Cryptocurrency Scams That Drain Millions Of Dollars
Are you planning to start trading in cryptocurrency? Wait, before you start investing in digital currency, it's important to educate yourself on every part of the crypto market. And cryptocurrency scams are a dirty aspect of this market. So many investors have become the victims of these scams, losing investments worth millions.
Though there are a bunch of such scams, let's focus on the most active ones.
Here in this article, we have given the top three cryptocurrency scams and some tips to identify them.
#1 Bitcoin Ponzi Scheme
The Bitcoin Ponzi scheme is an investment fraud that has been active for a while. This scam is based on fake promises to investors. Scammers convince the traders that their investments are highly profitable and include minimum to no risk. And in the hope of earning high profits, traders get trapped and lose their money.
How a Ponzi scheme works is very complex. Let's make you understand it's working in the easiest possible way- it’s like a steam engine. The engine is the scheme, and coal is the investors, just like the steam engine runs as long as the stoker is fueling it with coal. Similarly, this scheme runs as long as new traders are investing in it.
But if this scam runs on the money of new investors, what about the old traders? To maintain their old investors, scammers regulate the money of new shareholders among them. It makes people think that they are gaining money. But indeed they are not, because the ones increasing profits are only the fraudsters. This fake feeling of earning motivates old traders to bring more investors to the cryptocurrency Ponzi scheme. And thus, scammers keep on earning.
How To Recognize This Scheme?
Following are the few important signs that reflect the existence of this cryptocurrency scheme:
- If you find a scheme that allows you to earn more profits for no risk, it's a bitcoin Ponzi scheme.
- Another sign of this scam is consistent returns. There's no way to earn consistent profits as the crypto market is continuously changing.
- Securities and Exchange Commission is the best way to find if a scheme is worth trusting. If any crypto scheme is not registered with this agency, it's a scam.
#2 Old School Scams
If someone emails or calls you and says,- we are from the IRS, and you have due taxes that need to be paid immediately, would you send them the money? This type of fraud is known as Old School Scams. There are so many people who have become and are becoming the victims of this fraud. And it's not surprising because the way they talk to you on-call or the type of message they send you can convince anyone to pay them. But with the growth of the crypto market, this old school scam has also become advanced.
Scammers these days don't ask for money. Instead, they try to convince you to exchange cryptocurrency. So next time when someone tries to convince their identity as a government agency, don't reply. Instead, cut their call or ignore their message. No government employee will contact you directly, and obviously, they won't ask for your bitcoins or your crypto.
Malware has long been the best way for hackers to gain unauthorized access to- credit cards, bank accounts, and computer numbers. But recently, these hackers are using malware techniques to perform bitcoin scams. If your bitcoin wallet is connected to the internet, there are great chances that it might get hacked.
But how? You must have received emails like- "click on this like to gain free bitcoins" or such ads on your social media. By clicking this link, you will give direct access to your bitcoin wallets to hackers.
Help Tip - If you are not sure about such ads or emails’ legitimacy, you can directly contact the company. If you can't find the company’s contact information on their social media or website, they are a fraud. It's a red flag.
So these are a few popular cryptocurrency scams, along with some key points to identify them. We hope you find this blog useful, then do share this blog with all your investor friends. Help them trade safely in the crypto market.
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