These schemes often begin on social media or online dating sites, so be wary of anyone contacting you out of the blue about your crypto assets. To spot an investment scheme, look for promises of excessive profits or zero risks. “Given the speed at which new coins are created and marketed to investors on the internet without regulation, some investors looking to earn a quick profit are drawn in by reports of triple-digit percentage gains in a digital asset over a short period of time and want to jump on the bandwagon,” he says. But a little bit of momentum can drive it up the charts on sites like to make it look like the sky’s the limit on price appreciation,” Cummings says. “Typically, the new token is worth a few cents, or even fractions of a cent. When you buy, the price rises, at which point the scammer dumps their holdings at the new higher valuation, which causes the price to collapse, leaving you and any other victims underwater. A fraudster entices you to buy an obscure crypto at a “low price,” with promises that the asset’s value will soon go through the roof. Investment scams include pump-and-dump schemes. If you follow through with their request, kiss goodbye to your crypto. Whatever role is assumed, they promise to grow your investment if you transfer your cryptocurrency to them. Scammers can play many parts, such as an “investment manager,” a celebrity or even a love interest on an online dating site. Investment scams involve a bad actor enticing people to send their cryptocurrency to the fraudster with promises of “huge gains.” Here are a few of the most common examples. Types of Crypto ScamsĬrypto scams can take many forms. “As an instrument, crypto scams are particularly appealing to nefarious agents who enjoy cryptocurrency’s swift conversion to fiat money, ready-to-use third-party transaction applications and rich obfuscation techniques,” says Chengqi “John” Guo, professor of computing information systems and business analytics at James Madison University. The goal is always to manipulate victims into divulging personal data or transferring valuable digital assets like non-fungible tokens ( NFTs) to the perpetrator’s account. This latter type of scam could involve breaking into a person’s crypto wallet or getting an investor to send a digital asset as a form of payment for a fraudulent transaction, says Shane Cummings, wealth advisor and director of technology and cybersecurity for Halbert Hargrove. What Are Crypto Scams?Ĭrypto scams are like any other financial scam, except the scammers are after your crypto assets rather than your cash.Ĭrypto scammers use many of the same tactics employed in other financial crimes, such as pump-and-dump scams that lure investors to purchase an asset with fake claims about its value or outright attempts to steal digital assets. To avoid schemes that prey upon crypto enthusiasts, here’s a guide to common crypto scams. “Retail investors considering crypto investments need to understand the elevated risks and should employ heightened safeguards to help ensure they do not become the next victim,” Cohn says. And that might be just the tip of the iceberg-there are likely more victims out there who didn’t report their incidents.Īaron Cohn, partner at Weinberg Wheeler Hudgins Gunn & Dial, a law firm focused on financial fraud, says his practice has seen a strong increase in victims seeking help with hacked crypto accounts. The FTC also found that more than 46,000 consumers reported losing more than $1 billion in crypto between Jan. But that’s just one type of scam of many. In fact, crypto romance scammers conned victims out of $139 million last year, according to a 2022 report by the Federal Trade Commission (FTC). Headlines like “Crypto and Romance Scams Continue to Cost Victims Billions” and “A Romance Scammer Took Her Life Savings in Crypto” are becoming commonplace. They even go as far as entering into fake relationships through dating apps like Tinder. Swindlers exploit various schemes to lure victims into fraudulent crypto investments. Scam artists know no bounds-that also applies to stealing your cryptocurrency.
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