DeutschWhere a lot of money is earned, fraudsters will automatically gather sooner or later. Reports of cybercrime involving Bitcoin and Altcoins are therefore commonplace. Industry experts are constantly warning about the threats that millions of investors around the globe fall for year after year. These are particularly often so-called crypto scams, with specialist portals most frequently referring to potential Bitcoin scams. The term scam can be translated from English as “advance-fee fraud”, for example. The term basically clarifies what it is all about. Investors are often persuaded to invest money in supposed opportunities. Criminals try to extract the highest possible sums with high promises of profit, which of course are never paid back. Criminals in the digital world prove to be extremely creative.
The Creativity of Crypto Criminals Knows almost No Bounds
Over time, various scam variants have emerged in the crypto sector. The backgrounds are often not easy to uncover, even for industry experts. We will take a look at the most well-known phenomena at this point. Tips on how to recognize dangers and thus avoid losses also play a role. What states do (can) to better prevent crypto scams in the future will also be discussed. In the end, this results in an overview and outlook on possible positive and negative developments in the market. Internet users encounter threats in many places. Spam mails or fake e-mails that ask for access data to be entered after clicking on a link with fake websites are just one risk. Over the years, fraudsters have come up with much more.
Healthy Skepticism is Useful in many Ways
It is always about inflicting damage in one way or another with a crypto scam and enriching oneself. Pyramid schemes, extortion attempts and special types of cybercrime such as the “Ponzi scheme” should be identified early on in order to prevent damage. In the rapidly growing crypto market, many Initial Coin Offerings (ICOs) in the past turned out to be scams that robbed many investors of their savings. Recognizing indications of a criminal background helps to prevent fraud. There are definitely some indications, as experts regularly emphasize. Here now follows the top 5 of the classics on the market, which can lead to problems of a technical or economic nature as a crypto scam. You have to be careful when you come across suspicious offers.
Crypto Scam Variant 1: Fake Crypto Exchanges
Fake exchanges appeared on the market soon after the first major successes of the world’s first cryptocurrency, Bitcoin. Advertised via mail or as an ad in search engines, they cost some investors considerable sums. These are supposedly good and often particularly cheap exchanges that do not actually exist. As a fake, they were created exclusively with the aim of enriching criminals.
CoinPro.ch tip: If something looks too good to be true in terms of trading radius and fees, it usually isn’t. A reasonable legal notice, approvals by state authorities such as the British FCA or the German BaFin, entries in the commercial register and comprehensible company structures (search engine evaluations help in this point!) speak for good providers.
Crypto Scam Variant 2: the Ponzi Scheme
This approach belongs on the list of the first globally known crypto scams. With slogans like “Double now your Bitcoins”, investors are encouraged to transfer as large sums as possible in advance with enormous returns. The profits presented in glowing terms within the system are presented as returns from sales. On closer inspection, however, it becomes clear that other investors are the origin of the funds mentioned. Ultimately, only the originators of the systems emerge from such transactions.
CoinPro.ch tip: It is best to ignore advertising messages like the one mentioned at the beginning. Nobody can guarantee Bitcoin profits either!
Crypto Scam Variant 3: Ransomware
This involves illegal programs that, as a type of cyberhacking, block computers or mobile devices of victims – blockages remain in place until “ransom” is paid. These funds often flow into Bitcoin or privacy coins such as Monero. It becomes particularly dramatic when, for example, hospitals or authorities are affected by attacks.
CoinPro.ch tip: Do not click on links in e-mails from people you do not know, dispose of e-mails immediately! You should never enter personal data on websites whose seriousness you are not sure of. You should also ignore software submissions from unknown sources in your own interest.
Closely linked to ransomware is the topic of Bitcoin extortion. In this case, you may receive emails whose senders claim to have important personal data from you. If Bitcoins or Altcoins are not sent to the wallet mentioned, the publication of the illegally obtained sensitive data is threatened. In the case of extortion, software is often used to take possession of infected systems, so that they are no longer accessible to owners.
Crypto Scam Variant 4: Scam Coins
As lucrative as some newly presented ICOs may sound, some projects are just as risky, as many experts rightly warn. Scam coins are Altcoins in which funds are to be collected from investors. This is intended to build a new business, and the money providers should also benefit from the success – according to the product brochures. Unfortunately, the past few years have shown that criminals are constantly trying to make big money in the ICO sector at the expense of investors.
CoinPro.ch tip: Realistic-sounding white papers and product details are a good indication of seriousness. If established companies are behind Initial Coin Offerings, this also speaks for security. The difficulty here is that there have always been suspicions on the market against popular coins (e.g. OneCoin) of being a scam attempt.
Crypto Variant 5: Malware and Phishing Attacks
Phishing attacks were already a problem for many Internet users before the crypto boom. In this case, personal access data such as passwords are requested by mail. These are phishing emails. These contain, for example, links to deceptively real-looking copies of well-known websites. After the forwarding, users are asked to enter their data, which the perpetrators then “phish” on the phishing websites. A certain amount of IT know-how is required to recognize such forgeries, for example by looking at the address.
CoinPro.ch tip: Banks, wallet services, crypto exchanges and other providers in the industry do not work with such link mails. Rather, they will call on you to visit the correct pages in order to update data and take account measures there. It is advisable to delete suspicious emails immediately. This also applies to spam emails with attached software.
In many cases it is malware. Behind this is a malicious program that manipulates data on the system. This is particularly risky for users of so-called browser wallets. Malware is also often used to carry out illegal mining unnoticed on computers. In such a crypto scam, the storage capacities and electricity of the victims are consumed. This increases the electricity costs seemingly without reason and computers work more slowly or are more susceptible to malfunctions.
What Does the Future of Crypto Scams Look like?
There are many other crypto scams such as the theft of identities, supposed coin gifts, collecting Bitcoin and Co. at personal meetings with a dealer, snowball systems or methods with names like “Pump ‘n’ Dump” and much more. We have presented what we believe to be the most important risks. Due to the ingenuity of many criminals, a list of crypto scams can never claim to be complete. Finally, we would like to venture a brief outlook on the developments. From a professional point of view, a further increase in threats is initially obvious. The rapid growth of the market and the increasing arrival of digital currencies in trade and social mainstream create desires among criminals. This can have serious consequences, especially for inexperienced investors.
Crypto Industry is Working on Standards and Self-Controls
The successive recognition of cryptocurrencies by politics and business is equally linked to opportunities. ICO providers, blockchain companies and other industry representatives are primarily in demand when it comes to the fight against crypto scamming. There are now initial efforts to create uniform standards in terms of investor and data protection. These would be an important indicator for interested parties to separate the wheat from the chaff, so to speak, and to recognize black sheep. The crypto industry is increasingly defining a kind of common sense, which is based on not directly addressing users in ICOs or actions in which investors enjoy crypto gifts. This development is important with regard to the phishing topic.
State Regulation and Industry Standards as Better Protection
The fact that several states are working on regulatory standards may be a thorn in the side of some supporters of the decentralized and comparatively high anonymity of many tokens. For investors, however, these activities are also the basis for better scam protection in the future. The German Federal Government, for example, has finally presented its own blockchain strategy. The G7 and G20 groups have repeatedly spoken out in favor of global rules for ICOs and the crypto industry as a whole. The realization of such joint measures would also make it more difficult for scam perpetrators. Investors in spe will, however, continue to be asked themselves in the future. Attentive reading of product descriptions, careful handling of your own (wallet) data and, last but not least, the often-used “common sense” are the best possible protection against any type of crypto scam in combination.
If you become a victim of scamming despite the greatest caution, the supervisory authorities mentioned are the most important contact person immediately after the police. Regulations and controls by the state will hopefully lead to legal security from an investor’s point of view in the coming years. If damage occurs, claims for recourse could then be made. So far, those affected often have little left to do but come to terms with the damage and learn from their own mistakes.
