How to recognise a crypto scam

Anyone can become the target of a cryptocurrency scam, regardless of whether or not they invest in virtual currencies. Here is how you can protect yourself

December 08, 2023 01:03 pm | Updated 03:23 pm IST

Many crypto scammers target amateur traders who may not understand the technology behind blockchains, or everyday internet users with zero crypto holdings [File]

Many crypto scammers target amateur traders who may not understand the technology behind blockchains, or everyday internet users with zero crypto holdings [File] | Photo Credit: REUTERS

Even if you do not invest in cryptocurrencies such as Bitcoin and Dogecoin, you can still be the victim of a crypto scam. These cyber criminals range from lone scammers in your locality to North Korean state-backed hackers. Many crypto scammers target amateur traders who may not understand the technology behind blockchains, or even everyday internet users with zero crypto holdings.

In order to safeguard yourself and your finances, you do not need to be a blockchain prodigy or a cybersecurity expert. Instead, learning to recognise a few red flags and common criminal patterns can prevent you from losing your life savings.

Remember that a crypto scam can reach you through the digital channels you use everyday, such as WhatsApp or Signal (messaging apps), Facebook or X (social media apps), and even Tinder or Bumble (dating apps).

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Tactic 1: Prize giveaways

A stranger sends you a message on a social media channel, claiming that you have won money and that you should click a link in order to claim your prize. The sender may then ask you to pay a tiny sum, provide your bank details, create a digital wallet, share an OTP, or invest in a token in order to receive huge returns. Never accept such offers and do not click on any provided links. Do not accept “airdropped” gifts or tokens either, even if the risk is minimal.

Tactic 2: Romance scams

When you match with a romantic partner online, keep it polite and casual. Beware if a new date probes you about your finances or pushes you to invest in specific assets. A romance scammer may sweetly encourage you to buy coins/tokens they support, or might promise to share their earnings with you. They may also refuse to meet you in person for a number of reasons. Cease all communication at once, report the profile to law enforcement, and do not send any more money or information to the individual.

Some romance scammers are actually victims of human trafficking who are being forced by their enslavers to cheat people across the world, so it is key to report such incidents.

Tactic 3: Online advertisements

Scam crypto campaigns might reach you via online advertisements or paid articles placed in established news websites and social media platforms like X (formerly Twitter). You should instantly be suspicious of any trending cryptocurrency project that does not reveal information about its founders, such as pictures, professional qualifications, the base of operations, regulatory licenses, or social media channels. The website of a scam cryptocurrency project may have spelling errors and grammatical mistakes, while any pictures of the team leaders may look AI generated and lack contact information. Even if the crypto project is backed by a celebrity, it may not be legitimate.

Tactic 4: Highly similar branding

A scam cryptocurrency coin or asset may try to copy the name and ticker of a more famous cryptocurrency, such as Dogecoìn [D0GE] instead of the genuine Dogecoin [DOGE]. Such campaigns will invite you to invest in these assets, perhaps promising looser KYC (Know-Your-Client) requirements and more benefits. Never conduct crypto trades via non-regulated crypto exchanges or decentralised lending platforms if you are not already an experienced trader.

If you wish to invest in crypto but lack technical knowledge about blockchains, speak first with a financial advisor or your banker.

Tactic 5: Offers of help

When you complain on social media about a company’s poor service, a locked account, an undelivered food order, trouble with your bank, or computer issues, you will soon see a number of bot-like accounts with generic profile pictures offering to help you out. They may ask you to privately message them for assistance, or recommend that you reach out to a supposed “expert” who will solve your issue. Accepting this offer will likely put your finances and data security at risk. When facing issues with a company, reach out to their official representatives directly and never accept assistance from middlemen. Try to keep such interactions private, when possible.

How to keep yourself safe from a crypto scammer:
Never accept online giveaways, crypto “airdrops,” social media prize offers, crypto gifts, free NFTs, or investment deals which are too good to be true
Report dating app profiles if their users encourage you to invest in specific virtual assets or send you payment links
Be aware that crypto scam projects can also grab advertisement space via reputable news websites or social media platforms
Do not invest in crypto assets unless you are well-versed with the technology or have your banker’s guidance
Check crypto investment websites to make sure there are no spelling/grammatical errors, and look for verifiable information or contact details
If you have customer service issues with a company, try to resolve the issue privately and through official channels only
Do not share your bank account/Aadhaar/PAN/passport/debit card/credit card details in exchange for cash or crypto
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