Today, cryptocurrencies have become one of the hottest topics in the investment world. Investors buy bitcoin, ethereum and other digital cryptocurrencies through various cryptocurrency exchanges, hoping to sell them for profit and asset appreciation in the future.
Cryptocurrency is an investment with huge price fluctuations. Most people define it as a high-risk and highly speculative investment. Therefore, you may make or lose a lot of money very quickly in the field of cryptocurrency investment .
In this game of benefit delivery, the risk observers of the Maoqiu Technology Financing Department believe that there is another risk that is easily overlooked:Cryptocurrency scams.
As cryptocurrencies have grown in popularity among investors, so have cryptocurrency scams. For example, hackers use various tools to break into your crypto accounts, steal cryptocurrencies, and what’s more, they can create completely fake coins from hacking your accounts.
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Types of cryptocurrency scams
Because of the attractive benefits of cryptocurrencies, but the lack of supervision, there are no clear legal documents to protect the security of cryptocurrency assets, so the field of cryptocurrencies is now one of the fertile grounds for low-cost scams.
The fundamental reason for the above situation is that most investors do not really understand what cryptocurrency is and how it works, so that the price of cryptocurrency such as Bitcoin soars or a word from various investment celebrities causes investors to scramble phase influx.
People are very interested in investing in cryptocurrencies, but know very little about how it works, so the claims of fraud sound attractive and credible to investors. So much so that investors cant tell what the scammers say is realistic and what is unrealistic. Maoqiu Technology believes that it is for these reasons combined that cryptocurrency is a perfect combination for scammers to scam.
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1. Hacker scam
In theory, cryptocurrency investment should be a completely safe investment, after all, its market value has reached trillions of dollars.
On a blockchain, all transactions must pass through the blockchain, which routes the transactions to multiple computers and checks them against a database on each computer. To break into the system, a hacker would need to break into large most computers.
Judging from the current situation, it is basically impossible for hackers to attack the Bitcoin blockchain, and the cost is too high. But there is no absolute thing in the world. If hackers want to make a profit, in addition to attacking the blockchain itself, they can also attack other parts of the encryption market, such as exchanges, mining companies, and digital wallets. After all, the cost of attacking these is lower than Attack the blockchain itself.
At the same time, since encrypted accounts are not protected by insurance such as FDIC, once the coins are stolen by an attack, they cannot be retrieved at all.
Some of the most notable crypto hacks to date include:
In 2014, a Tokyo-based exchange called Gox hack was laundered of $460 million in cash and bitcoin by hackers.
The 2016 DAO hack, in which a venture capital firm operating on the Ethereum blockchain lost 3.6 million ether, worth about $70 million.
The 2016 Bitfinex hack, in which a Hong Kong-based exchange lost more than $60 million worth of bitcoin.
In the 2017 NiceHash hack, hackers breached the payment system of a Slovenian bitcoin mining company and stole $64 million.
In the 2018 Coincheck hack, hackers stole nearly $500 million in digital tokens from a cryptocurrency exchange in Tokyo.
As an ordinary investor, to avoid such attacks, Maoqiu Technology believes that investors are basically powerless.
For investors to avoid such risks, the most effective defenses may be taken:Dont put all your eggs in one basket.secondary title
2. Fake cryptocurrency investments
In cryptocurrency investment scams, scammers set up fake websites to invest in or mine cryptocurrencies, and these scammers use a variety of methods to lure victims to these websites.
For example, scammers pretend to be investors on the Internet to share crypto investment experience; pretend to be investment managers and send investment-related letters to lure victims to increase the amount of crypto investment. Whats more, some scammers are combining crypto scams with online romance by creating intimate relationships with their victims via dating sites.
No matter what kind of scam, they all have one thing in common:Investing sites promise huge returns,And will use fake testimonials on the website to make them look legitimate and authoritative.
And sometimes, scammers will offer multiple investment levels to show victims that a larger investment means greater returns, convincing victims that they have found a good investment method, and enticing them to invest real money.
In some cases, these sites lured investors for years, regularly sending out fake investment reports to show victims how their investments had grown.
But when victims first tried to withdraw these funds, they found that the money was missing or could not be withdrawn. To make matters worse, some websites will prompt victims to pay a withdrawal fee to withdraw funds, but when they pay, they find that they still cannot withdraw cash, and they are also defrauded of extra fees.
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3. Giveaway Scams
Another common form of fraud is gift scams. Scammers pose as celebrities or well-known cryptocurrency investors in order to help small investors. For example, scammers induce victims to send them cryptocurrencies, claiming that they will add some more cryptocurrencies to help investors increase their investment income.
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4. Fake job offers
Instead of convincing you to invest in cryptocurrencies, there are some scammers who claim to offer their victims job opportunities.
Scammers post fake job listings on job sites, posting jobs claiming to recruit investors, sell online, find people who mine cryptocurrencies live to help convert cash into bitcoin, and more.
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5. ICO Scams
An Initial Coin Offering (ICO) is a new way of launching a cryptocurrency with the aim of raising capital from investors. It seems that this is an opportunity to enter the bottom of the cryptocurrency, compared with other investors, it has a head start, but it is not the case.
Investing in ICOs is always risky because you can’t predict how new tokens will perform in the future, and some ICOs are not only risky, but totally scams.
ICO-based scams can be roughly divided into two categories.The first is to completely counterfeit the token.Criminals create an altcoin that looks like a new cryptocurrency, launch it and advertise it with a lot of fanfare, and yet, they just pocket investors’ money.
This ICO scam was most notorious at the time OneCoin. According to the BBC, the project sold virtual currency through a multi-level marketing sales model, defrauding a huge sum of more than 4 billion euros (close to 5 billion U.S. dollars) from global investors.
More recently, the U.S. Securities and Exchange Commission (SEC) shut down a $15 million ICO called PlexCoin, calling it a full-fledged online scam.
The second type of ICO scam is where the scammer has the cryptocurrency for the actual ICO.
Such scammers set up a fake website or social media account and use phishing emails to lure investors with bogus pre-sale offers, claiming its an early opportunity to get involved with a new cryptocurrency when in reality investors The money was sent directly to the scammer.
Such scams are not limited to ordinary investors. According to Coindesk, in 2017, scammers used the same phishing scam to investors who wanted to buy new digital tokens launched by social information company Kik. In just 40 minutes, scammers defrauded more than $20 million. ether.
The staff of Maoqiu Technology Investment Risk Department believe that the best way for investors to avoid these scams is to study ICO projects carefully. Check the relevant information on sites such as CoinDesk to confirm that it is true and compliant, and be wary of emails and social media posts.
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6. Fake crypto wallets
Because cryptocurrencies cannot be kept in regular bank accounts, the only way to store them is with a cryptocurrency wallet.
Cryptocurrency wallets can be devices, software, or wallet services provided by crypto exchanges that store the digital keys needed to access crypto investments and provide digital signatures for crypto transactions.
Although the above wallets are relatively simple to use, because they are online wallets, there is a major risk of hacker attacks. Of course, generally speaking, hackers will not attack these encrypted wallets, mainly because they are too troublesome.
As a result, many scammers (rather than hackers) post fake crypto wallets online or in mobile app stores, where the scammers hold the master keys of these fake wallets and they can manipulate any data and content stored in them.
Such as the Bitcoin wallet gold scam in 2017 is a good example. When a hacker convinced the creators of Bitcoin Gold to promote their website and wallet, the creators of the website subsequently stole more than $3 million in bitcoin and $200,000 in other currencies.
If you want to avoid such scams, one of the better ways is to use a well-known crypto wallet service with a good track record.
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7. SIM card fraud
Another way hackers can gain access to investors’ cryptocurrency wallets is through investor phone hijacking, a scam also known as SIM stealing, SIM swapping, SIM hijacking, and phone porting.
SIM card fraud works like this: first, the hacker transfers the investor’s mobile phone number to a new phone, and after doing this, they can use the phone to impersonate the investor and reset the crypto wallet’s password; then, using this new password Access the wallet and transfer the cryptocurrency in the account.
And because of the cryptocurrencyTransactions cannot be reversed,So if the property is cheated, there is no way to get it back.
For example, former technology CEO Cody Brown, hackers once used his mobile phone account to access his Coinbase account, and he lost $8,000 in Bitcoin in 15 minutes.
And if you want to prevent the SIM card from being stolen,One way to do this is to set a unique PIN code and security answer questions for mobile phone accounts.
However, the so-called insider is hard to guard against, and hackers can solve this problem by bribing the operators employees to provide them with the customers PIN code. Scammers can get this information from customer support and store employees for as little as $80 to $100, according to VICE USA.
The best way to avoid SIM card scams is to not connect your mobile number to your crypto wallet at all, and to use an authentication app (such as Authy or Google Authenticator) instead of relying on a verification code sent by text message to verify your account.
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8. Malware
The last way to hack investor accounts is to install on your computermalicious software.
Malware comes in various forms such as computer viruses, spyware, ransomware, etc. Many types of malware are specifically developed to steal cryptocurrencies. These programs can capture the login credentials of an investors crypto account, steal an entire crypto wallet, or gain access to the account while the investor is making a transaction.
One of the latest crypto-stealing malware apps is WeSteal. According to Palo Alto Networks, the malware works by searching your clipboard for patterns that match the identifiers of bitcoin or ethereum wallets, then replacing those wallet IDs with new codes it provides. Every time you make a transaction, the money will be transferred to this new fake wallet.
The way to combat this type of scam is to keep your computer safe from malware such asUse antivirus programs and firewalls to screen incoming and outgoing data. can also useStrong passwords or password management to protect login credentials,Such as 1password software.
In addition to the above methods to deal with it, you can also use a virtual private network to hide your real Internet connection.
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How to Spot a Cryptocurrency Scam
Not all scammers resort to the methods above, and some scammers also use the old trick of impersonating a government agency or employee.
Examples include posing as someone from an agency such as the IRS or the Social Security Administration, and calling or emailing you to convince you that you owe money to the government. According to the U.S. SEC, many people deposit money into Bitcoin ATMs, convert it into Bitcoin, and use it to pay imposter scammers claiming to be the Social Security Administration.
In other cases, scammers rely on simple old-fashioned scams, such as claiming to have leaked information, photos or videos about you and threatening to make them public unless you pay the scam money in cryptocurrency.
The only thing new about these scams is that the scammers ask the victims to pay in cryptocurrencies, usually in Bitcoin, since it is untraceable and irreversible.
The staff of the investment risk department of Maoqiu Technology believes that this requirement is itself a dangerous signal. Anyone who insists on paying with Bitcoin or any other cryptocurrency, for whatever purpose, is almost certainly a scammer.
The early warning signs of cryptocurrency fraud are similar to other types of financial scams, which are organized by Maoqiu Technology as follows:
Huge return on investment commitment: There is no sure and definite guaranteed return on any investment, especially all kinds of investments. For investment, high returns will only be accompanied by high risks.
Offering Free Assets: Anytime someone gives you money for free, whether it’s cash or cryptocurrency, or something else, it’s almost guaranteed to be a scam.
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If you find these situations in the process of crypto investment, then you should be more vigilant. Do not blindly perform operations such as transfers and payments, but at least search for relevant project information and materials online.
As the interest in crypto investment gradually increases among investors, cryptocurrency scams will also increase. In addition to the scams listed above, new forms may appear, such as tax fraud, public utility fraud, etc. .
To protect yourself from scams, Maoqiu Technology Venture Capital believes that the best way is to be more vigilant.
First understand as many existing types of scams as possible, and then when investing in cryptocurrencies, do not proceed blindly, and take preventive measures such as multi-party understanding and online inquiries.
At the same time, Maoqiu Technology also believes that for any type of investment, it is important to research the company, product and act as an investment consultant before investing money. These steps are of double importance for crypto investment.
