This topic is all the rave in the financial frontier and cybernetics. Is it the technology of the future, or is it just a fad that will die out in a matter of months?! Time will tell, but so far many people have amassed and lost huge wealth due to this financial instrument. Like with all the rising trends, scammers have found a way to abuse the turbulent market of cryptocurrency.
What is Cryptocurrency?
Well, to put it simply, it’s a currency like any other. Nevertheless, there are a couple of features that make it stand apart from let’s say Yen or Euro. Firstly, cryptocurrencies don’t have a physical form and it only exists in electronic funds and wallets. They don’t have corresponding paper notes or coins and aren’t tied to any commodity. Owners may exchange it for other physical currencies, though.
Secondly, in order to secure its electronic value and avoid any type of tampering, cryptocurrencies are guarded by a complex system of codes and inscriptions. Hence the crypto in the name, as cryptography is the science of codes. This feature makes cryptocurrencies extremely safe and this is the reason why they have the potential to become the financial instrument of the future.
Nevertheless, their electronic safety is not why people are so caught up in them. The value of a specific cryptocurrency fluctuates depending on supply, demand, and competition. To top it off there are still no firm regulations and legal bodies that govern it. This combination makes its value highly volatile, meaning there’s an opportunity to earn big bucks overnight. The downside is that conversely, people can also lose huge amounts of money.
What are Cryptocurrency Scams?
With the boom of cryptocurrency investors, scammers have recognized the opportunity for cons in this new frontier of finances. Unfortunately, many aspects of crypto trading go in their favor. Primarily, they try to abuse the lack of regulating bodies, abrupt and steep changes in the value fluctuation, and the fact that people are opportunistically engaging in get-rich-quick schemes.
Con artists and fraudulent companies will use social media and official platforms to promote themselves. They boast of being genuine experts in the new exciting field of cryptocurrency, and they promise a high return on your cash. In certain cases, they will try to make their targets invest in shady or non-existing electronic money. Famous large-scale scams were OneCoin and Bitconnect whose organizers disappeared with billions of dollars, making their victims lose their full investments.
In other situations, fraudsters will mislead people into selling their cryptocurrency for a considerably lower price than it is actually worth. It is not unheard of that scammers have manipulated the data to deceive their targets. What’s more, the perpetrators might use electronic channels of interaction with clients to extract private information and later commit identity theft.
Common types of Cryptocurrency Scams
Crypto trading has been deservingly called the wild west of financial trading. With such a brave new world, there are more than enough people who will deceitfully try to take advantage of it. Many fraudulent parties have already tested their tactics of extorting money from victims. To ensure you avoid potential financial injury we present you with a list of the most common scams regarding cryptocurrency opportunities.
The Pump & Dump
This colloquialism refers to a practice of falsely inflating the value of cryptocurrency in order to sell it for a much larger price than it’s actually worth. Commonly, a con persons will try to acquire large bulks of cheap crypto money. Once they do so, their plan is to sell it for disproportionally more. They entice their targets with the unique opportunity to invest in up-and-coming crypto money. Ultimately, the unsuspecting victim is left with unprofitable crypto assets, while the fraudster has vanished into thin air.
Fake Investment Syndicates
We live in an era with a constant promise of revolutionary new technology just around the corner. Bitcoin has made tectonic shifts in the world of finances, so it stands to reason that there could be a new exciting opportunity for monetary gain. This is the main hook for various fraudulent investment syndicates.
Many fake investment institutions and parties are trying to lure their victims with false promises of a chance to earn obscene amounts of money overnight. Almost always they advertise as experienced professionals with specific knowledge and skills. They use social media and financial platforms to prey on people. These are some of the reasons why it’s difficult to discern an actual investment syndicate from a false one.
The modus operandi of all these scammers is to earn your trust by falsely claiming they are professionals with unique insight into crypto trading. Their victims might even get the illusion that they are earning revenue, but that is just a calculated step to make people invest further. Once the scam reaches its full scope, the scammers disappear with the money leaving their targets’ funds depleted.
Fake Exchanges
The name of the game is the cryptocurrency exchange. Nevertheless, due to an almost complete lack of regulation, fraudulent parties can exploit the market to scam people. It is very difficult to differentiate between a legitimate trading opportunity and a money-stealing trap. This is particularly the case for the newcomers but unfortunately experienced traders have fallen victim to scammers as well.
Examples of illegitimate exchanges may involve fake currencies. Further dishonest practices include data manipulation so the target gets a false image of the market situation. Lastly, scammers might siphon people’s money through monthly fees and exorbitant exchange rates.
Fake Wallet
All the scams on our list can be viewed as tested techniques which are reappropriated for the novel market of crypto trading. However, the fake wallet scam is tailor-made for this financial sphere.
Cryptocurrency is electronic money and thus it has to be stored in cyberspace. The special function which holds crypto funds is deservingly named a digital wallet or e-wallet. It can come in the form of an internet address, online service, software, or electronic device. This exciting new technology can be quite useful for many people, scammers included.
There are several ways how a con artist might use an e-wallet. They can lure potential victims to keep their cryptocurrency in their digital wallet. More often than not, they are offering phony services, or they are deceiving people into non-existing investments. Once the e-wallet is appropriately full they disappear with funds.
Ponzi and Pyramid Schemes
If there is an exciting new opportunity for investments, you can expect Ponzi and pyramid schemes to creep in. This goes for crypto trading as well. Sadly it’s not always obvious whether the investment company is a scheme or a legitimate business entity. Still, there are several warning signals to keep an eye for. One of the signals would be unrealistically favorable interest rates. If the company is offering strikingly different interest rates than that of the market value, you can expect a quick collapse.
The second red flag you can easily check is the availability of information regarding the trading company. If you’re having difficulties digging up any data on your potential investment opportunity, that’s a warning sign.
People fall victim to these types of schemes all the time. To educate yourself further on the matter we invite you to check our page dedicated to Ponzi and Pyramid schemes.
Telegram messaging
Telegram app has become a preferred line of communication for many business people, entrepreneurs, and cryptocurrency trades. It became so popular owing to its privacy feature and safety. Nowadays there are various Telegram groups that offer community and information exchange for people who are willing to get informed or practice crypto-trading.
These Telegram groups can end up being hunting grounds for scammers. They may initiate a conversation often falsely presenting as group administrators. These fraudsters practice patience. They won’t be direct, but rather they take their time and gradually gain the victim’s trust. They might even offer helpful tips and be generally friendly. Eventually, they will make their move to extort your cryptocurrency and funds.
Con artists are not the only thing you should be careful about. With so many bots and spam messaging on this app, there is abundant opportunity for information extraction, phishing, and aggressive marketing. The best advice is never to click on suspicious links.
What to Do in Case of a Cryptocurrency Scam?
There are several warning signals that your crypto expert might be scamming you. Are they withholding your funds? Are they having problems with paying back your earnings efficiently on your demand? Do they present you with a now-or-never window of opportunity to make obscene amounts of money? If the answer to this question is yes, you are probably entangled in a fraudulent operation.
There is no need to panic. First of all, the best you can do is to contact professionals who deal with scam cases. We at Funds Recovery offer a specific package of services that will help you recognize and evaluate the damage of fraudulent activities. If you have suffered a financial injury, our team will make the best appropriate plan that will enable you to return your funds.
Take matters into your hands and bring back your stolen funds. Contact us for a free consultation now.