Online Scams has been around since the world wide web started, and a few years ago it looks like scammers has found another industry to make money off– the cryptocurrency space. The cryptocurrency space is infested with scams due to it’s pseudo anonymous nature, allowing scammers to get away with huge heists with little to no trace.
The best way to not get caught up by these scams is simply to educate yourself and be extremely cautious in everything you click online. Here are some of the common scams that are being used in the cryptocurrency space.
Phishing sites are scam sites that are masquerading as certain legitimate websites like social media sites, online banking sites, exchange sites, wallet sites, etc. Most of these phishing sites even looks exactly like the website they’re pretending to be.
So how do they work? Phishing sites mostly appear on Google or other search engine’s ads. You do a Google search on “Binance“, and so if you don’t use an ad blocker, then the Google top result would most likely be an advertisement.
It clearly says “www.binance.com/“, the legitimate URL, on the advertised link, but when you actually click the link and look at your browser’s address bar, there’s a good chance that the site is going to be something like “binancel.com“, binancesite.co“, something along those lines that isn’t the legitimate “binance.com“.
Some scammers are even so tricky, as they use domains like “biṇaṇce.com“.
You might haven’t noticed, but it’s actually a ‘ṇ‘, a latin character(a ‘n’ with a dot below it). Always keep your eyes peeled. Take note that this doesn’t only occur on exchanges. These scams exist for Facebook, Coinbase, MyEtherWallet, etc. Also, these scams doesn’t only exist on search engine ads. They could also be spread through emails. Scammers may email you something along the lines of: “Your account has been locked due to suspicious activity. Click on the link below to unlock your account“; and the link they’ve listed would actually be a phishing link.
Common signs of a phishing site:
- The site contains a different URL – no matter how similar the URL is to the website you’re planning on using, if it’s not the exact URL then it’s most likely a phishing site. (e.g. colnbase.com instead of coinbase.com).
- The site doesn’t have a secure badge.
- The site’s layout and overall appearance looks strange/weird; as some phishing sites are unable to copy exactly the original website’s look.
Common sites being used as phishing sites:
- Any other exchange
- Online banking sites
Tips to not get phished:
- always do a double or triple check on your browser’s address bar and confirm if you’re actually on the legitimate website.
- install an ad blocker on your browser, or use Brave browser instead.
- don’t do a Google search on the website. Instead, type the URL manually and accurately on your browser’s address bar; or better, save the correct URL as a bookmark.
Twitter Giveaway Scams
This should be a very obvious scam, but we’d just included this anyway due to people still falling for this scam for some reason.
This type of scam is pretty straightforward. The scammer would make a fake a Twitter account masquerading as a famous cryptocurrency or any technological personality, then the scammer would then reply on the legitimate person’s tweet, saying something along the lines of:
“I am donating 250 ETH! First 250 transactions with 0.2 ETH sent to the address below will receive 1 ETH in the address the 0.2 ETH came from.”
Don’t be delusional. No one would give out good amounts of money to strangers online.
Investment scams/Ponzi schemes
Investment scams has existed pretty much since forever. They ask you to deposit a certain amount of money(or crypto, in this case), and promise a amount in return every week, month, or year. Today, most of these scams mostly pretend to be “trading bots“, “cloud mining” sites, “bitcoin investment” sites, etc.
Yes, some people do make money off these sites, by using the site’s referral program. If you invite another person into the program and get the person to deposit money, you get a small percentage off the deposit. These scam sites mostly use referral programs to get people to spread these scams online for them; sometimes even to the point of YouTubers spreading them, causing a huge number of people to fall for these scams.
If you wanted to invest in the cryptocurrency market, buy the coins/tokens using reputable exchanges and hold them on your own secure wallet.
Some famous ponzi scams in the past:
Pump and dump schemes
Pump and dumps are pretty easy to spot, as pump and dump group leaders usually advertise them as “pump groups” or “trading signal groups“.
The scheme is pretty straightforward: The leader asks his members to buy a certain coin/token that is quite low in marketcap to make the price far easier to manipulate, claiming that it will raise or “pump” in price. Well the thing is, before the leader actually announces the coin/token, the leader already loaded up his bags with that certain coin/token, so the leader can sell them in a significantly higher price. The prices then do increase because of the group members buying loads of the specific coin/token, while the leader is selling at higher prices. Earning the leader significant amounts of profit.
How do you not fall into these schemes? Easy. Simply don’t join these groups, and invest wisely.
Initial Coin Offerings or ICOs is quite similar to crowdfunding whereas the company/team accepts BTC/ETH from the people in exchange for a certain amount of their coins/tokens, depending on how much you sent them.
ICOs aren’t really scams as some are definitely legitimate, but a good percentage of ICOs are indeed scams. The thing is, some well-made ICO scams are quite hard to detect as a scammer could create a legitimate well-thought project and simply just not deliver and run away with the money. Though there are some scam ICO characteristics that could be enough proof for you to stay away from certain ICOs.
For more information about ICO scams, refer to this guide: Detecting Scam ICOs
Exchange/gambling site deposit scams
This scam usually takes place by someone asking you to use a certain gambling site, and them saying that they gave you some free bitcoin to start playing/gambling with. You then play and gamble the money away, mostly with you getting huge win-streaks and you ending up with significant amounts of winnings. So what would you do after playing? Attempt to withdraw the funds of course.
But wait, there’s more! The website then asks you to deposit a certain amount of bitcoin(usually only around 0.1 BTC, to not make the scam too obvious), claiming that deposit to be for the “withdrawal fee”. If you made the deposit, then boom. Free 0.01 BTC for the scammer.
This scam usually is being attempted via private messages on forums and such, to prevent the more knowledgeable people from exposing the scam.
You can avoid this scam by simply not entertaining such offers on private messages or emails.