Bitcoin prices are flying high, with prices over $90,000 and likely hitting $100,000 any day now, creating frenzied buying by investors and rapacious activity by cybercriminals.
“This is going to create a lot of FOMO ("Fear of Missing Out") and a lot of urgency around investing in bitcoin and paying with bitcoin,” said Eva Velasquez, president and chief executive of the Identity Theft Resource Center, in an MSNBC report.
Scammers “love, love, love to leverage external events, create confusion, create that sense of urgency and steal your hard-earned money,” Velasquez said.
The FBI’s Internet Crime Complaint Center recently reported that cryptocurrency scams led to losses exceeding $5.6 billion last year, with bitcoin prices driving increased activity among fraudsters.
Scammers exploit the fear of missing out (FOMO) and urgency among investors, often using tactics like fake coin promotions, phishing messages, Ponzi schemes, and “Pig butchering” schemes where trust is built over time before persuading victims to invest in fake platforms.
Investment scams are particularly prevalent, with criminals promising substantial profits with minimal risk. These scams often involve directing victims to seemingly credible websites controlled by scammers, where they are encouraged to deposit funds but face obstacles when trying to withdraw them.
Additionally, scammers frequently use social media and fake celebrity endorsements to lure victims into fraudulent bitcoin giveaways and investment opportunities.
The rise of artificial intelligence has also enabled more sophisticated scams, such as using AI chatbots to promote fake tokens and employing deepfakes of well-known figures to endorse scam projects. As bitcoin prices remain high, these scams are expected to continue proliferating.
Protect yourself from cryptocurrency scams
Here are some tips from the FBI and others on how to avoid cryptocurrency scams:
1. Research Thoroughly
- Verify legitimacy: Before investing, research the cryptocurrency, platform, or company. Check reviews, forums, and reputable websites for user experiences.
- Look for licensing and regulation: Trust platforms that are licensed or registered with financial regulatory bodies.
2. Be Wary of Unrealistic Promises
- Avoid "guaranteed returns": No legitimate investment can promise guaranteed high returns or risk-free profits. Elon Musk is not going to double your money.
- Steer clear of hype: Be cautious of pressure tactics, such as “limited-time offers” or promises of massive profits.
3. Protect Your Wallet
- Use secure wallets: Choose reputable hardware or software wallets for storing cryptocurrency.
- Safeguard private keys: Never share your private keys or recovery phrases. Scammers can use them to steal your funds.
- Enable two-factor authentication (2FA): Use 2FA for all cryptocurrency-related accounts for added security.
4. Avoid Phishing Scams
- Scrutinize URLs: Only access cryptocurrency platforms via their official websites. Double-check the URL for authenticity.
- Ignore unsolicited messages: Be wary of emails, texts, or social media messages offering cryptocurrency opportunities or asking for personal details.
5. Stick to Trusted Platforms
- Use established exchanges: Stick to well-known and reputable cryptocurrency exchanges or platforms.
- Avoid peer-to-peer transactions with strangers: Scammers often exploit these to steal funds.
6. Watch Out for Fake Apps
- Download from official sources: Only download cryptocurrency apps from official app stores and verify their legitimacy.
- Check app reviews: Scammers create fake apps that look real but are designed to steal information or funds.
7. Beware of Ponzi and Pyramid Schemes
- Avoid referral-based opportunities: Be cautious of schemes that require recruiting others to earn money or rewards.
- Scrutinize new tokens: Be wary of obscure cryptocurrencies promoted as the "next big thing" without clear use cases or technology.
8. Stay Skeptical of "Free" Offers
- Ignore giveaways: Scammers often advertise fake giveaways on social media, claiming you'll receive free cryptocurrency after sending funds.
- Avoid unsolicited airdrops: Receiving tokens out of the blue can be a trap to lure you into fraudulent platforms.
9. Verify Transactions
- Double-check recipient addresses: Scammers may use malware to alter wallet addresses during transactions.
- Test with small amounts: When transferring large sums, send a small amount first to confirm the transaction is correct.
10. Educate Yourself
- Stay informed: Keep up with the latest news about cryptocurrency scams and security measures.
- Learn about blockchain technology: Understanding how cryptocurrencies work can help you spot scams.
11. Report Suspected Scams
- If you suspect a scam, report it to your country’s financial regulator, law enforcement, or platforms like the FBI’s Internet Crime Complaint Center (IC3).
By staying informed and cautious, you can significantly reduce your risk of falling victim to cryptocurrency scams.
And finally, crypto isn't for beginners. If you don't understand it thoroughly, put your money somewhere else.