Cryptocurrency Scams: Why People Get Conned And How to Avoid Scammers

As the popularity — and price — of bitcoin, dogecoin and ethereum continue to rise, so too does the online scams associated with those digital currencies. 

It’s becoming a daily occurrence to hear so and so has lost his lifesaving through online scammers.

Banks have been issuing warnings about fraudulent cryptocurrency trading, and are unlikely to refund any of his losses.

 According to the Federal Trade Commission, since October 2020, almost 7,000 people have reported losses totaling more than $80 million in the U.S. alone.

In Kenya where virtual money is still something very new, a lot of early adopters have also ended up losing their hard-earned cash in the process of investing as scammers continue to wreak havoc.

So how do people get conned so easily online yet they clearly understand that the internet is full of predators and no one there should be trusted.

One very common reason why a lot of people get scammed is be of lack of knowledge. Many just jump into the business ready to rake in the high returns and never bother to learn what cryptocurrency is and other related terms.

When you’re looking into digital cryptocurrency companies and startups, experts recommend that you confirm that they’re blockchain-powered, which means they track detailed transaction data. 

Also, check that they have solid business plans that solve real problems. Companies should specify their digital currency liquidity and ICO rules. There should be real people behind the company. If the startup you’re investigating lacks some of these characteristics, think through your decision even more carefully.

Here’s How you can Avoid Cryptocurrency Scams

Scammers are always finding new ways to steal your money using cryptocurrency.

One sure sign of a scam is anyone who says you have to pay by cryptocurrency. In fact, anyone who tells you to pay by wire transfer, gift card, or cryptocurrency is a scammer.

Of course, if you pay, there’s almost no way to get that money back.

Investment and business opportunity scams

• Some companies promise that you can earn lots of money in a short time and achieve financial freedom.
• Some scammers tell you to pay in cryptocurrency for the right to recruit others into a program. If you do, they say, you’ll get recruitment rewards paid in cryptocurrency. The more cryptocurrency you pay, the more money they promise you’ll make. But these are all fake promises, and false guarantees.
• Some scammers start with unsolicited offers from supposed “investment managers.” These scammers say they can help you grow your money if you give them the cryptocurrency you’ve bought. But once you log in to the “investment account” they opened, you’ll find that you can’t withdraw your money unless you pay fees.
• Some scammers send unsolicited job offers to help recruit cryptocurrency investors, sell cryptocurrency, mine cryptocurrency, or help with converting cash to bitcoin.
• Some scammers list scam jobs on job websites. They’ll promise you a job (for a fee), but end up taking your money or personal information.

Look for claims like these to help you spot the companies and people to avoid:

• Scammers guarantee that you’ll make money. If they promise you’ll make a profit, that’s a scam. Even if there’s a celebrity endorsement or testimonials. (Those are easily faked.)
• Scammers promise big payouts with guaranteed returns. Nobody can guarantee a set return, say, double your money. Much less in a short time.
• Scammers promise free money. They’ll promise it in cash or cryptocurrency, but free money promises are always fake.
• Scammers make big claims without details or explanations. Smart business people want to understand how their investment works, and where their money is going. And good investment advisors want to share that information.

Before you invest, check it out. Research online for the name of the company and the cryptocurrency name, plus words like “review,” “scam,” or “complaint.” See what others are saying. And read more about other common investment scams.

Blackmail emails

Scammers will often send emails that say they have embarrassing or compromising photos, videos, or personal information about you. Then, they threaten to make it public unless you pay them in cryptocurrency. Don’t do it. This is blackmail and a criminal extortion attempt. Report it to the FBI immediately.

Social media scams

If you read a tweet, text, email, or get a message on social media that tells you to send cryptocurrency, it’s a scam. That’s true even if the message came from someone you know, or was posted by a celebrity you follow. Their social media accounts might have been hacked.