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Cryptocurrency fraud Fraudsters never sleep and strive more and more each day to empty the pockets of others, speculating on emotions. Promises of high returns, incredible discounts on investments, income from trading on financial markets – the offers can be very diverse. But often, scams occur using cryptocurrency. And in most cases, among the victims are inexperienced investors.
Cryptocurrency fraud is relevant due to the anonymity of transactions, making it difficult to track the chain of operations. But it's important to be prepared and aware of the tricks of fraudsters, which they skillfully present as promises of fantastic income.
How Cryptocurrency Fraud Occurs
Many schemes are based on financial pyramids and fake investment funds. A crypto pyramid is a scam built on investing in a rapidly developing project. While newcomers join the «promising» platform, there is minimal turnover of funds, and some part of them may be returned to participants. But as soon as the number of users increases, so do the threshold amounts – and the project quickly shuts down, leaving all the clients' capital. The profit in this case is only for the scheme's organizers.
Cryptocurrency fraud is also common in fake investment funds. The main difference from a crypto pyramid is that here no one receives profit, not even the first investors. How cryptocurrency fraud occurs – fraudsters show that they want to open and promote a new project, but in the end – funds are collected from people. When the funding ends, the fund declares bankruptcy, and payouts become impossible.
Nonexistent Startups and Fake Websites
Attracting users by announcing a new exchange or cryptocurrency consulting center, with which fantastic income can be achieved. But the main thing – a small capital needs to be invested to subsequently increase it several times over. Such projects do not actually exist, but they are actively advertised to attract as many people as possible.
When swindlers carry out scams with bitcoin, they actively advertise fake resources on social networks. Phishing sites attract attention with a simple platform interface, which suits beginners who are not yet thoroughly familiar with cryptocurrency turnover. Another way of cryptocurrency fraud – scammers create a fake exchanger that users find through commissioned articles or ads in Telegram channels. After hearing the service's advantages, clients transfer money hoping to exchange it, but end up without cryptocurrency. Swindlers may even send fake notifications to the phone about fund deposits, but the transaction was made to the scammer's pocket, not the client's account.
Cryptocurrency Theft
Cryptocurrency coins become a tool for fraud. A new currency is formed for which money is collected, and then – the coins are devalued. Advertising about a new cryptocurrency, which is about to be added to a popular exchange, is in full swing on social networks. And clients are offered to financially invest in purchasing the coin immediately, during the stage of gaining popularity.
Then the fraudsters abruptly close the project – and cryptocurrency theft occurs, already invested by naive investors.
Pseudo-Consultations on Cryptocurrency Investments
Fraudsters create a story where they act as cryptocurrency investment consultants. Promises of profitable mining and selling currency at a favorable rate – this is the lure. At the same time, they ask the consultant to be paid for efforts to increase the client's income, as a specialist cannot provide free recommendations. After transferring funds, it is no longer possible to get advice from the cryptocurrency consultant, as he disappears.
Crypto fraud encompasses various schemes and methods of deception aimed at cryptocurrency users. Different exchanges, startups, investment funds – non-standard roles are chosen – creativity cannot be taken away from swindlers. In recent years, cryptocurrency fraud has become common scams. And they are all united by the fact that regardless of the scheme structure – they are implemented with methods of psychological influence.
How Not to Lose Funds and Recognize Types of Fraud?
It's necessary to pay attention to certain signs:
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Promises of high returns – if a site guarantees high profits but hides statistics and does not warn about risks – it's about fraudulent activities. In cryptocurrency services, there are no guarantees.
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Secrecy and lack of documentation – a decent service, operating legitimately and legally, as a rule, does not hide data and shows documents. At the same time, it does not promise «golden mountains» and luxurious earnings.
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Lack of a clear action algorithm – fake services do not publish work principles and do not describe technologies and strategies. If there is no information – you need to be on your guard.
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Insistent advertising of unique opportunities – if banners about immediate fund investment are shown, it's worth focusing attention and analyzing actions.
Protection from cryptocurrency scams involves studying the signs of fraud and following certain mandatory rules:
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Conduct research on the project you plan to invest in
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Do not trust unfamiliar platforms
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Use only reliable crypto wallets and exchanges
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Keep private keys and other confidential information secure
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Exercise caution in choosing projects that promise instant profits.
Investments in cryptocurrency in some cases are unsafe. No one is insured against fraud attempts. To protect yourself from unwanted risks, it is necessary to improve financial literacy to have up-to-date information and be able to counteract fraudsters.