Crypto Scams Jeopardize Cryptocurrency Security

The increase in scams using cryptocurrencies goes hand in hand with their value on the market. A cryptocurrency is an electronic currency that operates outside the control of governments and central banks, such as the Central Bank of Brazil. Owners keep cryptocurrencies, such as Bitcoin, in electronic wallets, protected by passwords and encryption.

According to Code Market Cap, a price tracking website, the global cryptocurrency market value is currently at $2 trillion, with Bitcoin leading the industry, followed by Ethereum. However, there are currently more than 8,000 cryptocurrencies that together open doors for many cyber attacks.

In fact, due to the growth and overvaluation of cryptocurrencies, cryptocurrency fraud has taken a huge leap in recent years. The Federal Trade Commission (FTC) received nearly 6,800 complaints of cryptocurrency investment scams from October 2020 to March 2021, up from 570 in the same period the previous year. Reported losses have grown more than tenfold to over $80 million.

In addition, the 2021 Crypto Crimes report from blockchain analysis firm Chain Analysis, shows that the total value of cryptocurrencies held at illicit wallet addresses increased 79% during 2021, reaching $14 billion.

Illicit wallet addresses in the Chainalysis report refer to the wallets where the scammers deposit the money they have stolen by executing the Crypto Scams strategies.

Despite the innovation and high technology of all cryptocurrencies, many of the related scams are just modern versions of classic scams

Generally speaking, Cryptocurrency Scams or simply Crypto Scams, are cybercrimes aimed at gaining access to digital wallet or authentication credentials for accessing cryptocurrencies.

In other words, this means that cybercriminals try to obtain information that gives them access to a digital wallet or other types of private information, such as security codes. In some cases this even includes access to physical hardware.

In practice, Crypto Scams seek to transfer cryptocurrency directly to a cybercriminal due to identity forgery, fraudulent investment or other business opportunities by malicious means.

You can transfer cryptocurrencies between wallets anonymously to buy a pizza, sell a car, or even pay a ransom, as long as the other party in the transaction accepts cryptocurrencies.

With a currency that you cannot touch, it is a medium that meets the requirements of a cybercrime, putting at risk financial transactions and especially the basic concept of cryptocurrencies, security.

The types of scams that companies and users, cryptocurrency investors, face can be many, from illicit get rich quick schemes that will actually cause you to lose money, to data hijacking ransom payments resulting from ransomware attacks.

Encryption is not always secure

As new as cryptography is to the world, one of the most common forms of scamming is almost as old as the Internet itself. While a crypto transaction is indeed secure, there is nothing to stop a scammer from creating a fake website that forces the user to send cryptocurrency or even their own money to a cybercriminal, basic phishing.

The attacker can lead you to bogus websites via a malicious email or through social media posts, text messages, and many other channels. These sites usually market some attractive scam around cryptocurrencies or NTFs, designed to convince you to spend money. The transaction also looks legitimate, but will actually send money to criminals.

To identify and avoid these scams, you should avoid downloading any documents from unknown e-mails, messages or websites. You should also check that web pages that accept payments are certified by https.

Social Engineering Scams and Love Scams

As mentioned earlier, crypto scams look a lot like regular Internet scams. So it is no surprise that love crimes, or romance crimes as they are also known, and social engineering are common in this world.

Romance scams, are scams where a criminal uses a fake account to lure victims with the prospect of a romantic relationship. They are usually carried out through dating apps and matrimonial websites, where people are quick to trust others due to the nature of the app/site.

Once they gain the trust of the victims, they ask for money and disappear with the proceeds of the scam.

The strategy has worked and taken many victims. According to the FBI, in the city of San Francisco in the United States alone, more than $64 million was stolen in love scams compared to just over $35 million in 2020.

Fake cryptocurrency investment scams

Many cryptocurrency investors are cheated out of large amounts of money when tricked into investing in a fake cryptocurrency.

In practice, investors are told that the currency was created from blockchain technologies and traded for large sums of money, which in turn would increase their returns. However, after each successful transaction, investors discover that the coin does not exist and that it is not traded on any exchange.

Learn what to do to invest safely in cryptocurrencies and avoid Crypto Scams:

  • Promises of guaranteed large returns or claims that your cryptocurrency will be multiplied are always frauds.
  • The cryptocurrency itself is the investment. You make money if you are lucky enough to sell it for more than you paid. Don't trust people who say they know a better way.
  • If an interested party, which includes "love contacts", organization or anyone else insists on some kind of business using cryptocurrency, you can bet it is a hoax.

Those who bet on the digital currency market need to be aware of a number of details that are specific to this segment. It is necessary, for example, to be careful with online interactions: try to verify the trustworthiness of websites and applications, fraudulent emails, and always be wary of offers that offer high financial returns through investments or mining in cryptocurrencies. Always seek to do business with reliable companies.

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