Cryptocurrencies such as Bitcoin, Ethereum, Solana, and thousands more are like hot dogs when it comes to online trading, and if an investor is smart, they will make a big profit. But sometimes, the stories of quick riches can make the smartest investor blind and defenseless for the scammers to lure them into scams.
Bitcoin is virtual money; no government or central bank backs bitcoin. Yet it is useful to buy goods and services, or you can exchange them for U.S. dollars or any other currency available on the digital markets; you can withdraw coins at specialized ATMs.
It is not anything like government-backed money. The value of all cryptocurrencies is driven by supply and demand. Thus it can create enormous flukes, and investors use it to make big gains or big losses. In addition, Crypto investments have lesser regulatory protection than traditional financial products like bonds, mutual funds, and stocks.
The Bitcoin Scams are a light year ahead of what we think. The Federal Trade Commission (FTC) received an approx. Of 6,800 complaints of cryptocurrency investment scams from October 2020 to March 2021, it was 570 the six months before the October to March report. The losses have crossed more than tenfold to approximately $ 80 million.
Phony sites are decorated with fake testimonials and studded with crypto candy words promising substantial investment returns. “Celebrity” certifications. Actors or Con artists posing online as billionaires or using influential names promising double your Bitcoin investment but take away and run what you have.
Bitcoin scammers use social media and messaging apps. Sometimes crypto promoter’s plant rumors that a powerful human is backing a particular asset. Investors are hence lured into buying more and driving up the price. The scammers sell once the prices are sky high and the value tumbles down.
Fraudsters peddling bitcoin create the delusion of big returns. They pay off old investors with new investors’ money. BitConnect is one such operation, where the Feds are going after criminal and civil cases. It was able to raise an approx. Of $2 billion before shutting down.
Scammers go after people they meet via different dating apps or social media to invest or trade in virtual currencies. The FBI’s Internet Crime Complaint Center (IC3) filed more than 1,800 reports of crypto-based romance scams in just seven months of 2021. The losses added up to $133 million.
Many Bitcoin scammers pose as legitimate crypto traders or set up fake exchanges to lure victims into giving them money. One more fraudulent sales pitch targets the “IRS approved” individual retirement accounts in cryptocurrencies. Then there are the legit hackers, directly breaking into your “digital wallets” where victims store their virtual currency.
And Bitcoin is sneaking into everyday imposter scams, with scammers pretending to be lottery officials or government officers demanding payment in cryptocurrency. The reason is primarily bills or prize fees, debts, and even directing the victim to crypto ATMs and forcing them into doing the transaction.
Do understand the risk.
Let’s say you are not being scammed, and the virtual currency trade is always volatile and speculative. The FTC comments that an investment might be worth thousands of dollars on Monday morning but can turn into hundreds by a Tuesday night.
Do resist pressure to buy right now.
Scammers create a false pretext, a sense of urgency, and a buzz around a supposedly red-hot cryptocurrency.
Do check out
Always check the dealer in virtual currency options or futures contracts before buying. The CFTC (U.S. Commodity Futures Trading Commission) has tools and will help you run an online background check.
Do thoroughly research
Research is essential for any digital wallet provider or virtual currency platform before you start handing out your credit card details, disclosing sensitive personal data, or wiring money.
Do carefully reading
Before agreeing to a digital wallet provider, read because they might not take responsibility for your stolen money. It is very different from banks, and credit cards, says the Consumer Financial Protection Bureau warns.
Don’t put money
If you don’t understand the mechanics of Cryptocurrency, do not invest.
Do not play with money in cryptocurrency if you can’t afford to lose.
Don’t invest in
Never invest or trade with cryptocurrencies on someone’s advice or someone you met online, even if it’s an anonymous tip over social media or a suggestion from a romantic partner.
Don’t make cryptocurrency payments.
Suppose someone is threatening you with unpaid bills or promises of a prize. Government agencies and legitimate businesses do not accept payments in crypto. Anyone who says they will do it is a scammer.
Don’t put money
If someone asks you for funds via an individual retirement account advertised as “IRS approved” or “IRA approved.” Major self-directed IRAs do not make investments in Virtual currencies but remember that the Internal Revenue Service does not review or approve IRA investments.
Don’t share your “private keys.”
Private keys are the long letter-and-number codes that help you open your virtual currency. Never share it with anyone and store them in a secure place.
Bitcoin has acquired a lot of recognition and influence in the investment world. Fraudulent users and hackers haven’t failed to spot development areas within this market either. As we’ve seen the records earlier, the bitcoin frauds are picking pace without a pause. Each old and worn out scam, once called out, gets transformed into a new deceptive scheme. Hence, it has become pivotal for each trader to attain sufficient market knowledge including the scam categories, red flags, and other behavioral patterns of a scammer. Executing a higher degree of vigilance and market understanding can help traders keep a safe distance from such Bitcoin frauds.