Social media platforms have become hotbeds for cryptocurrency scams thanks to their large user bases and ease of use. According to the Federal Trade Commission, social media platforms—like Instagram, Facebook and even YouTube—are responsible for almost half of the $1 billion lost to crypto scams in 2021.
Social media is appealing to scammers because they can easily create fake accounts or advertisements to spread their message to hundreds of thousands of people with just a few clicks. Although the goal is always the same—to convince you to part with your money—scammers use many different tricks and strategies to carry out their scams. Let’s take a look at some of the ways they carry out these crypto scams on social media.
Social Media Account Impersonation
Scammers impersonate social media accounts of celebrities and influencers in an effort to encourage people to invest in fake or real cryptocurrency. Sometimes they will even go as far as creating profile pictures or cover photos that cleverly include a blue checkmark to trick users into thinking the account is verified. Scammers will also use these impersonated accounts to carry out a number of different types of scams such as phishing, giveaway scams, pump and dump schemes and YouTube live stream scams. Keep reading to learn more about each of these crypto social media scams.
Spot the Impersonator
- Do your research to double check that the offer is legitimate. Run an internet search of the celebrity’s name with the word “scam” to see if it has been connected to any impersonated accounts. To verify if a checkmark is real on Twitter, YouTube and Facebook, hover over the checkmark.
- Be cautious of unbelievable offers. If it seems too good to be true, it probably is.
- Watch out for urgent language like “act now!” and “limited time offer”. Scammers will try to get you to act quickly without thinking.
Crypto Social Media Phishing
Using impersonated or fake social media accounts, scammers encourage users to visit fake websites by sending unsolicited DMs or posting malicious links to TikTok Live feeds and Instagram Stories. When you click on the link, you are taken to a website and asked to enter personal and financial information in order to purchase crypto. Once the information is entered, the scammer runs away with the cash and you never receive your cryptocurrency.
In addition to exposing your personal and financial information, clicking on malicious links can allow hackers unauthorized access to your device. Because most of our devices store sensitive information—including credit card numbers and bank account information—you don’t even have to enter your information for a scammer to gain access to it.
Red Flags of a Phishing Attempt
Be cautious of any social media messages or posts that:
- Are full of grammatical and spelling errors.
- Contains strange links. Use your instincts. If the link seems even the slightest bit off, don’t click it.
- Ask you to provide sensitive information, such as your login credentials or financial information.
By mimicking celebrities and high profile influencers, scammers can also deploy giveaway scams. Scammers use impersonated accounts to promote giveaways of cryptocurrency with promises of instantly doubling your investment. To participate in the giveaway, you have to send a particular amount of crypto to a designated wallet address. The scammer promises to send back double what you send them. However, once you make the transfer, you never see any of that crypto again.
Warning Signs of a Giveaway Scam
- They promise a high return with little to no risk. Cryptocurrency is extremely volatile, meaning that it is unpredictable and can change with notice. This makes it impossible to fulfill a promise of high returns.
- They ask you to pay to enter or receive your prize. You should never have to pay for a giveaway or sweepstakes.
- The scammer uses high-pressure sales tactics to get you to pay, such as saying that the prize will be forfeited if you do not send cryptocurrency immediately.
Pump and Dump Schemes
Scammers buy brand new, cheap cryptocurrency. Once they have bought enough, they will pay TikTok and Instagram influencers to promote it on social media in an effort to increase interest and investment. When people start buying, the value goes up. Then, the scammer will sell off their crypto at a higher value and take all the profit. In turn, people start to see the price drop and start selling their crypto too. This greatly reduces the cryptocurrency’s value and leaves other investors with nothing but an empty pocket.
How to Avoid Crypto Pump and Dump Schemes
- Be wary of unsolicited offers or advice. Also look into whether or not the person or firm you are talking to is registered to sell investments and/or offer investment advice with tools like BrokerCheck by FINRA.
- Do your research. Check the age of the cryptocurrency before investing. If the cryptocurrency is brand new and extremely cheap, proceed with caution.
- Beware of information that only focuses on the positives and doesn’t mention the risk associated with that particular type of crypto.
YouTube Live Stream Crypto Scams
Scammers use stolen content during YouTube live streams to disguise themselves as someone with authority in cryptocurrency. They use these live videos to promote crypto giveaways, sending you to a fake website where you will send crypto in order to receive your prize—like the giveaway scam described above. Scammers opt for live streams because they can steer clear of YouTube’s review process until the stream ends.
How to Identify Fraudulent YouTube Livestreams
- Do some investigating. If the channel only has a few videos, it’s likely suspicious. Also pay attention to things like how long ago the channel was created and if it has a verification badge.
- Check the comment feed. To appear more authentic, scammers will use other fake accounts to flood the live comment feed with positive feedback. Be alert for grammatical and spelling errors and comments that repeat over and over.
- Trust your gut. If it seems off in any way, it’s best to err on the side of caution, especially if the offer seems too good to be true.
If you come across any of these crypto scams while scrolling through social media, stop and report it immediately to the social media platform where it took place. Then, report it to the FTC. By reporting these crimes to the platform and the FTC, you can do your part to help others avoid being scammed.
Head over to our cryptocurrency scams page to learn more about recognizing, reporting and recovering from crypto scams.