As you indulge in the new digital monetary industry known as cryptocurrency, it doesn’t take long to recognize there’s a huge risk involved in these transactions. And the risk here is not about the volatility of the market but the scams. These scams are everywhere online, and cryptocurrency exchanges are no different. As one reaches to different startups and coin trading platforms for investing, one should be aware of the possibilities of losing their digital investments to these scams.
If you’re looking for cryptocurrency trading platforms and exchanges in India, it is recommended to confirm that they’re blockchain-powered. Also, check that they have a solid backup plan that solves real problems. Exchanges should specify their digital currency liquidity and their approach to safeguard your account. If the exchange you’re investing lacks some of these characteristics, think about your decision even more carefully.
Here’s a look at the most common scams in the crypto market and ways to avoid them to become a victim while taking an exciting ride in the cryptocurrency universe.
Social Media Giveaway Scams
It’s amazing nowadays that you see one of your favorite crypto exchanges is doing a huge giveaway. It mentions that if you send them just 1 BTC/ETH or any other coin, they promise to send you back 10x of that amount! It seems to be exciting, isn’t it? Unfortunately, that’s because it is. That’s a pretty good rule number one that attracts you to apply to many of these scams.
Strangely, someone is hosting a legitimate giveaway that requires you to first send your cryptocurrency. It is advised that you should be wary of these kinds of messages on social media. These offers might come from accounts that might look identical to the ones you know but this is part of the strategy. As for the dozens of replies thanking those offers on said account for their generosity – they’re just fake accounts or paid bots deployed as part of the giveaway scam.
It is highly recommended that you should just ignore these. If you want to have these offers take a closer look at the profiles and you’ll see the differences. And even if reliable crypto trading platforms like PCEX Member ever announce a giveaway, it will never ask to send your coins first.
Fake Mobile Apps
There are many fake apps available for download through Google Play and the Apple App Store. However, it is another common way scammers trick cryptocurrency investors. Although stakeholders can often quickly identify these fake apps and get them removed, this doesn’t mean that such apps aren’t impacting all investors. Thousands of people have already fallen prey to these scams and downloaded fake cryptocurrency apps.
These scams are a greater risk for Android users. Every investor should be aware of the possibility. One should thoroughly check that the app, and do their research such as “is there obvious misspellings in the copy or even the name of the app, does the branding look authentic or has strange coloring or an incorrect logo, etc” to download the right app for crypto trading.
In the year 2017, the City of London Police shut down a cryptocurrency exchange that was calling people to sell fake digital coins. Investors were cold-called and persuaded to purchase non-existent cryptocurrencies. Nine investors who became victims came forward to the UK firm, with combined losses exceeding £150,000.
It is important to check the currencies you are investing in and real investors will not cold-call you to offer an opportunity. These scams can make you lose all your money. Also, if you receive a call asking for your investment in a new coin, pen down the name of the caller, the company name and address, and put the phone down, and further report about the same.
There are scamming emails that one receives. Even if the email looks exactly like the one received from a legitimate cryptocurrency company, take a deeper look before investing your digital currency. Is the sender’s address the same, and are the logo and branding identical? If you have doubts regarding the email, ask someone who works there. And most importantly, never click on a link in a message to get to a site!
Unfortunately, there are many chances that some internet users exploit unsecured computing systems to steal cryptocurrency or your funds. You should learn more about staying safe and protecting yourself in this emerging market before you start investing in cryptocurrency, as no market is safe from scams.
A Pyramid Plan
This is relatively a simple fraud but is incredibly effective. This scam attracts people more than others as they promise them extremely high returns. A scammer will attempt to persuade you to support their cryptocurrency. Initially, investors do receive good returns, however, the returns come from other people who also funded the scheme.
Once an investor is convinced that it is a genuine plan, they will then transfer the capital into the scam and they might also encourage their friends to do it as well. Now, just like other scams the plan usually collapses since the scammer takes all the funds and simply disappears.
This is the reason why one must remain extra careful if they come across a promoter that encourages you to fund in their coin. Additionally, no profits are the best profits. You should never trust them.