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The massive growth of cryptocurrency has created a myriad of opportunities for fraud to thrive. Scammers are always on the lookout for new ways to steal people’s money.

As a result, Billions of dollars have been lost due to the ignorance of people who are new to the cryptocurrency market. It is no longer new that fraudsters capitalize on the naivety of new investors by promising them huge returns on their capital within a short period.

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Nigerian investors are always seeking new ways to make quick and extra profits as the nation’s economy continues to plummet. Sadly, they end up losing all the money they have. Regardless of how knowledgeable we get, some will always fall for this type of scheme especially if they are new to crypto. Therefore, it is important to be aware of how risky and vulnerable to scams investing in crypto is. To further prevent this, here are some of the most common crypto scams and how to spot them. They include:

Fake websites

Scammers create fake cryptocurrency trading platforms, websites, or fake versions of official crypto wallets to lure gullible targets. These fake websites are usually similar but slightly different from the sites they attempt to copy. Also, they look very similar to legitimate sites, making it difficult to tell the difference.

Phishing scams

Phishing scams target data that relates to online crypto-wallets. Once fraudsters get access to the wallet’s private keys, they can access funds within the wallet. Similarly, phishing scams work together with fake websites via email. These emails are sent to lure recipients to a special website asking them to enter their private key information. Once the hackers have this information, they steal the cryptocurrency in those wallets.

Pump and dump schemes

This is when a particular coin or token is promoted by fraudsters via social media. When new traders see it, they rush to buy it thereby driving up the price.

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This will cause the price to inflate. Then the scammers sell their holdings and cause a crash as the asset’s value sharply declines.

Fake apps

Another common way scammers trick cryptocurrency investors is through fake apps. These applications are available for download through Google Play and the Apple App Store. For instance, Apps like Nigerian Calabar company, Bitsane, and satowallet are fake crypto wallets. Before these fake apps are found and removed, they have affected many people.

Fake celebrity endorsements

Some scammers claim to have been endorsed by celebrities, business people, or influencers to catch people’s attention. These scams are usually sophisticated, involving glossy websites and brochures that appear to show celebrity endorsements of popular people.

Giveaway scams

This type of scam is more rampant. Here, scammers promise to multiply the cryptocurrency sent to them in what is known as a giveaway scam. This supposed ‘once-in-a-lifetime’

opportunity can lead people to transfer funds quickly in the hope of an instant return.

Blackmail and extortion scams

Another method scammers use is blackmail. They can send emails that claim to have a record of adult websites visited by the user or other illegal things the person has done.

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Then they will threaten to expose them unless they share their private keys or send cryptocurrency to the scammer.

Fraudulent initial coin offerings (ICOs)

An initial coin offering or ICO is a way for start-up crypto companies to raise money from future users. These new customers are promised a discount on the new crypto coins in exchange for sending active cryptocurrencies like bitcoin or another popular cryptocurrency. Many of these ICOs turn out to be fraudulent.

Theft by Hacking

Nowadays, hackers can hack digital wallets, companies that create coins, and even exchanges. While no one is immune from hacking, it is generally advisable not to put all of your funds and savings into one account, digital wallet, etc.

Ponzi Schemes

The Ponzi scheme is a popular scam that involves the promise of profits from funds contributed by new investors. The more people you recruit, the more money you make. This promise of quick and risk-free investment returns makes many people fall for this scam.

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This article was first published on 19th May 2022

eyimegwu-ekene

I am an accomplished content creator and recently delved into technical writing. I enjoy using my skills to contribute to the exciting technological advances and create awareness of evolving technological trends in Nigeria.

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