Cryptocurrency Scams

The Basics of Cryptocurrency Scams

The increase in popularity of cryptocurrency in recent years has caught the attention of scammers. Bad actors prey on the public’s lack of knowledge about how cryptocurrency works. That, with the ever-evolving state of cryptocurrency, makes this type of payment method even more appealing to scammers.

Cryptocurrency is a virtual currency and accounting system that is decentralized. This means that there are no banks or other centralized authorities that manage transactions and funds. In addition, crypto is not federally protected against bank failure or theft like money in the bank.

Types of Cryptocurrency Scams

Here are some common types to watch out for:

Crypto Investment Scams: Scammers pitch investments in a new or developing cryptocurrency claiming large returns for a small, short term investment. Once you provide your investment share they steal the investment money for their own use. When confronted, scammers hide behind the complexities of cryptocurrency to explain where the stolen funds are.
Crypto Government Imposter Scams: Scammers pose as a government authority, utility company, or law enforcement agency. They claim that you need to pay fees, fines or taxes using cryptocurrency or you will face major consequences. If you pay, the scammer vanishes and, because crypto has no safeguards, you can’t get your money back.
Crypto Prize Scams: The scammer, posing as a legitimate company such as Coinbase, will contact you claiming that you won a prize, a free vacation or a crypto jackpot. In order to receive the prize, the scammer says you must pay a fee using crypto. Once you pay the fee, the scammer disappears with your money and you never receive your prize.
Phishing: Similar to any run-of-the-mill phishing attack,scammers send emails posing as legitimate companies to steal your login credentials and private keys for your crypto wallet.
Social Media Impersonation: Scammers impersonate someone you know or an account that you follow on social media promoting fake cryptocurrency giveaways. Sometimes, they may ask you to pay a fee to receive your free cryptocurrency. Other times, they might ask you for your login credentials or private key to your crypto wallet so they can deposit your free cryptocurrency. Once they have that information, they can empty your crypto wallet.
Extortion: Scammers will claim that they have embarrassing or inappropriate information or photos of you. They threaten to share these with the public unless you pay in cryptocurrency.
Malware: Scammers will install malicious software on your devices to gain access to information and accounts, including your cryptocurrency wallet.

Step 1:Recognize

Red Flags of a Crypto Scam

There are a few things to look out for that may indicate you’re involved in a cryptocurrency scam:

Guaranteed low risk, high return. Scammers will claim that you can quickly make money with little to no risk. They may use terms like “risk free” or “zero risk”. Beware of anyone who claims you will receive high rates of return with little or no risk. No investment is completely risk free.

Use of complex concepts and terms. Scammers take advantage of the fact that most people don’t know much about cryptocurrency. They will use crypto lingo that is difficult to understand, and make sales pitches that are confusing.

Urgency and threats. Scammers will urge you to take action now in an effort to get you to act without thinking. They may even threaten you if you don’t comply with their demands.

Unbelievable offers. If the offer seems too good to be true, it probably is.

Unconventional payment methods. They ask you to pay a fee, fine, or taxes using cryptocurrency.

Step 2:Immediate Actions

If you think you may have been the victim of a crypto scam, it is important to take action right away to protect yourself and your finances. Unfortunately, if you paid a scammer using cryptocurrency, you won’t be able to get your money back. However, there are still steps you can take if you think you have been scammed:

If you provided login credentials to your crypto wallet, change your password immediately and set up multi factor authentication.

If the private key to your crypto wallet was stolen, you need to move all of your cryptocurrency to a new wallet immediately.

If you provided financial information to buy cryptocurrency, such as your credit card number or bank account information, contact your bank or credit card company right away. They can help you take care of any compromised accounts and unauthorized transactions.

If you shared personal information, like your Social Security number, you may be at risk for identity theft. Keep an eye on your credit report and financial accounts for any unusual activity, and consider placing a freeze on your credit.

If you believe that someone stole your cryptocurrency using malicious software, run full system scans on your devices. If you find malware, visit our malware page for help removing the malware.

Step 3:Report

Reporting any type of cybercrime, including a crypto scam, is imperative to help others avoid being scammed. As a society, the more people that report online scams and fraud, the more national reporting data that is collected, and the better chance law enforcement has to catch the criminals and decrease cybercrime.

Report to FTC

Step 4:Recover

Learn the Three Golden Rules to Spot a Scam

Scammers often utilize tactics to encourage you to act quickly and will use false information to persuade you to send money or personally identifiable information (PII). When faced with a questionable situation online, always follow the three golden rules to spot a scam:

Slow it down — Scammers often create a sense of urgency, being pushy or aggressive. Take your time and ask questions to avoid being rushed into a bad situation.

Spot check — Do your research to double check that the person is who they say they are. If you are looking at investing, use resources like the BrokerCheck by FINRA, which can tell you whether a person or firm is registered to sell investments and/or offer investment advice. If someone contacts you claiming to be from a government agency or utility company, look up their contact information on their official webpage and contact them directly.

Stop! Don’t send — Never share your crypto wallet login credentials or private keys with anyone. If someone insists that you pay them in the form of cryptocurrency, it’s a scam.

Take 5 Steps for Better Online Security

Along with making sure you follow the three golden rules to spot a scam, it’s important to strengthen your online security to help avoid all types of online scams. Take action to improve your digital posture by following these steps:

Implement Multi Factor Authentication (MFA): Passwords are generally easy for scammers to crack, and even if you use strong passphrases, there’s still the possibility that a cybercriminal can obtain your passphrase in a data breach. Implementing MFA is a great way to maximize your security and ensure that you are the only one who can gain access to your accounts. MFA should be implemented on all accounts where it is available. Check your account’s security settings to see if it is something you can set up.
Update Your Privacy Settings: Privacy settings allow you to control your personal information (name, address, phone number, date of birth, financial details, photos or videos, etc) and how that information is used. Review your privacy settings on all of your accounts including your social media accounts. Consider restricting who can see your friends list, contacts, photos and posts.
Activate Automatic Updates: Automatic updates are a set of changes to an app, software or operating system that are automatically pushed by the developer to fix or improve it. Oftentimes, cybercriminals take advantage of security flaws to plant malicious software on your devices. By activating automatic updates, you will automatically patch security vulnerabilities to protect your data.
Use a Password Manager or Create Strong Passphrases: A password manager is a software tool that securely stores all of your login credentials in one place, allowing you to create and manage strong, unique passwords for all of your accounts. If you are unable to afford a password manager, use strong passphrases. A passphrase is a combination of random words or a sentence that is much longer and more complex than a typical password. Using a passphrase instead of a password makes it much harder for hackers to guess or brute-force their way into your accounts.
Learn the Elements of a Phishing Attempt: Familiarize yourself with the elements of a phishing email. Phishing emails tend to include a sense of urgency and multiple grammar and spelling errors. If they are asking you to reveal personal information, be suspicious. If you get a strange email, try contacting the company another way to confirm they sent that email. If the email is suspicious, mark it as spam.

The Basics of Cryptocurrency Scams

Learn the Three Golden Rules to Spot a Scam

Take 5 Steps for Better Online Security

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Take Action

The Basics of Cryptocurrency Scams

Step 1:Recognize

Red Flags of a Crypto Scam

Step 2:Immediate Actions

Step 3:Report

Step 4:Recover

Learn the Three Golden Rules to Spot a Scam

Take 5 Steps for Better Online Security

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