What are the types of crypto scams? All you need to know

What are the types of crypto scams? Everything you want to know

The growing interest in cryptocurrencies has increased over the years, but along with the positive aspects of new cryptocurrency trends, there are some risks that investors should be aware of.

Apart from the highly volatile nature of the cryptocurrency market that has been seen in recent years, there is a wave of scams related to this industry.

Due to the increasing number of scams reported in recent days, many of us may know the types of scams related to cryptocurrency.

Let’s take a look at some common types of cryptocurrency scams and how traders can avoid them:

Fake platforms or websites:

Crypto scammers often create fake cryptocurrency platforms or websites or even fake crypto wallets to attract investors. Fake platforms generally look similar to official ones but may have a different domain name or something that is difficult to decipher and distinguish.

These types of platforms require investors or users to enter their details such as passwords for cryptocurrency wallets and other relevant information and within minutes their possessions are taken away by the scammers.

Rug pulling tricks:

Investors who have been in the cryptocurrency market may have heard of this term. Scammers inject crypto, NFT, etc. to receive funding in these scams. However, after receiving funds, sites or coins in general disappear, and investors lose their deposits.

Many scammers often create fake accounts or pretend to be a celebrity to gain the trust of investors in a fake project. After trusting the backing of the project, the investors invest in increasing their holdings but end up losing their deposits to fraudsters.

Romance Tricks:

Romance scams are nothing new, and scammers are now targeting dating apps and social media sites to find victims. Scammers lure the other person into a relationship with them and often get details of their crypto wallets and additional financial information and take away all of their possessions.

According to a Federal Trade Commission report, about $139 million in romance scams were reported in 2021.

Giveaway tricks:

Like the phishing scams mentioned above, many scams on social media and other platforms are now very popular. The scammers claim to have hosted free events, where users are asked to provide their details about their wallets, etc.

Besides, some giveaway scams require investors to deposit some money or cryptocurrency to access the giveaway prize.

Ponzi schemes:

Another common type of scam, Ponzi schemes, are scams in which fraudsters pay existing traders returns received from new investors. Scammers often promise higher returns with lower or sometimes no risk to lure investors towards the project.

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According to a June report from the Federal Trade Commission (FTC), over 46,000 people have lost more than $1 billion in cryptocurrency-related scams since the beginning of last year. The report showed that about half of the scams reported were through ads, emails or social media posts.

Another report by Chainalysis showed that 2021 was a record year for crypto-related fraud, with more than $14 billion in fraud occurring in 2021 alone. It was about double the level the year before.

Risk Disclosure: Trading in cryptocurrency involves high risks including the risk of losing some or all of your investment amount, and may not be suitable for all investors. Cryptocurrency prices are highly volatile and may be affected by external factors such as financial, regulatory or political events. The laws that apply to encryption products (and how a particular encryption product is regulated) may change. Before deciding to trade in financial instruments or cryptocurrencies, you should be fully aware of the risks and costs associated with trading in the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice when needed. Kalkine Media cannot and does not represent or warrant that any of the information/data available here is accurate, reliable, current, complete or appropriate for your needs. Kalkine Media will not be liable for any loss or damage as a result of your trading or reliance on information shared on this website.

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