11 Common Crypto Scams in 2022
It is now apparent that significant profits can be made through investing in a growing digital currency and establishing the necessary cryptocurrency exchanges. For example, the value of one Bitcoin has surged from $0 in 2009 to a peak of over $65000 in November 2021, resulting in the creation of millionaires. Furthermore, Bitcoin has the potential for further growth, despite the current market turbulence – it may experience a substantial resurgence. Additionally, there are other promising digital coins, including Ethereum, Helium, Solana, and Binance coin, among others, that have the potential to generate significant profits in the near future.
On the flip side, such a turnout of events in the crypto space has attracted crypto investors and scammers in equal measure.
So what can you do as a potential or budding crypto investor to avoid falling for the latter who have now gone bare knuckles in hunting for crypto treasure? Well, in our opinion, you first need to be well-versed with some common crypto scams be-devilling the crypto industry. Doing so can prevent you from entering shady crypto exchanges or deals that can leave you high and dry. And that’s the holy grail of staying safe in the crypto world―after all, proactivity is better than reactivity.
In this light, we’re glad to bring you up to speed with some of the most common crypto scams in 2022 you should be aware of. And some insights on how you can protect your crypto investments from the ever-increasing scammers and crypto scams.
Here we go!
Cryptocurrency investment scams
Cryptocurrency investment scams are the mother of all dodgy deals in the crypto space, in our opinion. They capitalize on an individual’s greed to “make it big” within no time ― the so-called pyramid schemes. As such, a majority of them present themselves in the form of mouth-watering investment deals meant to lure the would-be “investors.”
A deep dive into these cryptocurrency scams reveals a closely interconnected network of fraudulent crypto investment plans.
Rug pull investment plans
As the name suggests, these digital currency scams involve investment scammers or the so-called crypto insiders hyping a particular new coin, Non-Fungible Token (NFT), or project to get funding. And run off with the loot upon accomplishing their mission.
They capitalize on a crypto investor’s eagerness to participate in the growth of a new coin to net good returns.
Pump and dump
Like Rug pull investments above, pump and dump crypto scams involve spicing up a particular new digital coin to defraud innocent crypto investors. These can be through social media channels and other well-known public media to lure in more people to get the price up.
Those behind the schemes ― usually some “big fish” with insider access in the crypto space ― then sell off their “investment” once the prices have reached sky high. This makes other investors follow suit leading to the plummeting value of the hyped coin.
The crowd, in this case, is then left with a worthless investment portfolio.
A Ponzi scheme imitates your typical pyramid scheme that benefits its pioneers and sacrifices the masses; or the sea of other “investors” who happen to have joined the “investment” bandwagon later on.
It starts with the masterminds promising the flocks huge paybacks with little investments. Essentially, they will be given the right to recruit and access the initial coin offerings, among other incentives, upon surrendering a said amount of upfront payment, for example. The objective here is to get in more people and money in the quickest time possible.
In the early stages, everyone in the loop will seemingly be getting a fair share of their “sweat” ― with pioneers getting the lion’s share. However, the party stops when the number of recruiters exceeds those joining the Ponzi scheme. Those behind the plot simply disappear into thin air ― with a huge chunk of the spoils, of course.
Phony investment managers
They are represented by a day-to-day sweet-talking Joe or some smart suit behind a screen who brags about ripping big in the crypto space. Therefore, have all the needed tactics at hand to also make you “rich” just with a little or some bargain of an investment from your end.
In most cases, these “investment managers” would require you to drip in a small upfront fee (mostly in crypto) ―To give you fine advice or make you an instant millionaire. A majority of them would then disembark after you send them the cash.
However, in other cases, they might even want your crypto details to access your digital piggy bank. As such, your investment ideas or decisions can flunk if you happen to deal with such folks.
Technical support impersonation scams
To soften your guard, crypto scammers can impersonate your crypto company’s support team and pretend to offer you helpful insights regarding your crypto account or problem. In other cases, they call you with phony customer service queries or non-existent security alerts.
Then use that opportunity to glean some of your essential crypto details they can use to steal from you.
For instance, your:
- Two-factor/multi factor authentication information
- Remote access to your desktop then to your crypto account
- Cryptocurrency private keys to access your wallets
- Passwords and login information of your crypto wallets and accounts
- Crypto transactions
Like in any other money-related field, the crypto world is a haven for extortionist gangs who can do anything to steal your hard-earned digital assets. Mainly such groups capitalize on scare tactics to get you to comply with their orders. For example, an extortionist group threatening you to wire in a named amount of money to a specific account or risk having your details going viral over the net.
In general, they will threaten to blackmail you in one way or another to get an easy pass to your digital currency coffers.
Social Media Scams
They’re one of the most common cryptocurrency scams circulating the digital currency space. You’ll often come across social media posts promising hefty returns or giveaways upon paying a small token or amount of cryptocurrency.
Primarily, you’ll then be directed to a specific malicious website to fulfil your end of the bargain if you choose to click on provided links or follow the given directions. Here the fraudsters would then harvest your crypto details they would use later on to break into your account. So a gift, in this case, is just but a bait to lure you into their trap.
Phony crypto apps
Dishonest developers are at their best in developing thieving apps in the current digital craze. Most of these “crypto applications” will promise you mega profits out of nothing. Or negligible crypto investments as long as you download them and follow the provided instructions.
Therefore, they will, in most cases, leech your crypto details and transfer them to malicious actors, who then use their trade tools to steal from you.
They comprise another of the most well-known cryptocurrency scams. These crypto phishing scams have hit the rooftop since the work-from-home period when COVID-19 forced a global lockdown.
Nowadays, it won’t surprise anyone if you get a baby bump on your mail, wanting you to click on a particular link for a specific action. For instance, contribute to a particular gut-wrenching charity course, win yourself an enviable gift price, or a heavenly trip to some exotic place; the list is endless.
Sadly, a click on such links redirects you to a malicious website that collects your cryptocurrency details, for example, your crypto wallet’s private key or other sensitive data.
Similarly, the link to the malicious website would as well connect you to con artists impersonating representatives from well-known crypto exchange platforms. Who then plays around with your mind to obtain crucial personal crypto details.
They’re also part of the primary targeting methods used by crypto scammers to access crucial leads from innocent crypto investors or holders ― as said above.
They often involve crypto hackers cloning legitimate websites to lure the public into releasing their important crypto details.
Just like in the movies, romance scams take an interesting angle ― a case of people searching for love in the wrong places.
Romance scams and dating apps are the main conspirators behind these fraudulent activities as they connect “innocent love searchers” and scammers.
As it is the norm, a fraudster posing as a true lover would take their sweet time to convince ― or “fatten” in this case ― the target on the other end about their undying love. And in between, introduce ideas concerning crypto investments. Thus, urge them to join the party by sending in a particular amount of crypto.
However, things often go south once the innocent partner does as instructed. In short, the usually long-distance relationship is terminated, leaving the victim high and dry.
Man in the middle attacks
Through cyber-criminal activity, Man-in-the-middle-attacks have also taken centre stage in the crypto world.
They usually involve hackers intercepting private crypto wallet details such as account information, wallet keys, and passwords, especially if a person is using public Wi-Fi or even a trusted one, if the hacker is nearby or in the vicinity.
Fake cryptocurrency exchanges
This type of crypto crime takes advantage of the increasing number of cryptocurrency exchange platforms.
Typically you’ll be promised out of the normal cryptocurrency exchanges upon depositing a particular sum of money if you come across such fraudulent sites.
Your hard-earned crypto investment would then disappear into thin air upon making your deposit.
Real and fake celebrity endorsements
As the crypto market is getting older by the day, so is the advancement of crypto tricks. As of now, crypto scammers have upped their game to outsmart their would-be victims. For instance, they’re now capitalizing on the masses’ gullibility towards freebies.
In this case, they’re now impersonating celebrities using fake accounts and asking “fans” to send them a particular amount of crypto in exchange for bigger giveaways or endorsements.
They then use the exchange information to hack into their victim’s accounts.
Employment offers and fraudulent employees
Last on our list are crypto scams related to employment offers. They involve targeted messages that promise employment opportunities to potential job seekers. However, the catch is that the targets pay a certain amount of Bitcoin for “job training.”
After which, the supposed employers go missing in action. The same actions can be done by fraudulent employees wanting ill-gotten money from naïve job seekers.
How to prevent crypto scams in 2022
Now that we have insight regarding some of the common crypto scams that can hit us as potential or budding crypto investors. It’s time to delve into some of the measures we can implement to prevent them from occurring.
Use of a VPN
Firstly is the use of a virtual private network (VPN). This software changes your communication into an unreadable form (encryption) before allowing it over the network. Doing so prevents hackers from getting hold of your crucial crypto info. In this case, your crypto wallet’s private key details, account information, and cryptocurrency exchange information. Better still, it prevents your internet service provider or any interested third party from snooping into your over-the-net communication.
Using it at all times during your crypto transactions is a sure way to keep man-in-the-middle attacks and some small-time cyber criminals and hackers at bay.
Employ strong passwords
Just like in your standard bank account, it’s prudent for you to implement strong passwords on your crypto wallet and other digital currency assets. Doing so makes it challenging for the cybercriminal to access your digital assets.
As a rule of thumb, avoid, at all costs, using your year of birth as the password or any other easy-to-guess details. On the contrary, generate a complex password containing symbols, numbers, and a mix of letters (both lower and upper case); for example, Gardoon-Deep-15-Coffee-Doves.
Use of hardware wallets
With the current technological advancement, your crypto wallets aren’t safe even with strong passwords or other included whistles and bells. So a safer pair of hands in such a scenario is the hardware wallet. The reason is that it stores your digital assets offline, on a hard drive keeping hackers at arm’s length.
This way, you can only lose your investment by misplacing your hardware wallet or theft from someone close to you―a person who has your hardware wallet access details.
Keep your crypto information private
As said above, you can lose your crypto investment even to someone close to you. So, never give anyone your access codes, passwords, or wallet keys. That is, your friends, colleagues, or even particular family members, as well as individuals requesting your crypto details over the phone or email.
However, on a lighter note, you can share the details with someone you trust as you never know; things might go haywire, and you need their help withdrawing your funds. This could be your better half, parents, child, or someone very close. Just ensure they know how to keep a secret.
Avoid suspicious links
And by all means, suspicious links are things to avoid, like plague when it comes to crypto matters. A click here and there leading to the access of your crypto wallet by cybercriminals could spell doom for your crypto investment dreams. This is so as there isn’t a reversal of your funds once they have been hacked into.
Therefore, keenly look through every crypto-associated link sent your way either through mail or on social media to identify any red flags before clicking on them. And even after clicking through, never share your crypto details.
Check out for crypto websites reviews before doing business
Like in any other typical online transaction, it is super important to verify your sources. A sweep through reputable review sites such as glass door and TrustPilot, among others that can help you get an idea of which crypto site to trust with your transactions.
Taking this step can relieve you of the hassle of second-guessing your transactions or even a heart attack when this goes south.
Be keen on social media
As a piece of mouth for almost everything that goes about―good and bad, thus, it’s crucial not to follow every crypto lead or advice from any Tom, Dick, and Harry.
Hackers tend to waylay their victims by posting malicious links disguised as genuine or hard-to-resist offers and giveaways.
So take care lest you lose your hard-earned crypto investment.
Do not use blockchain address verification
It doesn’t matter how much a deal is too good; giving your crypto information over the net is a no go zone, as said before.
Simply put, hackers would use your given details to reverse engineer their way into your crypto stores. Or use your provided information right off the gate to access your account.
Check a website’s domain before doing anything
You also need to check a website’s URL to weed out the chaff from them before using it for any crypto transaction.
A good sign for a go-to site is one that is secured; for instance, one that starts with HTTPS. Avoid the unsecured ones that do not include an s at the end. For example, those that begin with an HTTP.
You’ll often stay on the right path by following this simple rule
Don’t reply to extortionist emails
Finally, you mustn’t respond to extortionist or sextortionist mails to stay safe. Most are scare tactics meant to blackmail you into action, for example, sending the perpetrators their mentioned amounts.
So keep your cool upon receiving such emails. Simply mark the messages as spam and delete them. Then change your email passwords and finally scan your device for any malware.
In a wrap, those are some of the common crypto scams you should be aware of in 2022, plus the measures you can take to avoid becoming a victim. So it’s your responsibility to implement them and stay safe in the crypto market since fraudsters have decided to muscle in also to get a piece of the cake― even though they are wrong.
Not to forget, you should also keep your guard against other emerging threats and those we have not mentioned here.
Now since you are familiar with the most common scams out there, make sure to check our Security tips guide.
*All said and done; we can say that this is not financial advice, content is only for educational / fun purposes.
Zornitsa is the Editor-in-chief at Coinlabz. She is involved in researching the impact of blockchain technology and the way crypto is transforming peoples’ perceptions of finances.