Cryptocurrency has changed how people conduct financial transactions. There are many new ways to transact quickly, and there is a decentralised network of transaction opportunities, which can lead to many new investment opportunities. At the same time that cryptocurrency has gained in popularity, there has been an increase in cryptocurrency scams. Criminals take advantage of the complex nature of the blockchain network and the lack of knowledge about the technology that new investors have to take their money through misleading schemes. The first step in protecting yourself against scams is to understand how they work.
What Is a Cryptocurrency Scam?
A Cryptocurrency scam consists of dishonest actions in which criminals deceive people into transferring their digital currency by using a variety of false representations of the digital currency they are promoting. Common types of crypto scams include: fake investment platforms, fake trading apps, fraudulent uses of reputable crypto companies’ names, and phishing websites used to obtain wallet information. When funds are transferred via the blockchain, most blockchain transactions are not reversible, and therefore, the impact of these types of scams can be very damaging.
Types of Cryptocurrency Scams
Cryptocurrency scams can take many forms, and some of these scams may look like legitimate online trading platforms that tout guaranteed returns and allow customers to withdraw their money. Other forms of cryptocurrency scams include romance or social media scams, where the scammer builds a rapport with the victim and convinces them to invest in fake cryptocurrencies. Phishing scams are designed to acquire sensitive information (such as your user ID and password) or private keys from the victim through spoof emails and/or fake websites that look similar to those of an authentic cryptocurrency service provider.
Signs that a Cryptocurrency Scam May Exist
There are various signs that can help an investor identify whether or not he/she is dealing with a cryptocurrency scam. The most important sign is if an organization promises to guarantee or offer a risk-free return on investment. A sign that an investor may be dealing with a scam is when he/she feel pressured to invest immediately and when the organization requires an up-front payment before the investor will be able to invest. If you see these signs, take the time to perform your own due diligence.
How to Track Stolen Cryptocurrencies
If you have lost any cryptocurrency through theft, your first step in attempting to regain those assets should be to see if you can find them using the Blockchain for each type of coin/source. With the many various methods of tracking coins, it is unlikely you will get back all of your lost funds from the initial theft; however, the use of Blockchain analytic software by Forensics Accountants will enable a person to follow the movement of your funds from the time of theft until they were moved/converted to another asset type after they left your wallet, thus providing you with sufficient evidence for a claim against the thief.
Ways to Prevent Being Victimized by Cryptocurrency Scammers
To reduce the risks of being a Cryptocurrency Scam Victim, the recommended way is for you to begin the process by educating yourself on how Cryptocurrency works and the processes involved. In addition to reviewing and studying various types of Cryptocurrency, it is important that you research the Exchange/Trading Platform that you intend to use. Additionally, to help protect your Cryptocurrency Wallet to its maximum potential, you should activate Two-Factor Authentication on each and every transaction and never provide your Private Key to anyone.
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