking into a broker or an ICO platform, make sure it has a reliable license.
Do your research and see who is behind the deal. There should be names and credentials that can be verified through a Google search. Check contact information to see if it is accurate. If you can’t identify who is running the service, that is a sign to stay away.
Although you may like cryptocurrency, when paying for crypto services, use a credit card. This can make chargebacks convenient if there is a problem. Services that accept only cryptocurrencies are depending on the fact that refunds through bitcoin can be a challenge.
Also, do not get involved in a deal advertised only through social media. The only place to do financial transactions online is through a secured website. This means not giving your cryptocurrency code and keys to anyone. Many of these crypto scams aim to steal your crypto and disappear.
If in spite of following these tips you end up losing money in a crypto scam, do not give up. Contact Broker Complaint Registry experts if you need assistance with a crypto scam complaint. We deal with a variety of issues, including data theft, forex trading 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.